H 1146

GENERAL ASSEMBLY OF NORTH CAROLINA
  SESSION 2025
 H  1
  HOUSE BILL 1146
 Short Title:   2026 Governor's Budget.  (Public)
 Sponsors:      Representatives Arp, K. Hall, Strickland, and Lambeth (Primary Sponsors).
  For a complete list of sponsors, refer to the North Carolina General Assembly web site.
 Referred to:   Appropriations, if favorable, Rules, Calendar, and Operations of the House
  May 4, 2026
1A BILL TO BE ENTITLED
2 AN ACT TO MAKE BASE BUDGET APPROPRIATIONS FOR CURRENT OPERATIONS
3    OF STATE DEPARTMENTS, INSTITUTIONS, AND AGENCIES, AND FOR OTHER
4    PURPOSES.
5 The General Assembly of North Carolina enacts:
6
7 PART I. TITLE AND INTRODUCTION
8
9 TITLE OF ACT
10SECTION 1.1. This act shall be known as the "Current Operations Appropriations
11 Act of 2026."
12
13 INTRODUCTION
14SECTION 1.2. The appropriations made in this act are for maximum amounts
15 necessary to provide the services and accomplish the purposes described in the budget in
16 accordance with the State Budget Act. Savings shall be effected where the total amounts
17 appropriated are not required to perform these services and accomplish these purposes, and the
18 savings shall revert to the appropriate fund at the end of each fiscal year, except as otherwise
19 provided by law.
20
21 PART II. CURRENT OPERATIONS AND EXPANSION/GENERAL FUND
22
23 GENERAL FUND APPROPRIATIONS
24SECTION 2.1.(a) Notwithstanding any bill with an appropriation enacted in the
25 2025-27 biennium, appropriations from the General Fund for the budgets of the State
26 departments, institutions, and agencies, and for other purposes as enumerated, are made for each
27 year of the 2025-2027 fiscal biennium, according to the following schedule:
28
29 Current Operations – General Fund  FY 2025-2026  FY 2026-2027
30
31 EDUCATION
32 Community College System  1,730,176,632  1,880,055,057
33
34 Public Instruction  12,386,402,718  13,604,577,403
35
  *H1146-v-1*
 General Assembly Of North Carolina  Session 2025
1 Governor Morehead School  10,656,568  11,500,741
2 NC School for the Deaf  12,169,049  13,085,861
3 Eastern NC School for the Deaf  10,740,596  11,534,374
4
5 Appalachian State University  209,862,595  209,862,595
6 East Carolina University
7     Academic Affairs  274,127,761  274,127,761
8     Health Affairs  107,144,915  107,144,915
9 Elizabeth City State University  48,513,547  48,513,547
10 Fayetteville State  87,586,990  87,586,990
11 NC A&T State University  162,728,474  162,743,010
12 NC Central University  98,572,636  98,572,636
13 NC State University
14     Academic Affairs  564,312,136  564,676,069
15     Agricultural Extension  46,543,237  46,543,237
16     Agricultural Research  63,465,016  63,465,016
17 UNC-Asheville  51,101,094  51,101,094
18 UNC-Chapel Hill
19     Academic Affairs  385,597,924        385,597,924
20     Health Affairs  249,399,553        249,399,553
21     AHEC  56,855,450  56,855,450
22 UNC-Charlotte  331,584,743        331,584,743
23 UNC-Greensboro  204,987,083        204,987,083
24 UNC-Pembroke  95,473,853  95,473,853
25 UNC-School of the Arts  41,972,163  41,972,163
26 UNC-Wilmington  217,239,729        217,239,729
27 Western Carolina University  164,563,738        164,589,450
28 Winston-Salem State University  68,743,773  68,743,773
29 General Administration  50,098,094  50,098,094
30 University Institutional Programs  312,000,384        620,191,944
31 Related Educational Programs  863,278,591      (114,721,409)
32 NC School of Science and Math  45,240,766  45,240,766
33 Aid to Private Institutions  1,209,300  11,209,300
34 Total University of North Carolina  4,802,203,545      4,142,799,286
35
36 HEALTH AND HUMAN SERVICES
37 Department of Health and Human Services
38   Aging and Adult Services  52,856,717  52,928,118
39   Central Management and Support  216,458,444        299,971,801
40   Child Development and Early Education  306,105,539        357,126,631
41   Child and Family Well Being  62,811,146  71,354,616
42   Health Benefits  6,844,445,224      7,627,688,832
43   Health Services Regulation  26,819,231  28,693,218
44   Mental Hlth/Dev. Disabl./Subs. Abuse Serv.  779,898,008        852,018,243
45   Public Health  133,644,399        121,290,363
46   Services for the Blind, Deaf and Hard of Hearing       9,599,492  10,504,110
47   Social Services  227,241,733        237,710,782
48   Vocational Rehabilitation  44,304,406  46,783,297
49 Total Health and Human Services  8,704,184,339      9,706,070,011
50
51 AGRICULTURE, NATURAL, AND ECONOMIC RESOURCES
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 General Assembly Of North Carolina  Session 2025
1 Agriculture and Consumer Services  180,358,286     197,624,154
2
3 Department of Commerce
4   Commerce  15,714,916      29,698,492
5   General State Aid  19,655,810      22,155,810
6   Economic Development  158,348,245     166,348,245
7
8 Environmental Quality  110,279,177     177,714,471
9
10 Labor  27,314,942      29,571,924
11
12 Department of Natural and Cultural Resources       285,859,993     336,482,888
13
14 Wildlife Resources Commission  18,430,344      20,291,774
15
16 JUSTICE AND PUBLIC SAFETY
17 Judicial Department  824,319,035     877,409,507
18
19 Judicial Department – Indigent Defense Services    174,735,348     182,710,624
20
21 Department of Justice  69,612,137      95,498,653
22
23 Department of Public Safety  665,993,291     697,589,873
24
25 Department of Adult Correction  2,226,163,079   2,301,698,762
26
27 State Bureau of Investigation  101,498,162      74,629,912
28
29 State Highway Patrol  26,056,834      49,929,942
30
31 GENERAL GOVERNMENT
32 Department of Administration  73,131,081      76,087,478
33
34 Office of Administrative Hearings  8,485,540      10,401,718
35
36 State Board of Elections  12,755,150      13,108,296
37
38 Office of State Auditor  25,984,513      26,878,912
39
40 Office of State Controller  36,885,814      37,867,492
41
42 General Assembly  105,392,840     109,503,336
43
44 Office of the Governor  6,985,397       7,766,647
45
46 Office of State Budget and Management
47   Office of State Budget and Management  11,996,615      13,050,765
48   OSBM – Reserve for Special Appropriations  10,300,000      12,000,000
49
50 Housing Finance Agency  10,660,000      70,660,000
51
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 General Assembly Of North Carolina  Session 2025
1 Office of State Human Resource  12,209,780  16,914,870
2
3 Department of Insurance
4   Insurance  61,692,190  82,365,350
5   Insurance – Industrial Commission  14,615,798  15,573,874
6
7 Office of Lieutenant Governor  1,387,170  1,429,756
8
9 Department of Military and Veterans Affairs  9,113,460  10,190,758
10
11 Department of Revenue  124,029,089  141,251,495
12
13 Department of Secretary of State  19,840,122  23,137,780
14
15 Department of State Treasurer
16   Treasurer  209,074  877,074
17   Treasurer – Retirement System  24,394,657  24,394,657
18
19 Information Technology  75,729,621  129,861,153
20
21 RESERVES, DEBT, AND OTHER BUDGETS
22 Statewide Reserves  67,206,909  (16,304,782)
23
24 Total Net Appropriation  33,273,877,866       35,435,994,393
25
26SECTION 2.1.(b) For purposes of this act, the requirements set forth in this section
27 represent the total amount of funds, including agency receipts, appropriated to an agency,
28 department, or institution.
29
30 GENERAL FUND AVAILABILITY
31SECTION 2.2.(a) The General Fund availability derived from State tax revenue,
32 nontax revenue, and other adjustments used in developing the budget for each year of the
33 2025-2027 fiscal biennium is as follows:
34
35FY 2025-2026      FY 2026-2027
36
37 Unappropriated Balance from Prior Fiscal Year  48,073,341        1,137,648,682
38    Over Collections  394,728,847  369,815,741
39    Estimated Reversions  448,182,114  400,000,000
40 Total, Current Beginning Unreserved Balance  890,984,302        1,907,464,423
41
42 Statutorily Required Reservations of Revenue
43    State Capital and Infrastructure Fund  (1,120,000,000)  0
44    Savings Reserve  (68,642,013)        (60,465,000)
45 Subtotal  (1,188,642,013)        (60,465,000)
46
47 Additional Investments to Reserves
48    State Capital and Infrastructure Fund  0     (1,159,200,000)
49    State Emergency Response and Disaster Relief Fund  0       (500,000,000)
50    Contingency and Emergency Reserve  0        (10,000,000)
51 Subtotal, Investments to Reserves  0     (1,669,200,000)
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 General Assembly Of North Carolina  Session 2025
1
2 Tax Revenues
3    Individual Income  16,892,700,000      16,614,600,000
4    Sales and Use  11,492,800,000      11,784,500,000
5    Corporate Income  1,379,400,000       1,320,500,000
6    Franchise  787,800,000  792,300,000
7    Insurance  1,417,370,000       1,605,700,000
8    Alcoholic Beverage  560,600,000  554,300,000
9    Tobacco Products  240,800,000  237,500,000
10    Other Tax Revenue  228,630,000  248,500,000
11 Subtotal, Tax Revenues  33,000,190,000      33,157,900,000
12
13 Non-tax Revenues
14    Judicial Fees  202,400,000  218,000,000
15    Investment Income  702,900,000  637,200,000
16    Disproportionate Share  171,400,000  174,600,000
17    Master Settlement Agreement  97,600,000  98,000,000
18    Insurance  123,394,259  127,100,000
19    Other Non-tax Revenue  289,300,000  302,700,000
20 Subtotal, Non-tax Revenue  1,586,994,259       1,557,600,000
21
22 ARPA SFRF Interest  122,000,000  4,000,000
23
24 Total, Net Revenues  34,709,184,259      34,719,500,000
25
26 Adjustments to Revenues:
27    Maintain Individual Income Tax at 3.99%  896,000,000
28    Increase Standard Deduction from $25,500 to $26,500  (53,000,000)
29    Working Families Tax Credit – 10% of federal
30Earned Income Tax Credit  (240,000,000)
31    Refundable Child and Dependent Care Tax Credit  (55,000,000)
32    Sales Tax Back-to-School Holiday  (29,900,000)
33 Subtotal, Adjustments to Tax Revenues  518,100,000
34
35 Adjustments to Availability
36    NCInnovation Clawback – to be Deposited in SERDRF  500,000,000
37    Insurance Non-Tax Transfer  22,426,526
38
39 Revised Total Net General Fund Availability  34,411,526,548      35,937,825,949
40
41 Less Base Budget  (31,918,784,866)   (32,066,568,438)
42
43 Total Recommended Adjustments  (1,355,093,000)    (3,369,425,955)
44
45 Total Recommended Appropriations  (33,273,877,866)   (35,440,494,393)
46
47 Unappropriated Balance Remaining  1,137,648,682  501,831,556
48
49SECTION 2.2.(b) IT Reserve – The State Controller shall transfer the sum of one
50 hundred sixty-five million six hundred sixty-seven thousand six hundred fifty-three dollars
51 ($165,667,653) from the unreserved fund balance in the Information Technology Project Reserve
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 General Assembly Of North Carolina  Session 2025
1 to the Office of State Budget and Management. Funds appropriated from the Information
2 Technology Project Reserve shall be allocated by the Director of the State Budget in consultation
3 with the State Chief Information Officer and the head of the department with primary ownership
4 over the information technology project based on documented project needs. Funds transferred
5 under this section are appropriated in the year in which they are transferred and shall be used for
6 the following information technology projects:
7(1)     The Department of Information Technology's project to modernize data
8storage by switching to hybrid cloud and local storage.
9(2)     The Department of Adult Correction's OPUS system and Rounds Tracking
10Software.
11(3)     Eastern North Carolina's School for the Deaf’s ADA Campus Wide
12Emergency Visual Alert System.
13(4)     The Modernizing Payroll Reserve for the replacement of the state's payroll
14system.
15(5)     The Governor Morehead School’s Network Upgrade.
16(6)     The Department of Public Instruction's PSU school business system
17modernization.
18(7)     The Office of State Human Resources' human capital management (HCM)
19Phase I Enhancements.
20(8)     The Department of Revenue's DataPower and Network Files end of life
21replacements, datacenter hardware replacement, and replacement of the RCA
22desktop client.
23(9)     The State Board of Elections' election modernization Stage III project.
24(10) The State Bureau of Investigation for its IT infrastructure project, Behavioral
25Threat Assessment Management System, and Real-time Threat Alerting
26Platform.
27(11) The Office of Administrative Hearings’ Database Development System.
28(12) The Department of Commerce's Modernized NCCareer Information System.
29(13) The Department of the Secretary of State's Hardware Update program.
30(14) The Office of Indigent Defense Services' Indigency Determination Pilot.
31(15) The Department of Justice’s Legal Case Management System.
32SECTION 2.2.(c) Medicaid Contingency Reserve. – The balance of the Medicaid
33 Contingency Reserve is hereby appropriated.
34SECTION 2.2.(d) Federal Infrastructure Match Reserve. – Notwithstanding
35 subsection 2.2.(m) of S.L. 2022-74, the State Controller shall transfer funds available in the
36 Federal Infrastructure Match Reserve to agencies and departments as needed to draw down
37 federal funds in accordance with the following schedule, and the funds transferred are
38 appropriated for the 2026-2027 fiscal year:
39(1)     Eleven million, seven hundred seventy thousand, seven hundred fifty dollars
40($11,770,750) to the Department of Agriculture and Consumer Services for
41the required match to leverage two agricultural conservation easement
42agreements;
43(2)     Eight million, six hundred thirty-two thousand, one hundred sixty-six dollars
44($8,632,166) to the Department of Environmental Quality to meet the state's
45required cost share for federally led cleanup activities at Superfund National
46Priorities List sites.
47(3)     Eight hundred fifty thousand dollars ($850,000) to the Department of
48Environmental Quality to leverage additional federal funds for the
49Albemarle-Pamlico National Estuary Partnership.
50(4)     The Department of Environmental Quality may access any remaining funds
51in the Federal Infrastructure Match Reserve, if interest earnings are
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 General Assembly Of North Carolina  Session 2025
1insufficient to meet the required State match for the federal Drinking Water
2State Revolving Fund and Clean Water State Revolving Fund programs, for
3the purpose of providing the required match.
4(5)    The Office of State Budget and Management may access any remaining funds
5in the Federal Infrastructure Match Reserve to provide support to State
6agencies in mitigating the fiscal impacts of federal spending freezes, federal
7government shutdowns, or reductions in federal spending.
8SECTION 2.2.(e) The State Controller shall reserve from funds available in the
9 General Fund the sum of ten million dollars ($10,000,000) in nonrecurring funds for the 2026-27
10 fiscal year to the Contingency and Emergency Fund in the General Fund. Funds under this section
11 are appropriated in the year in which they are reserved.
12SECTION 2.2.(f) Except as otherwise specifically provided, nothing in this section
13 shall be construed as appropriating funds reserved pursuant to this section. Funds reserved
14 pursuant to this section do not constitute an "appropriation made by law," as that phrase is used
15 in Section 7(1) of Article V of the North Carolina Constitution.
16SECTION 2.2.(g) The State Controller shall ensure that the transfers required under
17 this section are completed as soon as practicable but no later than the end of the 2026-2027 fiscal
18 year. In making the transfers required under this section, the State Controller shall prioritize
19 transfers to Reserves that support expenditures.
20
21 PART III. HIGHWAY FUND AND HIGHWAY TRUST FUND
22
23 CURRENT OPERATIONS/HIGHWAY FUND
24SECTION 3.1. Appropriations from the State Highway Fund for the maintenance
25 and operation of the Department of Transportation and for other purposes as enumerated are
26 made for the fiscal year ending June 30, 2027, according to the following schedule:
27
28 Highway Fund  FY 2026-2027
29 Administration  141,758,209
30 Division of Highways
31    Administration  38,287,904
32    Construction  77,543,078
33    Maintenance  2,191,689,355
34    Governor's Highway Safety Program  351,695
35 OSHA  358,030
36
37 Aid to Municipalities
38    Powell Bill  185,875,000
39
40 Intermodal Divisions
41     Ferry  93,637,728
42     Public Transportation, Bicycle and Pedestrian  90,220,554
43     Aviation  164,074,415
44     Rail  78,367,607
45
46 Division of Motor Vehicles  170,100,604
47
48 Other State Agencies, Reserves, Transfers  139,011,958
49
50 Capital Improvements  23,613,813
51
 House Bill 1146-First Edition  Page 7
 General Assembly Of North Carolina  Session 2025
1 Total Highway Fund Appropriations  $3,399,889,949
2
3 HIGHWAY FUND AVAILABILITY
4SECTION 3.2. The Highway Fund availability for the 2026-2027 fiscal year budget
5 is shown below:
6FY 2026-2027
7 Consensus Revenue Forecast
8 Motor Fuels Tax  1,904,200,000
9 Licenses and Fees  1,141,800,000
10 Short-Term Lease  124,500,000
11 Investment Income  24,400,000
12 Sales Tax Transfer  176,200,000
13 Jet Fuel Sales  12,600,000
14 Transportation Commerce Tax  13,800,000
15 N Dividend  4,800,000
16 Total Highway Fund Availability  $3,402,300,000
17
18 HIGHWAY TRUST FUND APPROPRIATIONS
19SECTION 3.3. Appropriations from the State Highway Trust Fund to the
20 Department of Transportation for construction and other purposes as enumerated are made for
21 the fiscal year ending June 30, 2027, according to the following schedule:
22
23 Current Operations – Highway Trust Fund  FY 2026-2027
24 Program Administration  45,117,311
25 Bonds  121,436,275
26 Turnpike Authority  49,000,000
27 State Ports Authority  45,000,000
28 Strategic Prioritization Funding Plan for
29     Transportation Investments  2,306,935,414
30 Transfer to Visitor Center  640,000
31 Other State Agencies  371,000
32
33 Total Highway Trust Fund Appropriations  $2,568,500,000
34
35 HIGHWAY TRUST FUND AVAILABILITY
36SECTION 3.4. The Highway Trust Fund availability for the 2026-2027 fiscal year
37 budget is shown below:
38FY 2026-2027
39 Consensus Revenue Forecast
40    Highway Use Tax  1,181,500,000
41    Motor Fuels Tax  636,400,000
42    Fees  177,700,000
43    Investment Income  44,300,000
44    Sales Tax Transfer  528,600,000
45
46 Total Highway Trust Fund Availability  $2,568,500,000
47
48 PART IV. OTHER AVAILABILITY AND APPROPRIATIONS
49
50 CASH BALANCES AND OTHER APPROPRIATIONS
 Page 8  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1SECTION 4.1.(a) Cash balances, federal funds, departmental receipts, grants, and
2 gifts from the General Fund, revenue funds, enterprise funds, and internal service funds are
3 appropriated for the 2026-2027 fiscal year as follows:
4(1)     For all budget codes listed in the Governor's Recommended Budget for the
52026-2027 fiscal year, dated April 2026, and in the Budget Support
6Document, fund balances and receipts are appropriated up to the amounts
7specified, as adjusted by the General Assembly, for the 2026-2027 fiscal year.
8Funds may be expended only for the programs, purposes, objects, and line
9items or as otherwise authorized by the General Assembly. Expansion budget
10funds listed in those documents are appropriated only as otherwise provided
11in this act.
12(2)     Notwithstanding the provisions of subdivision (1) of this subsection:
13a.       Any receipts that are required to be used to pay debt service
14requirements for various outstanding bond issues and certificates of
15participation are appropriated up to the actual amounts received for the
162026-2027 fiscal year and shall be used only to pay debt service
17requirements.
18b.       Other funds, cash balances, and receipts of funds that meet the
19definition issued by the Governmental Accounting Standards Board of
20a trust or agency fund are appropriated for and in the amounts required
21to meet the legal requirements of the trust agreement for the 2026-2027
22fiscal year.
23SECTION 4.1.(b) Receipts collected in a fiscal year in excess of the amounts
24 appropriated by this section shall remain unexpended and unencumbered until appropriated by
25 the General Assembly, unless the expenditure of over-realized receipts in the fiscal year in which
26 the receipts were collected is authorized by the State Budget Act. Over-realized receipts are
27 appropriated in the amounts necessary to implement this subsection.
28SECTION 4.1.(c) Notwithstanding subsections (a) and (b) of this section, there is
29 appropriated from the Reserve for Reimbursements to Local Governments and Shared Tax
30 Revenues for each fiscal year an amount equal to the amount of the distributions required by law
31 to be made from that reserve for that fiscal year.
32
33 EDUCATION LOTTERY FUNDS/CHANGES TO REVENUE ALLOCATIONS
34SECTION 4.2. Section 2A.1.(a) of S.L. 2025-89 reads as rewritten:
35    "SECTION 2A.1.(a) The allocations made from the Education Lottery Fund for the
36 2025-2027 fiscal biennium are as follows:
37FY 2025-2026  FY 2026-2027
38 Noninstructional Support Personnel  $385,914,455  $385,914,455
39 Prekindergarten Program  78,252,110  78,252,110
40 Universal School Breakfast  56,227,388
41 Public School Building Capital Fund  100,000,000  100,000,000
42 Needs-Based Public School Capital Fund  258,252,612  258,252,612
43 Public School Repair & Renovation  50,000,000  50,000,000
44 Scholarship Reserve Fund for Public Colleges
45    and Universities  17,748,769  17,748,769
46 Children of Wartime Veterans Scholarship  11,070,964  11,070,964
47 School Transportation  182,193,702  186,033,702
48 TOTAL ALLOCATION  $1,083,432,612$1,143,500,0001,087,272,612"
49
50 INDIAN GAMING EDUCATION REVENUE FUND APPROPRIATIONS
51SECTION 4.3. Section 2A.2.(a) of S.L. 2025-89 reads as rewritten:
 House Bill 1146-First Edition  Page 9
 General Assembly Of North Carolina  Session 2025
1    "SECTION 2A.2.(a) The allocations made from the Indian Gaming Education Revenue
2 Fund for the 2025-27 fiscal biennium are as follows:
3FY 2026-2027    FY 2026-2027
4 Textbook and Digital Resources Allotment  $10,000,000      $10,000,000
5 Classroom Materials  15,500,000        53,500,000
6 Total Appropriation  $25,500,000    $153,500,000"
7
8 CIVIL PENALTY AND FORFEITURE FUND
9SECTION 4.4. Section 2A.3.(a) of S.L. 2025-89 reads as rewritten:
10     "SECTION 2A.3.(a) The allocations made from the Civil Penalty and Forfeiture Fund for
11 the 2025-27 fiscal biennium are as follows:
12FY 2025-2026  FY 2026-2027
13 School Technology Fund  $18,000,000  $18,000,000
14 Drivers Education  31,493,768  31,493,768
15 State Public School Fund  186,041,640  166,041,640
16 Devices for Students  15,000,000
17 Universal School Breakfast  15,000,000
18 Total Appropriation  $235,535,408 $24515,535,408"
19
20 PART V. GENERAL PROVISIONS
21
22 ESTABLISHING OR INCREASING FEES
23SECTION 5.1.(a) Notwithstanding G.S. 123.1, an agency is not required to consult
24 with the Joint Legislative Commission on Governmental Operations prior to establishing or
25 increasing a fee to the level authorized or anticipated in this act.
26SECTION 5.1.(b) Notwithstanding G.S. 150B-21.1A(a), an agency may adopt an
27 emergency rule in accordance with G.S. 150B-21.1A to establish or increase a fee as authorized
28 by this act if the adoption of a rule would otherwise be required under Article 2A of Chapter
29 150B of the General Statutes.
30
31 CAP STATE FUNDED PORTION OF NONPROFIT SALARIES
32SECTION 5.2. No more than one hundred forty thousand dollars ($140,000) in State
33 funds, including any interest earnings accruing from those funds, may be used for the annual
34 salary of any individual employee of a nonprofit organization.
35
36 2026 DISASTER RECOVERY
37SECTION 5.3.(a) State Emergency Response and Disaster Relief Fund. – Of the
38 nonrecurring funds appropriated in this act for the 2026-2027 fiscal year, fifty million dollars
39 ($50,000,000) shall be allocated to the Department of Public Safety, Emergency Management
40 Division, to provide disaster response and recovery assistance to households and communities in
41 response to future storms.
42SECTION 5.3.(b) Implementation. – The following actions and policies shall be
43 taken to implement subsection 5.3.(a):
44(1)    If a person's home is relocated or purchased with funds allocated in this
45subsection, the State Emergency Response and Disaster Relief Fund is
46subrogated to the person's rights under any insurance coverage for the damage
47to the home and any monies received from the insurance coverage shall be
48paid to the State Emergency Response and Disaster Relief Fund. The Office
49of State Budget and Management shall ensure that those potentially affected
50by this section are notified of, and adhere to, its requirements.
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 General Assembly Of North Carolina  Session 2025
1(2)      No State funds appropriated in this section may be expended for the
2construction of any new residence within the 100-year floodplain unless the
3construction is in an area regulated by a unit of local government pursuant to
4a floodplain management ordinance and the construction complies with the
5ordinance. As used in this section, "100-year floodplain" means any area
6subject to inundation by a 100-year flood, as indicated on the most recent
7Flood Insurance Rate Map prepared by the Federal Emergency Management
8Agency under the National Flood Insurance Program.
9(3)     Homeowners in the 100-year floodplain who receive homeowner's housing
10assistance pursuant to this section shall have in effect federal flood insurance,
11if available, as a precondition to receipt of State homeowner's housing
12assistance for losses resulting from future flooding.
13SECTION 5.3.(c) Limitation. – Funds allocated in this section shall be expended in
14 a manner that does not adversely affect any person's or entity's eligibility for federal funds that
15 are made available, or that are anticipated to be made available, as a result of natural disasters.
16 To the extent practicable, funds allocated in this section shall not be used to cover costs that will
17 be, or likely will be, covered by federal funds.
18SECTION 5.3.(d) No Reversion of Funds. – Funds allocated in this section shall
19 remain available to implement the provisions of this section until the General Assembly directs
20 the reversion of any unexpended and unencumbered funds and G.S. 143C-6-23(f1)(1) shall not
21 apply to those funds.
22SECTION 5.3.(e) Reporting Requirements. – The Office of State Budget and
23 Management shall provide periodic reports on the use of the funds allocated and appropriated in
24 this section in a manner which is consistent with Section 5.10 of Session Law 2019-250.
25
26 GOLDEN LEAF – HURRICANE HELENE BRIDGE LOAN MODIFICATIONS
27SECTION 5.4.(a) Section 4C.3 of S.L. 2024-53, as modified by Section 1.1(a) of
28 S.L. 2025-97 reads as rewritten:
29      "…
30      "SECTION 4C.3.(d) Reversion; Reloan; Repayment. – Funds allocated by this section are
31 not subject to the provisions of G.S. 143C-6-23. Funds allocated by this section that have not
32 been expended or encumbered by October 31, 2028March 15, 2026, shall revert to the Savings
33 Reserve established in G.S. 143C-4-2. Net loan funds, including repayments of loans, available
34 to Golden LEAF prior to October 31, 2028March 15, 2026, may be loaned in accordance with
35 this section. Beginning December 15, 2025March 15, 2026, and every six months thereafter,
36 Golden LEAF shall remit the net loan funds it has received from lenders to the Office of State
37 Budget and Management to be placed into the Savings Reserve.
38      "SECTION 4C.3.(e) Reporting. – Beginning December 15, 2025March 15, 2026, and
39 continuing every six months thereafter, Golden LEAF shall submit a report on the program to
40 the Joint Legislative Economic Development and Global Engagement Oversight Committee and
41 the Fiscal Research Division. The duty to report pursuant to this section shall cease after the
42 submission of the report following when Golden LEAF has remitted the entirety of the net loan
43 funds to the Office of State Budget and Management. Each report shall contain, at a minimum,
44 all of the following:
45…."
46
47 NCINNOVATION
48SECTION 5.5.(a) Return of Funds. – NCInnovation shall transfer back to the State,
49 after consultation with, and in conformity with direction received from, the State Controller, the
50 sum of five hundred million dollars ($500,000,000).
 House Bill 1146-First Edition  Page 11
 General Assembly Of North Carolina  Session 2025
1SECTION 5.5.(b) State Emergency Response and Disaster Relief Fund. – The State
2 Controller shall facilitate the return of transferred funds from NCInnovation pursuant to
3 subsection (a) of this section and shall deposit the funds into the State Emergency Response and
4 Disaster Relief Fund established in G.S. 166A-19.42. The transfer and deposit of funds into
5 reserves pursuant to this section does not constitute an "appropriation made by law," as that
6 phrase is used in Section 7(1) of Article V of the North Carolina Constitution. The funds shall
7 remain unappropriated unless the General Assembly appropriates the funds in this or a
8 subsequent act. In accordance with G.S. 147-69.1(d), funds in the Reserves shall be invested by
9 the Department of the State Treasurer, with earnings and interest therefrom being transferred to
10 and deposited in the General Fund.
11SECTION 5.5.(c) Repeal. – Upon the return of the transferred funds to the State
12 pursuant to subsection (a) of this section, Article 76A of Chapter 143 of the General Statutes is
13 repealed. The State Controller shall notify the Revisor of Statutes when the transfer has been
14 completed.
15SECTION 5.5.(d) This section is effective when it becomes law.
16
17 PART VI. COMMUNITY COLLEGE SYSTEM
18
19 PROPEL NC FUNDING MODEL ADJUSTMENT
20SECTION 6.1.(a) The funds appropriated in this act for Propel NC shall be used to
21 shift North Carolina Community College System’s enrollment formula from the current tier-
22 based allocation model to a labor-market driven model. This new model shall link courses to
23 workforce sectors that are ranked and valued by statewide salary job demand data.
24SECTION 6.1.(b) The State Board of Community Colleges in consultation with the
25 Department of Commerce shall identify the workforce sectors aligned with the State’s high-
26 demand, high-salary jobs and allocate the funds appropriated in this act to those workforce
27 sectors. Appropriated funds may also be used for customized training and Small Business Centers
28 at the individual colleges.
29SECTION 6.1.(c) Part 3 of Article 1 of Chapter 115D of the General Statutes is
30 amended by adding a new subsection to read:
31 "§ 115D-10.5. Program funding.
32      …
33      (aa) The State Board of Community Colleges shall review and revise, as necessary, its
34 workforce sector designations for curriculum, workforce continuing education, and Basic Skills
35 courses at community colleges by July 15, 2029, and every three years thereafter.
36      …."
37
38 PROPEL NC ENROLLMENT INCREASE RESERVE
39SECTION 6.2. G.S. 115D-31 reads as rewritten:
40 "§ 115D-31. State financial support of institutions.
41     …
42     (e)      If receipts for community college tuition and fees exceed the amount certified in
43 General Fund Codes at the end of a fiscal year, the State Board of Community Colleges shall
44 transfer retain the amount of receipts and fees above those budgeted. to the Enrollment Growth
45 Reserve. Funds in the Enrollment Growth Reserve shall not revert to the General Fund and shall
46 remain available to the State Board until expended. The State Board may allocate these funds in
47 this reserve to colleges experiencing an enrollment increase greater than five percent (5%) of
48 budgeted enrollment levels.proportionally to colleges based on actual receipt collections from
49 the prior fiscal year.
50     (f)      The Enrollment Increase Reserve shall be established as a recurring, nonreverting
51 reserve under the direction of the State Board of Community Colleges. Funds appropriated by
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 General Assembly Of North Carolina  Session 2025
1 the North Carolina General Assembly shall be allocated based on actual fall semester FTE. The
2 method of allocation shall be as follows: at one-half the average FTE value per FTE for the
3 greater of FTE increases in excess of 5% for each category of instruction, or for increases in total
4 FTE greater than 325. If enrollment growth exceeds the funds appropriated in a given year, the
5 value per FTE would be reduced proportionately."
6
7 AUTHORIZE USE OF MOTORCYCLE SAFETY EDUCATION PROGRAM FUNDS
8    FOR A CAPITAL PROJECT
9SECTION 6.3.(a) Notwithstanding G.S. 115D-10.50, of the funds received for the
10 North Carolina Motorcycle Safety Education Program (NCMSEP), the State Board of
11 Community Colleges may award up to five-hundred thousand dollars ($500,000) to Lenoir
12 Community College for use in constructing or renovating a facility used for this program.
13SECTION 6.3.(b) This authorization is for the fiscal year ending on June 30, 2027,
14 and funds transferred under subsection (a) above, shall not revert and shall remain available until
15 expended.
16
17 CLARIFY CUSTOMIZED TRAINING PERSONNEL
18SECTION 6.4. G.S. 115D-10.17(e) reads as rewritten:
19 "§ 115D-10.17. Customized Training Program.
20     …
21     (e)    Of the funds appropriated in a fiscal year for the Customized Training Program, the
22 State Board of Community Colleges may approve the use of up to fifteen percent (15%) for the
23 training and support of regional community college personnelregionally based program
24 personnel to deliver Customized Training Program services to business and industry. For the
25 purpose of this subsection, “regionally based program personnel” is defined as the following:
26(1)     An individual(s) who may be hosted by a local community college to serve a
27defined region of the state as assigned by the System Office.
28     …."
29
30 FREE COMMUNITY COLLEGE TUITION FOR HIGH DEMAND SKILLS TRAINING
31SECTION 6.7. G.S. 115D-5.1A reads as rewritten:
32 "§ 115D-10.19. Short-Term Workforce Development Grant Program.
33     …
34     (c)     Award Amounts. – To the extent funds are made available for the Program, the State
35 Board of Community Colleges shall award grants in an amount of up to seven hundred fifty
36 dollars ($750.00) to students pursuing short‑term, noncredit State and industry workforce
37 credentials. The State Board of Community Colleges shall establish criteria for initial and
38 continuing eligibility for students. The criteria shall include a requirement that eligible students
39 be a resident of North Carolina pursuant to G.S. 116-143.1(a)(1). At a minimum, students shall
40 be required to qualify as a resident for tuition purposes under the criteria set forth in G.S.
41 116‑143.1 and in accordance with the coordinated and centralized residency determination
42 process administered by the State Education Assistance Authority.
43     (d)     Report. – The State Board shall submit a report by April December 1 annually on the
44 Program to the Joint Legislative Education Oversight Committee and the Fiscal Research
45 Division. The report shall contain, for each academic year and by programs of study, the amount
46 of grant funds disbursed and the number of eligible students receiving funds."
47
48 PART VII. PUBLIC INSTRUCTION
49
50 REPEAL THE TEXTBOOK COMMISSION
 House Bill 1146-First Edition  Page 13
 General Assembly Of North Carolina  Session 2025
1SECTION 7.1.(a)       G.S. 115C-86 through G.S. 115C-95 and G.S. 115C-97 are
2 repealed.
3SECTION 7.1.(b) Part 3 of Article 8 of Chapter 115C of the General Statutes reads
4 as rewritten:
5"Part 3. Textbooks.Instructional Materials.
6 "§ 115C-85. Textbook Instructional material needs are determined by course of study.
7     When the State Board of Education has adopted, upon the recommendation of the
8 Superintendent of Public Instruction, a standard course of study at each instructional level in the
9 elementary school and the secondary school, setting forth what subjects shall be taught at each
10 level, it shall proceed to select and adopt textbooks.
11     As used in this part, "textbook" "instructional materials" means systematically organized
12 material comprehensive enough to cover the primary objectives outlined in the standard course
13 of study for a grade or course. Formats for textbooks instructional materials may be print or
14 nonprint, including hardbound books, softbound books, activity-oriented programs, classroom
15 kits, and technology-based programs digital resources that require the use of electronic
16 equipment in order to be used in the learning process.
17     Textbooks adopted in accordance with the provisions of this Part shall be used by the public
18 schools of the State except as provided in G.S. 115C-98(b1).
19     …
20 "§ 115C-96. Powers and duties of the State Board of Education in regard to
21textbooks.instructional materials.
22     (a)      The children of the public elementary and secondary schools of the State shall be
23 provided with free basic textbooks instructional materials within the appropriation of the General
24 Assembly for that purpose. To implement this directive, the State Board of Education shall
25 evaluate annually the amount of money necessary to provide textbooks instructional materials
26 based on the actual cost and availability of textbooks the instructional materials and shall request
27 sufficient appropriations from the General Assembly.
28     (b)      The State Board of Education shall administer a fund and establish adopt rules and
29 regulations necessary to:
30(1)     Acquire by contract such basic textbooks as are or may be on the adopted list
31of the State of North Carolina which the Board finds necessary to meet the
32needs of the State public school system and to carry out the provisions of this
33Part.
34(2)     Provide a system of distribution of these textbooks and distribute the books
35that are provided without using any depository or warehouse facilities other
36than those operated by the State Board of Education.
37(3)     Provide for the free use, with proper care and return, of elementary and
38secondary basic textbooks. instructional materials. The title of said books the
39instructional materials shall be vested in the State.
40 "§ 115C-98. Local boards of education to provide for local operation of the textbook
41program, the selection and procurement of other instructional materials, and the
42use of nonadopted textbooks.selection of supplementary and instructional
43materials.
44     (a)      Local boards of education shall adopt rules policies not inconsistent with the policies
45 rules of the State Board of Education concerning the local operation of the textbook
46 program.selection and procurement of instructional materials.
47     (b)      Local boards of education shall adopt written policies concerning the procedures to
48 be followed in their local school administrative units for the selection and procurement of
49 supplementary textbooks, library books, periodicals, audiovisual materials, and other
50 supplementary and instructional materials needed for instructional purposes in the public schools
51 of their units.
 Page 14  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1     Local boards of education shall have sole authority to select and procure supplementary and
2 instructional materials, including library books and media, whether or not the materials contain
3 commercial advertising, to determine if the materials are related to and within the limits of the
4 prescribed curriculum, and to determine when the materials may be presented to students during
5 the school day. Supplementary materials and contracts for supplementary materials are not
6 subject to approval by the State Board of Education.
7     Supplementary books and other instructional materials shall neither displace nor be used to
8 the exclusion of basic textbooks.instructional materials.
9     (b1) A local board of education may establish a community media advisory committee to
10 investigate and evaluate challenges from parents, teachers, and members of the public to
11 textbooks and supplementary instructional materials on the grounds that they are educationally
12 unsuitable, pervasively vulgar, or inappropriate to the age, maturity, or grade level of the
13 students. The State Board of Education shall review its rules and policies concerning these
14 challenges and shall establish guidelines to be followed by community media advisory
15 committees.
16     The local board, at all times, has sole authority and discretion to determine whether a
17 challenge has merit and whether challenged material should be retained or removed.
18     (b2) Local boards of education may:
19(1)     Select, procure, and use textbooks that have not been adopted by the State
20Board of Education for use throughout the local school administrative unit for
21selected grade levels and courses; and
22(2)     Approve school improvement plans developed under G.S. 115C-105.27 that
23include provisions for using textbooks that have not been adopted by the State
24Board of Education for selected grade levels and courses.
25     All textbook instructional material contracts made under this subsection shall include a clause
26 granting to the local board of education the license to produce braille, large print, and
27 audiocassette tape tape, and other accessible copies of the textbooks instructional materials for
28 use in the local school administrative unit.
29     …
30 "§ 115C-98.5. Challenges to supplementary and instructional materials.
31     (a)     Local boards of education shall establish a community media advisory committee to
32 investigate and evaluate challenges to supplementary and instructional materials.
33     (b)     At a minimum, the committee shall include the following:
34(1)     A principal from a high school, middle school, and elementary school,
35respectively.
36(2)     A teacher from a high school, middle school, and elementary school,
37respectively.
38(3)     A parent of a student in high school or middle school and a parent of a student
39in elementary school.
40(4)     A school library media coordinator from a high school, middle school, and
41elementary school, respectively.
42     (c)     Challenges to instructional and supplemental materials shall be made in writing and
43 submitted to the local board of education. The challenge shall specify that the material being
44 challenged is one or more of the following:
45(1)     Obscene.
46(2)     Inappropriate to the age, maturity, or grade level of the students.
47(3)     Not aligned with the standard course of study.
48     (d)     The local board of education and the media advisory committee shall only investigate
49 and evaluate challenges submitted by a parent of a student enrolled in a school governed by the
50 board, a teacher employed by the board, or a resident of the area of assignment for the board.
 House Bill 1146-First Edition  Page 15
 General Assembly Of North Carolina  Session 2025
1     (e)      Within two weeks of the filing of the challenge, the media advisory committee shall
2 hold a hearing and provide the challengers an opportunity to present their concerns to the
3 committee. The committee may, in the committee's discretion, request additional information on
4 the subject matter at the hearing from experts employed by the local school administrative unit.
5 Within two weeks of the hearing, the committee shall make a recommendation to the local board
6 of education on whether the challenge has merit and whether the challenged material should be
7 retained or removed as unfit material. The committee's determination shall be limited to
8 considerations of whether the material is unfit on the specific grounds of the material being (i)
9 obscene, (ii) inappropriate to the age, maturity, or grade level of the students, or (iii) not aligned
10 with the standard course of study.
11     (f)      At the next meeting of the local board of education after the media advisory
12 committee's recommendation is received, the local board shall determine whether the challenge
13 has merit and whether the challenged material should be retained or removed as unfit material.
14     (g)      The local board, at all times, has sole authority and discretion to determine whether a
15 challenge has merit and whether challenged material should be retained or removed. The decision
16 of the board is not appealable.
17 "§ 115C-99. Legal custodians of textbooks instructional materials furnished by State.
18     Local boards of education are the custodians of all textbooks instructional materials
19 purchased by the local boards with State funds. They shall provide adequate and safe storage
20 facilities for the proper care of these textbooks the instructional materials and emphasize to all
21 students the necessity for proper care of textbooks.instructional materials.
22 "§ 115C-100. Rental fees for textbooks instructional materials prohibited; damage fees
23authorized.
24     No local board of education may charge any pupil a rental fee for the use of textbooks.
25 instructional materials. A pupil's parents or legal guardians may be charged damage fees for
26 abuse or loss of textbooks instructional materials under rules adopted by the State Board of
27 Education. All money collected from the sale of textbooks instructional materials purchased with
28 State funds under the provisions of this Part shall be paid annually as collected to the State Board
29 of Education.
30 "§ 115C-101. Duties and authority of superintendents of local school administrative units.
31     The superintendent of each local school administrative unit, as an official agent of the State
32 Board of Education, shall administer the provisions of this Part and the rules and regulations of
33 the Board insofar as they apply to his the local school administrative unit. The superintendent of
34 each local school administrative unit shall have authority to require the cooperation of principals
35 and teachers so that the children may receive the best possible service, and so that all the books
36 instructional materials and moneys may be accounted for properly. If any principal or teacher
37 fails to comply with the provisions of this section, his the superintendent shall withhold his the
38 salary vouchers of the principal until the duties imposed by this section have been performed.
39     If any superintendent fails to comply with the provisions of this section, the State
40 Superintendent, as secretary to the State Board of Education, shall notify the State Board of
41 Education and the State Treasurer. The State Board and the State Superintendent shall withhold
42 the superintendent's salary vouchers, and the State Treasurer shall make no payment until the
43 State Superintendent notifies him confirms that the provisions of this section have been complied
44 with.
45 "§ 115C-102. Right to purchase; disposal of textbooks and instructional materials.
46     (a)      Any parent, guardian, or person in loco parentis may purchase any instructional
47 material needed for any child in the public schools of the State from the board of education of
48 the local school administrative unit in which the child is enrolled or, in the case of basic
49 textbooks, from the State Board of Education.enrolled.
50     (b)      Notwithstanding Article 3A of Chapter 143 of the General Statutes, G.S. 143-49(4),
51 or any other provision of law, the State Board of Education may adopt rules authorizing local
 Page 16  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 boards of education to dispose of discontinued instructional material, including State-adopted
2 textbooks.material."
3SECTION 7.1.(c) G.S. 115C-11(d) reads as rewritten:
4     "(d) Voting. – No voting by proxy shall be permitted. Except in voting on textbook
5 adoptions, a A majority of those present and voting shall be necessary to carry a motion and a
6 roll call vote shall be had on each motion. A record of all such votes shall be kept in the minute
7 book."
8SECTION 7.1.(d) G.S. 115C-11(e) is repealed.
9SECTION 7.1.(e) G.S. 115C-12(9)b. is repealed.
10SECTION 7.1.(f) G.S. 115C-12(18)d. reads as rewritten:
11"d.     The State Board of Education shall modify the Uniform Education
12Reporting System to provide clear, accurate, and standard information
13on the use of funds at the unit and school level. The plan shall provide
14information that will enable the General Assembly to determine State,
15local, and federal expenditures for personnel at the unit and school
16level. The plan also shall allow the tracking of expenditures for
17textbooks, instructional materials, educational supplies and
18equipment, capital outlay, at-risk students, and other purposes."
19SECTION 7.1.(g) G.S. 115C-47 reads as rewritten:
20 "§ 115C-47. Powers and duties generally.
21     In addition to the powers and duties designated in G.S. 115C-36, local boards of education
22 shall have the power or duty:
23…
24(6)     To Regulate Fees, Charges and Solicitations. – Local boards of education shall
25adopt rules and regulations governing solicitations of, sales to, and
26fund-raising activities conducted by, the students and faculty members in
27schools under their jurisdiction, and no fees, charges, or costs shall be
28collected from students and school personnel without approval of the board of
29education as recorded in the minutes of said the board; provided, this
30subdivision shall not apply to such textbooks instructional material fees as are
31determined and established by the State Board of Education. The local board
32of education shall publish a schedule of fees, charges, and solicitations
33approved by the local board on the local school administrative unit's Web site
34by October 15 of each school year and, if the schedule is subsequently revised,
35within 30 days following the revision.
36…
37(33) To Approve and Use Supplemental Materials. – Local boards of education
38shall have sole authority to select and procure supplementary instructional
39materials, whether or not the materials contain commercial advertising,
40pursuant to the provisions of G.S. 115C-98(b).
41(33a) To Approve and Use Textbooks Not Adopted by State Board of Education.
42Instructional Materials. – Local boards of education shall have the authority
43to select, procure, and use textbooks not adopted by the State Board of
44Education        instructional       materials        as      provided        in
45G.S. 115C-98(b1).G.S. 115C-98.
46…."
47SECTION 7.1.(h) G.S. 115C-76.55 reads as rewritten:
48 "§ 115C-76.55. Age-appropriate instruction for grades kindergarten through fourth grade.
49     Instruction on gender identity, sexual activity, or sexuality shall not be included in the
50 curriculum provided in grades kindergarten through fourth grade, regardless of whether the
51 information is provided by school personnel or third parties. For the purposes of this section,
 House Bill 1146-First Edition  Page 17
 General Assembly Of North Carolina  Session 2025
1 curriculum includes the standard course of study and support materials, locally developed
2 curriculum, supplemental instruction, and textbooks and other supplementary materials, but does
3 not include responses to student-initiated questions."
4SECTION 7.1.(i) G.S. 115C-81.5(b)(3) is repealed.
5SECTION 7.1.(j) G.S. 115C-81.25(b)(3) is repealed.
6SECTION 7.1.(k) G.S. 115C-81.25(d) reads as rewritten:
7     "(d) Parental Review. – The State Board of Education shall make available to all local
8 school administrative units for review by the parents and legal guardians of students enrolled at
9 those units any State-developed objectives for instruction, any approved textbooks, the list of
10 reviewed materials, and any other State-developed or approved materials that pertain to or are
11 intended to impart information or promote discussion or understanding in regard to the
12 prevention of sexually transmitted diseases, including HIV/AIDS, to the avoidance of
13 out-of-wedlock pregnancy, or to the reproductive health and safety education curriculum. The
14 review period shall extend for at least 60 days before use."
15SECTION 7.1.(l) G.S. 115C-105.25(b)(12) reads as rewritten:
16"(12) Funds allotted for textbooks and digital resources instructional materials may
17only be used for the purchase of textbooks and digital resources. to acquire
18instructional and supplemental materials as identified in Part 3 of Article 8 of
19this Chapter and to acquire software necessary for the use of the instructional
20or supplemental materials. These funds shall not be transferred out of the
21allotment for any other purpose."
22SECTION 7.1.(m) G.S. 115C-242(3) reads as rewritten:
23"(3) The board of education of any local school administrative unit may operate
24the school buses of such unit one day prior to the opening of the regular school
25term for the transportation of pupils and employees to and from the school to
26which such pupils are assigned or in which they are enrolled and such
27employees are employed, for the purposes of the registration of students, the
28organization of classes, the distribution of textbooks, instructional materials,
29and such other purposes as will, in the opinion of the superintendent of the
30schools of such unit, promote the efficient organization and operation of such
31public schools."
32SECTION 7.1.(n) G.S. 115C-271(d)(2) reads as rewritten:
33"(2) Local funds appropriated for teachers, textbooks, instructional materials, or
34classroom materials, supplies, and equipment are not transferred or used for
35this purpose."
36SECTION 7.1.(o) G.S. 115C-384(c) reads as rewritten:
37     "(c) Rental Fees for Textbooks Instructional Materials Prohibited; Damage Fees
38 Authorized. – No rental fees are permitted for the use of textbooks, but damage fees may be
39 collected pursuant to the provisions of G.S. 115C-100."
40SECTION 7.1.(p) G.S. 115C-390.2(l)(1) reads as rewritten:
41"(1) The opportunity to take textbooks instructional materials and school-furnished
42digital devices home for the duration of the absence."
43SECTION 7.1.(q) G.S. 115C-390.5(c)(1) reads as rewritten:
44"(1) The opportunity to take textbooks instructional materials home for the
45duration of the suspension."
46SECTION 7.1.(r) G.S. 115C-398 reads as rewritten:
47 "§ 115C-398. Damage to school buildings, furnishings, textbooks.instructional materials.
48     Students and their parents or legal guardians may be liable for damage to school buildings,
49 furnishings and textbooks instructional materials pursuant to the provisions of G.S. 115C-523,
50 115C-100 and 14-132."
51SECTION 7.1.(s) G.S. 143A-48 is repealed.
 Page 18  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1SECTION 7.1.(t) No further funds shall be allocated into the State Textbook fund.
2 The Department of Public Instruction, in coordination with the Office of State Budget and
3 Management, shall ensure that the fund is dissolved once all funds are expended.
4SECTION 7.1.(u) Effective July 1, 2026, there is established the Instructional
5 Materials funding allotment within the State Public School Fund. The State Board of Education
6 shall establish the purposes for which the funds within the Instructional Materials funding
7 allotment may be used for the purchase and maintenance of instructional and supplemental
8 materials as identified in Part 3 of Article 8 of Chapter 115C of the General Statutes. Funds
9 allocated to the Instructional Materials funding allotment in fiscal years 2026-2027 and
10 2027-2028 shall not revert to the General Fund at the end of the fiscal year but shall remain
11 available until expended.
12
13 EXCEPTIONAL CHILDREN FUNDING
14SECTION 7.2.(a) G.S. 115C-111.05 reads as rewritten:
15 "§ 115C-111.05. Funding for children with disabilities.
16      To the extent funds are made available for this purpose, the State Board shall allocate funds
17 for children with disabilities to each local school administrative unit on a per child basis. Each
18 local school administrative unit shall receive funds for the lesser of (i) all children who are
19 identified as children with disabilities or (ii) thirteen percent (13%) of its allocated average daily
20 membership in the local school administrative unit for the current school year.The State Board
21 of Education shall adopt an allotment policy to implement the tiered student funding formula for
22 exceptional children as proposed in the report published pursuant to Section 7.7 of S.L. 2023-
23 134 by the Department of Public Instruction. To the extent funds are made available for this
24 purpose, the Exceptional Children Allotment shall be funded at a seventy percent (70%) state
25 share and shall replace the Children With Disabilities Allotment. The State Board shall adjust the
26 amount of funding for children with disabilities each public school unit receives during the fiscal
27 year based on the December 1 headcount of children with disabilities required by 20 U.S.C.
28 1412(a)(3)."
29SECTION 7.2.(b) Create the Exceptional Children Funding Stabilization Reserve.
30 – The Exceptional Children Funding Stabilization Reserve is established within the General
31 Fund. The General Assembly shall appropriate in the Current Appropriations Act or other
32 appropriations act a specific amount to this reserve for allocation, on an as-needed basis only, to
33 provide stabilization funds to public school units that experience a decline in total state funding
34 for exceptional children in the FY 2026-27 fiscal year.
35SECTION 7.2A.(c) Reserve Authorized Uses. – The funds in the Reserve are
36 available to the Department of Public Instruction to distribute to public school units that would
37 otherwise receive less funding under the Exceptional Children allotment in the FY 2026-27 fiscal
38 year than they received through the Children With Disabilities allotment in FY 2025-26.
39SECTION 7.2A.(d) Reserve Nonrevert. – The funds in the Reserve shall not revert
40 at the end of FY 2026-27 but shall remain available for use until June 30, 2029 to implement this
41 section.
42SECTION 7.2.(e) Compliance. – Implementation of the exceptional children
43 weighted funding model and access to funds by public school units through this model shall be
44 contingent upon the provision of a free and appropriate education (FAPE) in the least restrictive
45 environment. The Department of Public Instruction shall routinely monitor public school units
46 commensurate with the authority established by 34 CFR Part 300 and G.S. 115C-451. In
47 exercising its monitoring responsibilities under 34 CFR 300.600(d), the Department of Public
48 Instruction must ensure that when it identifies noncompliance with the requirements of this part
49 by PSUs, the noncompliance is corrected as soon as possible, and in no case later than one year
50 after the State's identification of the noncompliance 34 CFR 300.600(e).
51SECTION 7.2.(f) G.S. 115C-218.105(a) reads as rewritten:
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1    "(a)   The State Board of Education shall allocate to each charter school:
2(1)    An amount equal to the average per pupil allocation for average daily
3membership from the local school administrative unit allotments in which the
4charter school is located for each child attending the charter school except for
5the allocation for children with disabilities and for the allocation for children
6with limited English proficiency;
7(2)    An additional amount for each child attending the charter school who is a child
8with disabilities; and
9(3)    An additional amount for children with limited English proficiency attending
10the charter school, based on a formula adopted by the State Board.
11In accordance with G.S. 115C-218.7 and G.S. 115C-218.8, the State Board
12shall allow for annual adjustments to the amount allocated to a charter school
13based on its enrollment growth in school years subsequent to the initial year
14of operation.
15In the event a child with disabilities leaves the charter school and enrolls in
16a public school during the first 60 school days in the school year, the charter
17school shall return a pro rata amount of funds allocated for that child to the
18State Board, and the State Board shall reallocate those funds to the local
19school administrative unit in which the public school is located. In the event
20a child with disabilities enrolls in a charter school during the first 60 school
21days in the school year, the State Board shall allocate to the charter school the
22pro rata amount of additional funds for children with disabilities. The State
23Board shall adjust the amount of funding for children with disabilities each
24charter school receives during the fiscal year based on the December 1
25headcount of children with disabilities required by 20 U.S.C. 1412(a)(3)."
26SECTION 7.2.(g) G.S. 116-239.11(a) reads as rewritten:
27    "(a)   The State Board of Education shall allocate to a laboratory school the following:
28(1)    An amount equal to the average per pupil allocation for average daily
29membership from the local school administrative unit allotments in which the
30school is located for each child attending the laboratory school, except for the
31allocation for children with disabilities and for the allocation for children with
32limited English proficiency.
33(2)    An additional amount for each child attending the laboratory school who is a
34child with disabilities. In the event a child with disabilities leaves the
35laboratory school and enrolls in a public school during the first 60 school days
36in the school year, the laboratory school shall return a pro rata amount of funds
37allocated for that child to the State Board, and the State Board shall reallocate
38those funds to the local school administrative unit in which the public school
39is located. In the event a child with disabilities enrolls in the laboratory school
40during the first 60 school days in the school year, the State Board shall allocate
41to the laboratory school the pro rata amount of additional funds for children
42with disabilities. The State Board shall adjust the amount of funding for
43children with disabilities each laboratory school receives during the fiscal year
44based on the December 1 headcount of children with disabilities required by
4520 U.S.C. 1412(a)(3).
46…."
47
48 LIMITED ENGLISH PROFICIENCY FUNDING METHODOLOGY CHANGE
49SECTION 7.3.(a) The title of Article 32F of Chapter 115C of the General Statutes
50 reads as rewritten:
51"Supplemental School Funding.Funding and Other Allotments."
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 General Assembly Of North Carolina  Session 2025
1SECTION 7.3.(b) Article 32F of Chapter 115C of the General Statutes is amended
2 by adding a new section to read:
3 "§ 115C-472.30. Limited English proficient allotment.
4     To the extent funds are made available for this purpose, the State Board of Education shall
5 allocate funds to local school administrative units, charter schools, regional schools, and
6 laboratory schools operated under Article 29A of Chapter 116 of the General Statutes to provide
7 services to students with limited English proficiency. The State Board shall allocate these funds
8 under a formula that takes into account the average number of students in the units, charters,
9 regional schools, or laboratory schools over the past three years who have limited English
10 proficiency. Local school administrative units shall use funds allocated to them to pay for
11 classroom teachers, teacher assistants, tutors, textbooks, classroom materials/instructional
12 supplies/equipment, transportation costs, and professional development of teachers for students
13 with limited English proficiency. A county in which a local school administrative unit receives
14 funds under this section shall use the funds to supplement local current expense funds and shall
15 not supplant local current expense funds."
16SECTION 7.3.(c) When making adjustments to allocations to local school
17 administrative units from the limited English proficient allotment for the 2026-2027 fiscal year,
18 no local school administrative unit with an average daily membership of 20,000 or fewer students
19 for the 2026-2027 school year shall receive a negative adjustment in excess of fifty thousand
20 dollars ($50,000) when compared to the allocation received during the 2025-2026 fiscal year
21 from that allotment.
22
23 SCHOOL RESOURCE OFFICER ALLOTMENT
24SECTION 7.4.(a) Purpose. – The State Board of Education shall create the School
25 Resource Officer Allotment to provide for the safety of students on school grounds. Middle
26 schools across the state may use allotted funds to hire and train School Resource Officers (SROs).
27SECTION 7.4.(b) Allotment. – Of the funds appropriated through this act to the
28 Department of Public Instruction, the State Board shall allocate funding to each local school
29 administrative unit for hiring school resource officers. Each local school administrative unit shall
30 receive allotted dollars for each non-virtual school serving students in middle school.
31SECTION 7.4.(c) Consolidation. – Effective July 1, 2026, G.S. 143B-1209.60 is
32 repealed and all funds for middle school SROs shall be administered through the School Resource
33 Officer Allotment by the Department of Public Instruction. At the discretion of the State Board
34 of Education, the funds provided for high school SROs through the At-Risk Student Allotment
35 may also be consolidated into this allotment.
36SECTION 7.4.(d) Training. – The Center for Safer Schools and the Department of
37 Public Instruction shall work with the NC Criminal Justice Education and Training Standards
38 Commission to establish initial training and continuing education standards for SROs. Those
39 standards shall include pre-service training and modules on the social and cognitive development
40 of elementary school and middle school children, behavioral health, and trauma-informed
41 practices in schools. All SROs must receive training through a community college, a local law
42 enforcement agency, or the North Carolina Justice Academy prior to placement in a school.
43
44 EXPAND LITERACY PROFESSIONAL DEVELOPMENT AND SUPPORT TO
45     GRADES 6-8
46SECTION 7.5.(a) G.S. 115C-83.6A reads as rewritten:
47 "§ 115C-83.6A. Approval of literacy intervention plans.
48     (a)     Each local school administrative unit shall submit to the Department of Public
49 Instruction a plan for the literacy interventions interventions for kindergarten through eighth
50 grade it will offer, including reading camps, in the following school year no later than October
51 1. The plan shall include information about the local school administrative unit's efforts to staff
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1 reading camps with the most qualified teachers possible, including the unit's efforts to attract
2 teachers associated with high growth in reading based on EVAAS data and teachers who have
3 earned a reading bonus. The plan shall incorporate any feedback received from the Department
4 on the previous year's plan. As part of their plans, local school administrative units are
5 encouraged to partner with other local school administrative units and with community
6 organizations to enhance literacy interventions.
7      …."
8SECTION 7.5.(b) G.S. 115C-83.4B reads as rewritten:
9 "§ 115C-83.4B. Early Literacy Program.
10      (a)    There is established the Early Literacy Program within the Department of Public
11 Instruction. The Department of Public Instruction, in consultation with the Department of Health
12 and Human Services, shall use the Early Literacy Program to build strong foundational early
13 literacy skills utilizing the Science of Reading for children in the North Carolina Prekindergarten
14 (NC Pre-K) program.
15      (b)    As part of the Early Literacy Program, the Department of Public Instruction shall
16 focus on at least the following components:
17(1)       Provide a training program to educatorseducators, principals, and
18administrators working with children in the NC Pre-K program to ensure
19developmentally appropriate instruction grounded in the Science of Reading
20and outcomes promoting reading achievement in students. Any principal who
21supervises educators who undergo this training shall also complete the
22training themselves. The Department of Public Instruction shall utilize a third-
23party independent teacher training program to deliver professional
24development that demonstrates evidence-based success with educators
25educators, principals, and administrators in establishing deep knowledge of
26literacy instruction.
27…."
28SECTION 7.5.(c) Allotment. – To the extent funds are made available for this
29 purpose, the Department of Public Instruction shall use funds appropriated in this act to contract
30 with Lexia Learning to provide Lexia Aspire® Professional Learning to all English-Language
31 Arts, Math, Science and Social Studies teachers in sixth, seventh, and eighth grades.
32
33 EXPAND USE OF DIAGNOSTIC READING ASSESSMENTS TO GRADES 4-5
34SECTION 7.6.(a) G.S. 115C-83.3 reads as rewritten:
35 "§ 115C-83.3. Definitions.
36     The following definitions apply in this Part:
37(1)    "Accelerated reading class" means a class where focused literacy
38interventions are provided to increase a student's reading level at least two
39grades in one school year.
40(2)    "Alternative assessment" means a valid and reliable standardized assessment
41of reading comprehension, approved by the State Board of Education, that is
42not the same test as the State-approved standardized test of reading
43comprehension administered to third grade students. The State Board of
44Education shall provide the valid and reliable alternative assessment to local
45school administrative units public school units upon request and establish
46achievement level ranges for the approved alternative assessment. The State
47Board of Education shall annually review the alternative assessment to ensure
48ongoing relevance, validity, and reliability.
49…."
50SECTION 7.6.(b) G.S. 115C-83.6 reads as rewritten:
51 "§ 115C-83.6. Facilitating early grade reading proficiency.
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 General Assembly Of North Carolina  Session 2025
1      (a)    Kindergarten, first, second, and third through fifth grade students shall be assessed
2 with valid, reliable, formative, and diagnostic reading assessments made available to local school
3 administrative units public school units by the State Board of Education pursuant to G.S. 115C-
4 174.11(a). Difficulty with reading development identified through administration of formative
5 and diagnostic assessments shall be addressed with literacy interventions outlined in the student's
6 Individual Reading Plan. Parents or guardians of first and second grade students offered a reading
7 camp as a literacy intervention shall be encouraged to enroll their student in the reading camp
8 provided by the local school administrative unit. Parents or guardians of a student identified as
9 demonstrating reading comprehension below grade level shall make the final decision regarding
10 a student's reading camp attendance.
11      …
12      (a2) The Department of Public Instruction shall provide for EVAAS analysis all formative
13 and diagnostic assessment data collected pursuant to this section for kindergarten through third
14 fifth grade. The Department shall use a uniform template for all data collected, and the template
15 shall be used each time data is provided. The template shall include clear designations for each
16 data component reported.
17      …."
18SECTION 7.6.(c) G.S. 115C-83.6B reads as rewritten:
19 "§ 115C-83.6B. Individual Reading Plans.
20      (a)    An Individual Reading Plan (IRP) shall be developed for any student in kindergarten
21 through third fifth grade demonstrating difficulty with reading development based on the results
22 of either (i) the first diagnostic or formative assessment of the school year or (ii) the first
23 diagnostic or formative assessment of the second semester of the school year. The IRP shall be
24 continually adjusted based on multiple data sources as prescribed by the Department of Public
25 Instruction, indicating that the student is not progressing toward grade-level standards in one or
26 more major reading areas. Based on the most recently collected data, the IRP shall include the
27 following information, specific to the identified student:
28(1)     The specific reading skill deficiencies identified by assessment data.
29(2)     Goals and benchmarks for growth.
30(3)     The means by which progress will be monitored and evaluated.
31(4)     The specific additional literacy interventions the student will receive.
32(5)     The Science of Reading-based instructional programming the teacher will
33implement.
34(6)     Any additional services the teacher deems appropriate to accelerate the
35student's reading skill and development.
36      …."
37
38 SCHOOL PERFORMANCE GRADE REDESIGN
39SECTION 7.7.(a) Program Established; Purpose. – There is established the School
40 Performance Grade Redesign Pilot Program (Program) for the 2026-2027 and 2027-2028 fiscal
41 years. The Program shall be composed of a small group of school units and expanded to all K-12
42 schools receiving public funds in the 2028-29 school year. The purpose of the Program is to
43 improve the school performance grade process to provide more transparent and comprehensive
44 information about school performance to parents, students, and administrators. School
45 performance grades will continue to be issued pursuant to G.S. 115C-83.15 during the pilot
46 program.
47SECTION 7.7.(b) School Performance Grade Criteria. – The Department of Public
48 Instruction shall develop and publish criteria to be used for school performance grades in the
49 Program.
50SECTION 7.7.(c) Application for Program. – Public school units interested in
51 participating in the Program shall notify the Department, and the Department shall establish a
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 General Assembly Of North Carolina  Session 2025
1 process for selecting schools to participate. The Department shall select one charter school, one
2 local school administrative unit, and one private school that receives state funds to participate in
3 the Program from each State Board of Education region, balancing characteristics of the school
4 units to represent the diversity of the State.
5SECTION 7.7.(d) Interim Reporting. – Each school unit participating in the Program
6 shall report to the Department on the criteria developed pursuant to subsection (b) of this section
7 by the deadline established by the Department.
8SECTION 7.7.(e) Department Reporting. – The Department shall report to the Joint
9 Legislative Oversight Committee and the Office of State Budget and Management by November
10 1, 2027, on the status and progress of the Program. A copy of the report shall be distributed to all
11 local superintendents and principals in public school units participating in the Program. The
12 report shall include at least the following:
13(1)     Any difficulties in collecting data or information required by the Program.
14(2)     Any recommended changes to the Program.
15(3)     Any other information the Department deems relevant to the performance of
16the Program.
17(4)     Any other information requested by the committee.
18SECTION 7.7.(f) Statewide Expansion of the Program. – Beginning with the
19 2028-29 school year, the Program shall be expanded to all K-12 schools in the State that receive
20 public funds. All participating schools shall provide the information required by the Program.
21SECTION 7.7.(g) Final Reporting. – Each participating school unit, as part of the
22 Program, shall report to the Department on the criteria developed pursuant to subsection (a) of
23 Section 2 of this act by the deadline established by the Department.
24SECTION 7.7.(h) Final Department Reporting. – The Department shall submit a
25 final report to the Joint Legislative Oversight Committee by June 30, 2029, on the outcomes of
26 the Program. A copy of the report shall be distributed to local superintendents and principals in
27 all participating schools. The report shall include at least the following:
28(1)     Any continued difficulties in collecting data or information required by the
29Program.
30(2)     Any recommended changes to the criteria developed by the Program.
31(3)     Any other information the Department deems relevant to the performance of
32the Program.
33(4)     The model and scale that the Department would use to assign school
34performance grades from the criteria developed for the Program.
35(5)     Any recommended legislation for implementing the Program permanently to
36replace the existing school performance grade system.
37(6)     Any other information requested by the committee.
38SECTION 7.7.(i) Intention of General Assembly. – It is the intention of the General
39 Assembly that after any statutory changes made pursuant to subsection (h) of this section, school
40 performance measures be issued that are based on the results of the pilot, that more heavily
41 weight growth than the current score, and that comply with federal requirements, including those
42 in the Every Student Succeeds Act.
43
44 FUND VIRTUAL CHARTER SCHOOLS AT STATEWIDE AVERAGE PER-PUPIL
45   FUNDING
46SECTION 7.8. G.S. 115C-218.105 reads as rewritten:
47   "(a) The State Board of Education shall allocate to each charter school:
48(1)    An amount equal to to:
49a.     Except for charter schools approved to operate pursuant to G.S. 115C-
50218-120(b)(1), the average per pupil allocation for average daily
51membership from the local school administrative unit allotments in
 Page 24  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1which the charter school is located for each child attending the charter
2school except for the allocation for children with disabilities and for
3the     allocation    for     children     with     limited     English
4proficiency.proficiency;
5b.      For charter schools approved to operate pursuant to G.S. 115C-218-
6120(b)(1), the average State per pupil allocation for average daily
7membership for each child attending the charter school except for the
8allocation for children with disabilities and for the allocation for
9children with limited English proficiency.
10…."
11
12 ELIMINATE TRANSPORTATION FUNDING FOR VIRTUAL CHARTER SCHOOL
13SECTION 7.9. G.S. 115C-218.105 reads as rewritten:
14     "…
15     (a1) The State Board shall not withhold or reduce distribution of funds to a charter school
16 for any reason except as provided in subsection (a2) of this section.
17     (a2) The State Board shall withhold or reduce distribution of funds to a charter school if
18 any of the following applies:
19(1)    The change in funding is due to an annual adjustment based on enrollment or
20is a general adjustment to allocations that is not specific to the charter or
21actions of that charter school.
22(2)    The Review Board notifies the State Board that the charter school has
23materially violated a term of its charter, has violated a State statute or federal
24law, or has had its charter terminated or nonrenewed.
25(3)    The Review Board notifies the State Board that the charter school has failed
26to meet generally accepted standards of fiscal management or has violated a
27State or federal requirement for receipt of funds.
28     (a3) The State Board shall not provide transportation funds to virtual charter schools or
29 remote charter academies for students who attend exclusively online.
30     …."
31
32 INCREASE SUPPORT FOR PUBLIC SCHOOL CAPITAL IMPROVEMENTS
33SECTION 7.10. G.S. 115C-546.2 reads as rewritten:
34     "…
35     (e)     The State Board of Education may use up to two million dollars ($2,000,000) two
36 million five hundred thousand dollars ($2,500,000) each year of monies in the Fund to support
37 positions in the Department of Public Instruction's Support Services Division.
38     …."
39
40 INCREASE PARTICIPATION IN COMMUNITY ELIGIBILITY PROVISION MEAL
41     PROGRAM
42SECTION 7.11.(a) Part 2 of Article 17 of Chapter 115C of the General Statutes is
43 amended by adding a new section to read:
44 "§ 115C-264.6. CEP Meal Incentive Program.
45     (a)   Definitions. – The following definitions apply to this section:
46(1)     CEP. – Community Eligibility Provision.
47(2)     Department. – Department of Public Instruction.
48(3)     Eligible unit. – A local school administrative unit, school within a local school
49administrative unit, regional school, or charter school that meets all of the
50following:
51a.      Qualifies for the federal CEP program.
 House Bill 1146-First Edition  Page 25
 General Assembly Of North Carolina  Session 2025
1b.        Did not participate in the federal CEP program in the 2025-2026 fiscal
2year.
3(4)     ISP. – Identified Student Percentage.
4(5)     Participating school. – A school participating in the Program.
5(6)     Participating unit. – An eligible unit selected to participate in the Program.
6(7)     Program. – The CEP Meal Incentive Program established pursuant to this
7section.
8      (b)     Program; Purpose. – The Department shall establish the Program to expand public
9 school participation in the federal CEP program to increase the number of students with access
10 to healthy, cost-free school breakfast and lunch. In each year where funds are made available for
11 this purpose, the Program shall be administered in accordance with the provisions of this section.
12      (c)     Application. – By April 15 of each year of the Program, the Department shall develop
13 the application for the Program and make it available to eligible units. To be considered for
14 selection for the Program, eligible units shall submit their applications by June 1 of each year. At
15 a minimum, the application shall include the following information:
16(1)     The school or schools that will participate in the CEP program.
17(2)     The ISP for the school or schools for the current school year.
18(3)     The number of students enrolled in the school or schools for the current school
19year.
20(4)     Participation rates in the National School Breakfast and Lunch programs for
21the current school year for the schools requesting to receive the incentive.
22      (d)     Selection. – By July 15 of each year of the Program, the Department shall determine
23 whether each applicant is eligible to participate. The Department shall then award grants to all
24 eligible units that apply. If there are insufficient funds to award grants to all eligible units that
25 apply, the Department shall first prioritize awarding grants to eligible units with an ISP of greater
26 than or equal to fifty-five percent (55%) and then prioritize awarding grants to those schools that
27 will draw the greatest federal match.
28      (e)     Grants. – The Department shall issue State reimbursements to participating units to
29 supplement federal reimbursements of school meals. State reimbursements shall equal the
30 difference between the federal free rate and the federal paid rate for the number of meals served
31 at the participating schools equal to a 0.2 multiplier of the ISP for the participating schools. State
32 and federal reimbursements shall not exceed one hundred percent (100%) of the federal free rate
33 of meals served. Participating schools shall have an innovative breakfast option available where
34 students have access to breakfast and are allowed to consume breakfast in the classroom.
35      (f)     Nonsupplant Requirement. – A participating unit shall use the funds to supplement
36 and not supplant local current expense funds.
37      (g)     Report. – No later than January 1 of each year of the Program, the Department shall
38 report to the Joint Legislative Education Oversight Committee and the Fiscal Research Division
39 at least the following information:
40(1)     The number of participating schools.
41(2)     The number of students who received free meals who would not have
42otherwise received free meals had the participating school not utilized the
43incentive.
44(3)     The amount of federal and State money participating units received.
45(4)     Any increase in student success due to the participating school's utilization of
46the incentive and participation in the Program.
47      (h)     Administration. – The Department may use up to five hundred thousand dollars
48 ($500,000) of the funds appropriated for the Program for administrative costs."
49SECTION 7.11.(b) Section 7.59 of S.L. 2023-134 is repealed.
50SECTION 7.11.(c) This section becomes effective July 1, 2026.
51
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 General Assembly Of North Carolina  Session 2025
1 PART VII-A. COMPENSATION OF PUBLIC SCHOOL EMPLOYEES
2
3 TEACHER SALARY SCHEDULE
4SECTION 7A.1.(a) The following monthly teacher salary schedule shall apply for
5 the 2025-26 fiscal year to licensed personnel of the public schools who are classified as teachers.
6 The salary schedule is based on years of teaching experience.
7 2025-2026 Teacher Monthly Salary Schedule
8Years of Experience  "A" Teachers
90  4,630
101  4,690
112  4,750
123  4,810
134  4,870
145  4,930
156  4,990
167  5,050
178  5,110
189  5,170
1910  5,230
2011  5,290
2112  5,350
2213  5,410
2314  5,470
2415  5,520
2516  5,520
2617  5,520
2718  5,580
2819  5,580
2920  5,580
3021  5,640
3122  5,640
3223  5,640
3324  5,730
3425+  5,730
35SECTION 7A.1.(b) The following monthly teacher salary schedule shall apply for
36 the 2026-2027 fiscal year to licensed personnel of the public schools who are classified as
37 teachers. The salary schedule is based on years of teaching experience.
38 2026-2027 Teacher Monthly Salary Schedule
39Years of Experience  "A" Teachers
400  5,312
411  5,332
422  5,355
433  5,378
444  5,401
455  5,424
466  5,447
477  5,470
488  5,493
499  5,516
5010  5,539
5111  5,562
 House Bill 1146-First Edition  Page 27
 General Assembly Of North Carolina  Session 2025
112  5,585
213  5,608
314  5,631
415  5,654
516  5,677
617  5,700
718  5,723
819  5,746
920  5,769
1021  5,792
1122  5,815
1223  5,838
1324  5,861
1425+  5,875
15SECTION 7A.1.(c) Salary Supplements for Teachers Paid on This Salary Schedule.
16(1)    Licensed teachers who have NBPTS certification shall receive a salary
17supplement each month of twelve percent (12%) of their monthly salary on
18the "A" salary schedule.
19(2)    Licensed teachers who are classified as "M" teachers shall receive a salary
20supplement each month of ten percent (10%) of their monthly salary on the
21"A" salary schedule.
22(3)    Licensed teachers with licensure based on academic preparation at the
23six-year degree level shall receive a salary supplement of one hundred
24twenty-six dollars ($126.00) per month in addition to the supplement
25provided to them as "M" teachers.
26(4)    Licensed teachers with licensure based on academic preparation at the
27doctoral degree level shall receive a salary supplement of two hundred
28fifty-three dollars ($253.00) per month in addition to the supplement provided
29to them as "M" teachers.
30(5)    Certified school nurses shall receive a salary supplement each month of ten
31percent (10%) of their monthly salary on the "A" salary schedule.
32(6)    School counselors who are licensed as counselors at the master's degree level
33or higher shall receive a salary supplement each month of one hundred dollars
34($100.00).
35SECTION 7A.1.(d) For school psychologists, school speech pathologists who are
36 licensed as speech pathologists at the master's degree level or higher, and school audiologists
37 who are licensed as audiologists at the master's degree level or higher, the following shall apply:
38(1)    The first step of the salary schedule shall be equivalent to the sixth step of the
39"A" salary schedule.
40(2)    These employees shall receive the following salary supplements each month:
41a.       Ten percent (10%) of their monthly salary, excluding the supplement
42provided pursuant to sub-subdivision b. of this subdivision.
43b.       Three hundred fifty dollars ($350.00).
44(3)    These employees are eligible to receive salary supplements equivalent to those
45of teachers for academic preparation at the six-year degree level or the
46doctoral degree level.
47(4)    The twenty-sixth step of the salary schedule shall be seven and one-half
48percent (7.5%) higher than the salary received by these same employees on
49the twenty-fifth step of the salary schedule.
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 General Assembly Of North Carolina  Session 2025
1SECTION 7A.1.(e) Beginning with the 2014-2015 fiscal year, in lieu of providing
2 annual longevity payments to teachers paid on the teacher salary schedule, the amounts of those
3 longevity payments are included in the monthly amounts under the teacher salary schedule.
4SECTION 7A.1.(f) A teacher compensated in accordance with this salary schedule
5 for the 2025-26 and 2026-27 school years shall receive an amount equal to the greater of the
6 following:
7(1)    The applicable amount on the salary schedule for the applicable school year.
8(2)    For teachers who were eligible for longevity for the 2013-2014 school year,
9the sum of the following:
10a.      The salary the teacher received in the 2013-2014 school year pursuant
11to Section 35.11 of S.L. 2013-360.
12b.      The longevity that the teacher would have received under the longevity
13system in effect for the 2013-2014 school year provided in Section
1435.11 of S.L. 2013-360 based on the teacher's current years of service.
15c.      The annual bonus provided in Section 9.1(e) of S.L. 2014-100.
16(3)    For teachers who were not eligible for longevity for the 2013-2014 school
17year, the sum of the salary and annual bonus the teacher received in the
182014-2015 school year pursuant to Section 9.1 of S.L. 2014-100.
19SECTION 7A.1.(g) As used in this section, the term "teacher" shall also include
20 instructional support personnel.
21
22 RESTORE MASTER'S PAY
23SECTION 7A.2.(a) The following session laws are repealed:
24(1)   Section 8.22 of S.L. 2013-360.
25(2)   Section 8.3 of S.L. 2014-100.
26SECTION 7A.2.(b) G.S. 115C-302.10 reads as rewritten:
27 "§ 115C-302.10. Qualifications for certain education-based salary supplements.
28     (a)     Notwithstanding any other provision of law, only the following teachers and
29 instructional support personnel shall be paid on the "M" salary schedule or receive a salary
30 supplement for academic preparation at the six-year degree level or at the doctoral degree level:
31(1)   Certified school nurses and instructional support personnel in positions for
32which a master's degree is required for licensure.
33(2)   Teachers and instructional support personnel who were paid on the "M" salary
34schedule or received that salary supplement prior to the 2014-15 school year.
35(3)   Teachers and instructional support personnel who (i) complete a degree at the
36master's, six-year, or doctoral degree level for which they completed at least
37one course prior to August 1, 2013, and (ii) would have qualified for the salary
38supplement pursuant to State Board of Education policy, TCPA006, as it was
39in effect on June 30, 2013.
40(4)   Teachers who do not qualify under subdivisions (1), (2), and (3) of this section
41but who spend at least seventy percent (70%) of their time as follows:
42a.      For teachers, in classroom instruction related to their graduate
43academic preparation in their field or subject area within their area of
44licensure. Most of the teachers' remaining time shall be spent in one or
45more of the following:
461.      Mentoring teachers.
472.      Performing demonstration lessons for teachers.
483.      Writing curricula.
494.      Developing and leading staff development programs for
50teachers.
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1b.      For instructional support personnel, performing work within the
2employee's area of graduate academic preparation.
3     (b)     Beginning with the 2025-2026 fiscal year and in subsequent fiscal years, for teachers
4 who are paid on the "M" salary schedule under subdivision (4) of subsection (a) of this act,
5 determination of whether teachers shall be paid on the "M" salary schedule or receive a salary
6 supplement for academic preparation shall take place on an annual basis. Teachers may be moved
7 off the "M" salary schedule or discontinue receiving salary supplements if they are not meeting
8 the requirements of subdivision (4) of subsection (a) of this act in that year.
9     (c)     Unless an individual otherwise qualifies under subdivision (2) or (3) of subsection (a)
10 of this section, teachers and instructional support personnel who earn an advanced degree in
11 school administration shall not be paid on the "M" salary schedule or receive a salary supplement
12 for academic preparation."
13
14 CONSOLIDATED TEACHER BONUS PROGRAM
15SECTION 7A.3.(a) Establish Consolidated Bonus Program. – The State Board of
16 Education shall establish a consolidated teacher bonus program for the 2025-2027 fiscal
17 biennium to reward teacher performance and encourage student learning and improvement. To
18 attain this goal, the Department of Public Instruction shall administer bonus pay to qualifying
19 teachers whose salaries are supported from State funds in January of 2026 and 2027, based on
20 data from the 2024-2025 and 2025-2026 school years, respectively, in accordance with this
21 section.
22SECTION 7A.3.(b) Definitions. – For purposes of this section, the following
23 definitions shall apply:
24(1)     Eligible advanced course teacher. – A teacher of Advanced Placement
25courses, International Baccalaureate Diploma Programme courses, or the
26Cambridge Advanced International Certificate of Education (AICE) program
27who meets the following criteria:
28a.       Is employed by, or retired having last held a position at, one or more
29of the following:
301.       A qualifying public school unit.
312.       The North Carolina Virtual Public School program.
32b.       Taught one or more students who received a score listed in subsection
33(c) of this section.
34(2)     Eligible career and technical education (CTE) teacher. – A teacher who meets
35the following criteria:
36a.       Is employed by, or retired having last held a position at, a qualifying
37public school unit.
38b.       Taught one or more students who attained approved industry
39certifications or credentials consistent with G.S. 115C-156.2.
40(3)     Eligible growth teacher. – A teacher who meets at least one of the following
41criteria:
42a.       Is employed by, or retired having last held a position at, a qualifying
43public school unit and meets one of the following criteria:
441.       Is in the top twenty-five percent (25%) of teachers in the State
45according to the EVAAS student growth index score for third
46grade reading from the previous school year.
472.       Is in the top twenty-five percent (25%) of teachers in the State
48according to the EVAAS student growth index score for fourth
49or fifth grade reading from the previous school year.
503.       Is in the top twenty-five percent (25%) of teachers in the State
51according to the EVAAS student growth index score for fourth,
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1fifth, sixth, seventh, or eighth grade mathematics from the
2previous school year.
3b.       Is employed by, or retired having last held a position at, a local school
4administrative unit and meets one of the following criteria:
51.      Is in the top twenty-five percent (25%) of teachers in the
6teacher's respective local school administrative unit according
7to the EVAAS student growth index score for third grade
8reading from the previous school year.
92.      Is in the top twenty-five percent (25%) of teachers in the
10teacher's respective local school administrative unit according
11to the EVAAS student growth index score for fourth or fifth
12grade reading from the previous school year.
133.      Is in the top twenty-five percent (25%) of teachers in the
14teacher's respective local school administrative unit according
15to the EVAAS student growth index score for fourth, fifth,
16sixth, seventh, or eighth grade mathematics from the previous
17school year.
18c.       Was employed by a local school administrative unit that employed in
19the previous school year three or fewer total teachers in that teacher's
20grade level as long as the teacher has an EVAAS student growth index
21score from the previous school year of exceeded expected growth in
22one of the following subject areas:
231.      Third grade reading.
242.      Fourth or fifth grade reading.
253.      Fourth, fifth, sixth, seventh, or eighth grade mathematics.
26(4)     EVAAS. – The Education Value-Added Assessment System.
27(5)     Qualifying public school unit. – Any of the following:
28a.       A local school administrative unit.
29b.       A charter school.
30c.       A regional school.
31d.       A school providing elementary or secondary instruction operated by
32The University of North Carolina under Article 29A of Chapter 116 of
33the General Statutes.
34(6)     Qualifying teacher. – An eligible teacher who meets one of the following
35criteria:
36a.       Remains employed teaching in the same qualifying public school unit,
37or, if an eligible advanced course teacher is only employed by the
38North Carolina Virtual Public School program, remains employed
39teaching in that program, at least from the school year the data is
40collected until January 1 of the corresponding school year that the
41bonus is paid.
42b.       Retired, between the last day of the school year in which the data is
43collected and January 1 of the corresponding school year in which the
44bonus is paid, after attaining one of the following:
451.      The age of at least 65 with five years of creditable service.
462.      The age of at least 60 with 25 years of creditable service.
473.      Thirty years of creditable service.
48SECTION 7A.3.(c) Advanced Course Bonuses. – A bonus in the amount of fifty
49 dollars ($50.00) shall be provided to qualifying advanced course teachers for each student taught
50 in each advanced course who receives the following score:
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1(1)     For Advanced Placement courses, a score of three or higher on the College
2Board Advanced Placement Examination.
3(2)    For International Baccalaureate Diploma Programme courses, a score of four
4or higher on the International Baccalaureate course examination.
5(3)    For the Cambridge AICE program, a score of "E" or higher on the Cambridge
6AICE program examinations.
7SECTION 7A.3.(d) CTE Bonuses. – For qualifying career and technical education
8 teachers, bonuses shall be provided in the following amounts:
9(1)    A bonus in the amount of twenty-five dollars ($25.00) for each student taught
10by a teacher who provided instruction in a course that led to the attainment of
11an industry certification or credential with a twenty-five dollar ($25.00) value
12ranking as determined under subsection (e) of this section.
13(2)    A bonus in the amount of fifty dollars ($50.00) for each student taught by a
14teacher who provided instruction in a course that led to the attainment of an
15industry certification or credential with a fifty dollar ($50.00) value ranking
16as determined under subsection (e) of this section.
17SECTION 7A.3.(e) CTE Course Value Ranking. – The Department of Commerce,
18 in consultation with the State Board, shall assign a value ranking for each industry certification
19 and credential based on academic rigor and employment value in accordance with this subsection.
20 Fifty percent (50%) of the ranking shall be based on academic rigor and the remaining fifty
21 percent (50%) on employment value. Academic rigor and employment value shall be based on
22 the following elements:
23(1)    Academic rigor shall be based on the number of instructional hours, including
24work experience or internship hours, required to earn the industry certification
25or credential, with extra weight given for coursework that also provides
26community college credit.
27(2)    Employment value shall be based on the entry wage, growth rate in
28employment for each occupational category, and average annual openings for
29the primary occupation linked with the industry certification or credential.
30SECTION 7A.3.(f) Statewide Growth Bonuses. – Of the funds appropriated in this
31 act for the program, bonuses shall be provided to qualifying teachers who are eligible teachers
32 under sub-subdivision a. of subdivision (3) of subsection (b) of this section, as follows:
33(1)    The sum of five million dollars ($5,000,000) shall be allocated for bonuses to
34eligible teachers under sub-sub-subdivision a.1. of subdivision (3) of
35subsection (b) of this section. These funds shall be distributed equally among
36qualifying teachers.
37(2)    A bonus in the amount of two thousand dollars ($2,000) shall be awarded to
38each qualifying teacher who is an eligible teacher under sub-sub-subdivision
39a.2. of subdivision (3) of subsection (b) of this section.
40(3)    A bonus in the amount of two thousand dollars ($2,000) shall be awarded to
41each qualifying teacher who is an eligible teacher under sub-sub-subdivision
42a.3. of subdivision (3) of subsection (b) of this section.
43SECTION 7A.3.(g) Local Growth Bonuses. – Of the funds appropriated in this act
44 for the program, bonuses shall be provided to eligible teachers under sub-subdivisions b. and c.
45 of subdivision (3) of subsection (b) of this section, as follows:
46(1)    The sum of five million dollars ($5,000,000) shall be allocated for bonuses to
47eligible EVAAS teachers under sub-sub-subdivisions b.1. and c.1. of
48subdivision (3) of subsection (b) of this section. These funds shall be divided
49proportionally based on average daily membership in third grade for each
50local school administrative unit and then distributed equally among qualifying
51third grade reading teachers in each local school administrative unit.
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1(2)       A bonus in the amount of two thousand dollars ($2,000) shall be awarded to
2each qualifying teacher who is an eligible teacher under sub-sub-subdivision
3b.2. or c.2. of subdivision (3) of subsection (b) of this section.
4(3)     A bonus in the amount of two thousand dollars ($2,000) shall be awarded to
5each qualifying teacher who is an eligible teacher under sub-sub-subdivision
6b.3. or c.3. of subdivision (3) of subsection (b) of this section.
7SECTION 7A.3.(h) Limitations and Other Criteria. – The following additional
8 limitations and other criteria shall apply to the program:
9(1)     Bonus funds awarded to a teacher pursuant to subsection (c), subsection (d),
10subdivision (1) of subsection (f), and subdivision (1) of subsection (g) of this
11section shall not exceed three thousand five hundred dollars ($3,500) per
12subsection or subdivision in any given school year.
13(2)     A qualifying teacher who is an eligible teacher under sub-sub-subdivision a.1.,
14b.1., or c.1. of subdivision (3) of subsection (b) of this section may receive a
15bonus under both subdivision (1) of subsection (f) and subdivision (1) of
16subsection (g) of this section but shall not receive more than seven thousand
17dollars ($7,000) pursuant to subdivision (1) of subsection (f) and subdivision
18(1) of subsection (g) of this section in any given school year.
19(3)     A qualifying teacher who is an eligible teacher under sub-sub-subdivision a.2.,
20b.2., or c.2. of subdivision (3) of subsection (b) of this section may receive a
21bonus under both subdivision (2) of subsection (f) and subdivision (2) of
22subsection (g) of this section but shall not receive more than two bonuses
23pursuant to subdivision (2) of subsection (f) and subdivision (2) of subsection
24(g) of this section in any given school year.
25(4)     A qualifying teacher who is an eligible teacher under sub-sub-subdivision a.3.,
26b.3., or c.3. of subdivision (3) of subsection (b) of this section may receive a
27bonus under both subdivision (3) of subsection (f) and subdivision (3) of
28subsection (g) of this section but shall not receive more than two bonuses
29pursuant to subdivision (3) of subsection (f) and subdivision (3) of subsection
30(g) of this section in any given school year.
31SECTION 7A.3.(i) Bonuses Not Compensation. – Bonuses awarded to a teacher
32 pursuant to this section shall be in addition to any regular wage or other bonus the teacher receives
33 or is scheduled to receive. Notwithstanding G.S. 135-1(7a), the bonuses awarded under this
34 section are not compensation under Article 1 of Chapter 135 of the General Statutes, Retirement
35 System for Teachers and State Employees.
36SECTION 7A.3.(j) Study and Report. – The State Board of Education shall study
37 the effect of the program on teacher performance and retention. The State Board shall report the
38 results of its findings and the amount of bonuses awarded to the President Pro Tempore of the
39 Senate, the Speaker of the House of Representatives, the Joint Legislative Education Oversight
40 Committee, the Office of State Budget and Management, and the Fiscal Research Division by
41 March 15 of each year of the 2025-2027 fiscal biennium. The report shall include, at a minimum,
42 the following information:
43(1)     Number of students enrolled and taking examinations in each of the following
44categories of courses:
45a.       Advanced Placement.
46b.       International Baccalaureate Diploma Programme.
47c.       Cambridge AICE program.
48d.       Courses needed for the attainment of an industry certification or
49credential.
 House Bill 1146-First Edition  Page 33
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1(2)    Number of students receiving outcomes on examinations resulting in the
2award of a bonus for a teacher in each category of courses identified in
3sub-subdivision a. of subdivision (1) of this subsection.
4(3)    Number of teachers receiving a bonus in each category of courses identified
5in sub-subdivision a. of subdivision (1) of this subsection.
6(4)    The amounts awarded to teachers for each category of courses identified in
7sub-subdivision a. of subdivision (1) of this subsection.
8(5)    The type of industry certifications and credentials earned by the students, the
9value ranking for each certification and credential, the number of bonuses
10earned for each certification or credential, and the total bonus amount awarded
11for each certification or credential.
12(6)    Average bonus amount awarded to each qualifying teacher who is an eligible
13teacher under sub-sub-subdivision a.1., b.1., or c.1. of subdivision (3) of
14subsection (b) of this section.
15(7)    The percentage of teachers who received a bonus pursuant to this section and
16were eligible to receive a bonus for teaching in the same grade level or course
17in January 2026 or January 2027, or both, where applicable, pursuant to one
18of the following programs:
19a.      The Advanced Course and CTE Bonus Program provided in Section
207A.4 of S.L. 2021-180.
21b.      The Growth-Based Teacher Bonus Program provided in Section 7A.2
22of S.L. of 2022-74.
23(8)    The percentage of teachers who received a bonus pursuant to this section and
24received a bonus for teaching in the same grade level or course in either
25January 2026 or January 2027 pursuant to one of the programs listed in
26subdivision (7) of this subsection.
27(9)    The percentage of teachers who received a bonus pursuant to this section and
28received a bonus for teaching in the same grade level or course in January
292026 or January 2027, or both, where applicable, pursuant to one of the
30programs listed subdivision (7) of this subsection.
31(10)   The statistical relationship between a teacher receiving a bonus in January
322026 or 2027 pursuant to this section and receiving a bonus pursuant to a
33predecessor bonus program. For purposes of this subdivision, the following
34are predecessor programs:
35a.      Bonuses awarded pursuant to Section 7A.4(c) of S.L. 2021-180 are
36predecessors to bonuses awarded pursuant to subsection (c) of this
37section.
38b.      Bonuses awarded pursuant to Section 7A.4(d) of S.L. 2021-180 are
39predecessors to bonuses awarded pursuant to subsection (d) of this
40section.
41c.      Bonuses awarded pursuant to subdivision (1) of subsection (c) and
42subdivision (1) of subsection (d) of Section 7A.2 of S.L. 2022-74 are
43predecessors to bonuses awarded pursuant to subdivision (1) of
44subsection (f) and subdivision (1) of subsection (g) of this section.
45d.      Bonuses awarded pursuant to subdivision (2) of subsection (c) and
46subdivision (2) of subsection (d) of Section 7A.2 of S.L. 2022-74 are
47predecessors to bonuses awarded pursuant to subdivision (2) of
48subsection (f) and subdivision (2) of subsection (g) of this section.
49e.      Bonuses awarded pursuant to subdivision (c)(3) and subdivision (d)(3)
50of Section 7A.2 of S.L. 2022-74 are predecessors to bonuses awarded
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1pursuant to subdivision (3) of subsection (f) and subdivision (3) of
2subsection (g) of this section.
3(11)    The distribution of statewide and local growth bonuses awarded pursuant to
4this section as among qualifying public school units and, where applicable,
5schools within those units.
6
7 SUPPLEMENTAL FUNDS FOR TEACHER COMPENSATION
8SECTION 7A.4.(a) Use of Funds. – For each year of the 2025-2027 fiscal biennium,
9 except as provided in subsection (f1) of this section, the State Board of Education shall allocate
10 funds pursuant to this section to eligible local school administrative units to provide salary
11 supplements to teachers and qualifying school administrators in those units. Allocation of salary
12 supplements among teachers and qualifying school administrators within each eligible local
13 school administrative unit, including whether a teacher or qualifying school administrator
14 receives a salary supplement and the amount of the supplement provided to that person, shall be
15 determined in the discretion of the local board of education of the eligible unit, except that no
16 individual salary supplement shall exceed the per teacher funding amount awarded to that unit
17 pursuant to subdivision (4) of subsection (c) of this section.
18SECTION 7A.4.(b) Definitions. – As used in this section, the following definitions
19 shall apply:
20(1)     Adjusted market value of taxable real property. – A county's assessed taxable
21real property value, using the latest available data published by the
22Department of Revenue, divided by the county's sales assessment ratio
23determined under G.S. 105-289(h).
24(2)     Composite value. – For each eligible county, the sum of the following:
25a.      The taxable real property factor multiplied by sixty-five percent
26(65%).
27b.      The median household income factor multiplied by twenty-five
28percent (25%).
29c.      The effective tax rate factor multiplied by ten percent (10%).
30(3)     County allocation factor. – For each eligible county, the supplement factor for
31that county divided by the sum of all supplement factors for the State.
32(4)     Effective tax rate. – The actual county tax rate multiplied by the most recent
33annual sales assessment ratio for that county.
34(5)     Effective tax rate factor. – For each eligible county, the effective tax rate for
35that county divided by the median effective tax rate in the State.
36(6)     Eligible county. – A county that has an adjusted market value of taxable real
37property of less than fifty billion nine hundred million dollars
38($50,900,000,000).
39(7)     Eligible local school administrative unit. – A local school administrative unit
40located in whole or in part in an eligible county.
41(8)     Eligible school. – A public school that is located in an eligible county and
42governed by a local school administrative unit.
43(9)     Maintenance of effort amount. – For each local school administrative unit in
44each fiscal year, the supplant factor multiplied by the total State and non-State
45funds expended for salaries for teachers from the fiscal year for which the
46most recent salary data are available.
47(10) Median household income. – A county's median household income for the
48most recent 12 months for which data are available, as that term is used in
49G.S. 143B-437.08.
 House Bill 1146-First Edition  Page 35
 General Assembly Of North Carolina  Session 2025
1(11)    Median household income factor. – For each eligible county, the median
2household income in the State divided by the median household income for
3that county.
4(12) Non-State funds. – Any funds held by a local school administrative unit, other
5than nonrecurring federal funds received as a result of legislation enacted by
6Congress in response to COVID19, that are not State funds.
7(13) Qualifying school administrator. – Any of the following:
8a.       Assistant principals paid pursuant to G.S. 115C-285(a)(8).
9b.       Principals paid pursuant to G.S. 115C-285(a)(8a).
10(14) Supplant factor. – For each local school administrative unit in each fiscal year
11of the fiscal biennium, the total non-State funds expended for salary
12supplements for teachers in the 2020-2021 fiscal year divided by the total
13State and non-State funds expended for salaries for teachers in the 2020-2021
14fiscal year.
15(15) Supplement factor. – For each eligible county, the composite value multiplied
16by the number of State-funded teachers employed in a school in the county
17that is governed by a local school administrative unit.
18(16) Taxable real property factor. – For each eligible county, the median adjusted
19market value of taxable real property in the State divided by the adjusted
20market value of taxable real property for that county.
21(17) Teacher. – Teachers and instructional support personnel.
22SECTION 7A.4.(c) Allocation of Funds. – The State Board of Education shall
23 allocate funds for salary supplements to eligible local school administrative units according to
24 the following procedure:
25(1)     County allocation. – For each eligible county, the State Board shall determine
26a county allocation by multiplying the county allocation factor for that county
27by the funding amount appropriated pursuant to this section for the applicable
28fiscal year.
29(2)     Per teacher funding amount. – For each eligible county, the State Board shall
30determine a per teacher funding amount by dividing the county allocation
31amounts determined pursuant to subdivision (1) of this subsection by the total
32number of State-funded teachers employed in all eligible schools in that
33county.
34(3)     Unit funding amount. – For each eligible local school administrative unit, the
35State Board shall determine the funding amount for that unit based on the per
36teacher funding amount or amounts for the eligible county or counties where
37the unit is located. For each county with an eligible school governed by the
38unit, the State Board shall multiply the applicable per teacher funding amount
39for that county determined pursuant to subdivision (2) of this subsection by
40the number of State-funded teachers employed in the eligible school in that
41county. If the unit is located in multiple eligible counties, the State Board shall
42aggregate those amounts.
43(4)     Allocation and funding cap. – The State Board shall allocate the amount
44determined pursuant to subdivision (3) of this subsection to each eligible local
45school administrative unit for each applicable fiscal year, up to a maximum of
46five thousand dollars ($5,000) per State-funded teacher.
47SECTION 7A.4.(d) Charter Schools. – Funds appropriated to the Department of
48 Public Instruction pursuant to this section shall be subject to the allocation of funds for charter
49 schools described in G.S. 115C-218.105. The General Assembly encourages charter schools
50 receiving funds pursuant to this section to provide salary supplements to teachers and qualifying
51 school administrators in the charter school in accordance with the requirements of this section.
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1SECTION 7A.4.(e) Formula for Distribution of Supplemental Funding Pursuant to
2 this Section Only. – The formula in this section is solely a basis for distribution of supplemental
3 funding to eligible local school administrative units and is not intended to reflect any measure of
4 the adequacy of the educational program or funding for public schools. The formula is also not
5 intended to reflect any commitment by the General Assembly to appropriate any additional
6 supplemental funds for eligible local school administrative units.
7SECTION 7A.4.(f) Non-supplant Requirement. – A local school administrative unit
8 that receives funds under this section shall use those funds to supplement non-State funds
9 provided for salary supplements for teachers and qualifying school administrators and shall not
10 use any State funds, including funds received under this section or Section 7A.12 of S.L.
11 2021-180, to supplant non-State funds provided for salary supplements for teachers and
12 qualifying school administrators. For purposes of this section, a local school administrative unit
13 has supplanted non-State funds if the State Board finds that the amount of non-State funds
14 expended by the unit for salary supplements was less than ninety-five percent (95%) of the
15 maintenance of effort amount for the local school administrative unit.
16SECTION 7A.4.(f1) Non-supplant Enforcement. – If the State Board of Education
17 determines that a local school administrative unit has supplanted non-State funds in violation of
18 subsection (f) of this section, the State Board of Education shall not allocate any funds under this
19 section to the unit.
20SECTION 7A.4.(f2) Additional Penalty for Consecutive Supplanting. – It is the
21 intent of the General Assembly that the State Board of Education will not allocate supplemental
22 funds for teacher compensation to a local school administrative unit in the 2026-2027 fiscal year
23 if the State Board of Education determines that the local school administrative unit supplanted
24 non-State funds provided for salary supplements for teachers and qualifying school
25 administrators with State funds in the 2024-2025 fiscal year and the 2025-2026 fiscal year.
26SECTION 7A.4.(g) Reports. – No later than April 15 of each year of the 2025-2027
27 fiscal biennium, the State Board of Education shall report the following information for the
28 applicable fiscal year to the Joint Legislative Education Oversight Committee and the Fiscal
29 Research Division:
30(1)      A list of all eligible counties and eligible local school administrative units.
31(2)      Funds allocated to each eligible local school administrative unit.
32(3)      The percentage and amount of teachers and qualifying school administrators
33in each eligible local school administrative unit receiving salary supplements.
34(4)      The average salary supplement amount in each eligible local school
35administrative unit.
36(5)      The range of salary supplement amounts in each eligible local school
37administrative unit.
38(6)      The effect of the salary supplements on the retention of teachers and
39qualifying school administrators in eligible local school administrative units.
40(7)      The identity of any local school administrative unit that the State Board
41determines has supplanted funds.
42
43 PRINCIPAL SALARY SCHEDULE
44SECTION 7A.5.(a) The following annual salary schedule for principals shall apply
45 for the 2025-2026 fiscal year, beginning July 1, 2025.
46 2025-2026 Principal Annual Salary Schedule
47     Avg. Daily Membership  Base  Met Growth    Exceeded Growth
480-200  $79,737  $87,709       $95,684
49201-400  $83,723  $92,095       $100,467
50401-700  $87,709  $96,481       $105,252
51701-1,000  $91,698  $100,866      $110,037
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11,001-1,600  $95,684  $105,252  $114,821
21,601+  $99,670  $109,637  $119,604
3SECTION 7A.5.(b) The following annual salary schedule for principals shall apply
4 for the 2026-2027 fiscal year, beginning July 1, 2026.
5 2026-2027 Principal Annual Salary Schedule
6     Avg. Daily Membership  Base  Met Growth  Exceeded Growth
70-200  $81,730  $89,902  $98,076
8201-400  $85,816  $94,397  $102,979
9401-700  $89,902  $98,893  $107,883
10701-1,000  $93,990  $103,388  $112,788
111,001-1,600  $98,076  $107,883  $117,692
121,601+  $102,162  $112,378  $122,594
13SECTION 7A.5.(c) A principal's placement on the salary schedule shall be
14 determined according to the average daily membership of the school supervised by the principal,
15 as described in subsection (b) of this section, and the school growth scores, calculated pursuant
16 to G.S. 115C-83.15(c), for each school the principal supervised in at least one of the prior two
17 school years, as described in subsection (c) of this section, regardless of a break in service, and
18 provided the principal supervised each school as a principal for at least a majority of the school
19 year, as follows:
20(1)     A principal shall be paid according to the Exceeded Growth column of the
21schedule if the school growth scores show the school or schools exceeded
22expected growth in at least one of the prior two school years.
23(2)     A principal shall be paid according to the Met Growth column of the schedule
24if any of the following apply:
25a.      The higher school growth score in one of the two prior school years
26shows that the school met expected growth.
27b.      The principal supervised a school in the two prior school years that
28was not eligible to receive a school growth score.
29(3)     A principal shall be paid according to the Base column if either of the
30following apply:
31a.      The school growth scores show the school or schools did not meet
32expected growth in either of the two prior years.
33b.      The principal has not supervised any school as a principal for a
34majority of the school year in at least the two prior school years.
35SECTION 7A.5.(d) For purposes of determining the average daily membership of a
36 principal's school, the following amounts shall be used during the following time periods:
37(1)     For the 2025-2026 school year, placement on the schedule related to average
38daily membership shall be based on the average daily membership for the
39school from the 2024-2025 school year. If the school did not have an average
40daily membership in the 2024-2025 school year, the projected average daily
41membership for the school for the 2025-2026 school year shall be used
42between July 1, 2025 and December 31, 2025, and the average daily
43membership for the school shall be used between January 1, 2026 and June
4430, 2026.
45(2)     For the 2026-2027 school year, placement on the schedule related to average
46daily membership shall be based on the average daily membership for the
47school from the 2025-2026 school year. If the school did not have an average
48daily membership in the 2025-2026 school year, the projected average daily
49membership for the school for the 2026-2027 school year shall be used
50between July 1, 2026 and December 31, 2026, and the average daily
 Page 38  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1membership for the school shall be used between January 1, 2027 and June
230, 2027.
3SECTION 7A.5.(e) For purposes of determining the school growth scores for each
4 school the principal supervised in one or more prior school years, the following school growth
5 scores shall be used during the following time periods:
6(1)    For purposes of determining the school growth scores for each principal in the
72025-2026 school year, school growth scores from the two most recent
8available school years, up to the 2024-2025 school year, shall be used.
9(2)    For purposes of determining the school growth scores for each principal in the
102026-2027 school year, school growth scores from the two most recent
11available school years, up to the 2025-2026 school year, shall be used.
12SECTION 7A.5.(f) Beginning with the 2017-2018 fiscal year, in lieu of providing
13 annual longevity payments to principals paid on the principal salary schedule, the amounts of
14 those longevity payments are included in the annual amounts under the principal salary schedule.
15SECTION 7A.5.(g) A principal compensated in accordance with this section for the
16 2025-2026 and 2026-27 fiscal year shall receive an amount equal to the greater of the following:
17(1)    The applicable amount determined pursuant to subsections (a) through (d) of
18this section.
19(2)    For principals who were eligible for longevity in the 2016-2017 fiscal year,
20the sum of the following:
21a.      The salary the principal received in the 2016-2017 fiscal year pursuant
22to Section 9.1 or Section 9.2 of S.L. 2016-94.
23b.      The longevity that the principal would have received as provided for
24State employees under the North Carolina Human Resources Act for
25the 2016-2017 fiscal year based on the principal's current years of
26service.
27(3)    For principals who were not eligible for longevity in the 2016-17 fiscal year,
28the salary the principal received in the 2016-2017 fiscal year pursuant to
29Section 9.1 or Section 9.2 of S.L. 2016-94
30
31 PRINCIPAL RECRUITMENT BONUS
32SECTION 7A.6.(a) G.S. 115C-285.1 reads as rewritten:
33 "§ 115C-285.1. Principal recruitment supplement.
34     (a)    Definitions. – The following definitions shall apply in this section:
35(1)     Eligible employer. – The governing board of a local school administrative unit
36with an eligible school.
37(2)     Eligible school. – A low‑performing school, as defined in G.S. 115C-105.37,
38that received an overall school performance score that placed it in the bottom
39five percent (5%) ten percent (10%) of all schools in the State in the prior
40school year.
41(3)     Qualifying principal. – A principal who is paid on the Exceeded Growth
42column of the Principal Salary Schedule.
43(4)     Qualifying school. – An eligible school selected by the Department to
44participate in the Program.
45     (b)    Program; Purpose. – The Department of Public Instruction shall establish the
46 Principal Recruitment Supplement Program (Program). To the extent funds are made available,
47 the purpose of the Program shall be to provide significant, time‑limited salary supplements to
48 qualifying principals who accept employment as principals of qualifying schools.
49     (c)    Salary Supplement. – A qualifying principal who accepts a position as a principal in
50 a qualifying school shall receive an annual salary supplement of thirty thousand dollars
 House Bill 1146-First Edition  Page 39
 General Assembly Of North Carolina  Session 2025
1 ($30,000), paid on a monthly basis, as long as the principal is employed as the principal of that
2 school, up to a maximum period of 36 months, subject to the following:
3(1)   A qualifying principal who contracts with an eligible employer to receive the
4salary supplement shall not be excluded in future years from contracting with
5the same eligible employer or a different eligible employer for another salary
6supplement, subject to the requirements of this section.
7(2)   A qualifying principal who accepts employment as a principal at a qualifying
8school shall continue to receive the salary supplement during performance of
9the contract, up to 36 months, even if one or more of the following occur:
10a.      The principal is no longer a qualifying principal.
11b.      The school is no longer an eligible school.
12(3)   Notwithstanding G.S. 135-1(7a), salary supplements provided pursuant to this
13section are not compensation under Article 1 of Chapter 135 of the General
14Statutes, the Teachers' and State Employees' Retirement System.
15(4)   In the event that insufficient funds are available to provide awards to all
16qualifying principals, the Department shall prioritize providing salary
17supplements to those principals accepting positions in the lowest performing
18schools.
19    …."
20
21 BONUSES FOR PRINCIPALS
22SECTION 7A.7.(a) The Department of Public Instruction shall administer a bonus
23 in the 2025-2027 fiscal biennium to any principal who supervised a school as a principal for a
24 majority of the previous school year if that school was in the top fifty percent (50%) of school
25 growth in the State during the previous school year, calculated by the State Board pursuant to
26 G.S. 115C-83.15(c), as follows:
27 2025-2027 Principal Bonus Schedule
28Statewide Growth Percentage  Bonus
29Top 5%  $15,000
30Top 10%  $10,000
31Top 15%  $5,000
32Top 20%  $2,500
33Top 50%  $1,000
34A principal shall receive no more than one bonus pursuant to this subsection. The
35 bonus shall be paid at the highest amount for which the principal qualifies.
36SECTION 7A.7.(b) The bonus awarded pursuant to this section shall be in addition
37 to any regular wage or other bonus the principal receives or is scheduled to receive.
38SECTION 7A.7.(c) Notwithstanding G.S. 135-1(7a), the bonuses awarded pursuant
39 to this section are not compensation under Article 1 of Chapter 135 of the General Statutes,
40 Retirement System for Teachers and State Employees.
41SECTION 7A.7.(d) It is the intent of the General Assembly that funds provided
42 pursuant to this section will supplement principal compensation and not supplant local funds.
43SECTION 7A.7.(e) The bonus provided pursuant to this section shall be paid no
44 later than October 31, 2025, to qualifying principals employed as of October 1, 2025.
45
46 ASSISTANT PRINCIPAL SALARIES
47SECTION 7A.8.(a) For the 2025-2027 fiscal biennium, assistant principals shall
48 receive a monthly salary based on the relevant salary schedule for teachers shown in Section
49 7A.1(a) who are classified as "A" teachers plus nineteen percent (19%). An assistant principal
50 shall be placed on the step on the salary schedule that reflects the total number of years of
51 experience as a certified employee of the public schools. For purposes of this section, an
 Page 40  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 administrator with a one-year provisional assistant principal's certificate shall be considered
2 equivalent to an assistant principal.
3SECTION 7A.8.(b) Assistant principals with certification based on academic
4 preparation at the six-year degree level shall be paid a salary supplement of one hundred
5 twenty-six dollars ($126.00) per month and at the doctoral degree level shall be paid a salary
6 supplement of two hundred fifty-three dollars ($253.00) per month.
7SECTION 7A.8.(c) Participants in an approved full-time master's in school
8 administration program shall receive up to a 10-month stipend during the internship period of the
9 master's program. The stipend shall be at the beginning salary of an assistant principal or, for a
10 teacher who becomes an intern, at least as much as that person would earn as a teacher on the
11 teacher salary schedule. The North Carolina Principal Fellows Program or the school of education
12 where the intern participates in a fulltime master's in school administration program shall supply
13 the Department of Public Instruction with certification of eligible fulltime interns.
14SECTION 7A.8.(d) Beginning with the 2017-2018 fiscal year, in lieu of providing
15 annual longevity payments to assistant principals on the assistant principal salary schedule, the
16 amounts of those longevity payments are included in the monthly amounts provided to assistant
17 principals pursuant to subsection (a) of this section.
18SECTION 7A.8.(e) An assistant principal compensated in accordance with this
19 section for the 2025-2027 fiscal biennium shall receive an amount equal to the greater of the
20 following:
21(1)    The applicable amount determined pursuant to subsections (a) through (d) of
22this section.
23(2)    For assistant principals who were eligible for longevity in the 2016-2017 fiscal
24year, the sum of the following:
25a.      The salary the assistant principal received in the 2016-2017 fiscal year
26pursuant to Section 9.1 or Section 9.2 of S.L. 2016-94.
27b.      The longevity that the assistant principal would have received as
28provided for State employees under the North Carolina Human
29Resources Act for the 2016-2017 fiscal year based on the assistant
30principal's current years of service.
31(3)    For assistant principals who were not eligible for longevity in the 2016-2017
32fiscal year, the salary the assistant principal received in the 2016-2017 fiscal
33year pursuant to Section 9.1 or Section 9.2 of S.L. 2016-94.
34
35 CENTRAL OFFICE SALARIES
36SECTION 7A.9.(a) For the 2025-2026 fiscal year, beginning July 1, 2025, the
37 annual salary for superintendents, assistant superintendents, associate superintendents,
38 directors/coordinators, supervisors, and finance officers, whose salaries are supported from State
39 funds, shall be increased by two and one half percent (2.5%).
40SECTION 7A.9.(b) The monthly salary maximums that follow apply to assistant
41 superintendents, associate superintendents, directors/coordinators, supervisors, and finance
42 officers for the 2025-2026 fiscal year, beginning July 1, 2025:
432025-2026 Fiscal Year
44Maximum
45School Administrator I  $7,762
46School Administrator II  $8,225
47School Administrator III  $8,715
48School Administrator IV  $9,055
49School Administrator V  $9,417
50School Administrator VI  $9,974
51School Administrator VII  $10,373
 House Bill 1146-First Edition  Page 41
 General Assembly Of North Carolina  Session 2025
1The local board of education shall determine the appropriate category and placement
2 for each assistant superintendent, associate superintendent, director/coordinator, supervisor, or
3 finance officer within the maximums and within funds appropriated by the General Assembly
4 for central office administrators and superintendents. The category in which an employee is
5 placed shall be included in the contract of any employee.
6SECTION 7A.9.(c) The monthly salary maximums that follow apply to public
7 school superintendents for the 2025-2026 fiscal year, beginning July 1, 2025:
82025-2026 Fiscal Year
9Maximum
10Superintendent I  $10,995
11Superintendent II  $11,650
12Superintendent III  $12,350
13Superintendent IV  $13,092
14Superintendent V  $13,880
15The local board of education shall determine the appropriate category and placement
16 for the superintendent based on the average daily membership of the local school administrative
17 unit and within funds appropriated by the General Assembly for central office administrators and
18 superintendents.
19SECTION 7A.9.(d) For the 2026-2027 fiscal year, beginning July 1, 2026, the
20 annual salary for superintendents, assistant superintendents, associate superintendents,
21 directors/coordinators, supervisors, and finance officers, whose salaries are supported from State
22 funds, shall be increased by an additional two and one half percent (2.5%).
23SECTION 7A.9.(e) The monthly salary maximums that follow apply to assistant
24 superintendents, associate superintendents, directors/coordinators, supervisors, and finance
25 officers for the 2026-2027 fiscal year, beginning July 1, 2026:
262026-2027 Fiscal Year
27Maximum
28School Administrator I  $7,956
29School Administrator II  $8,431
30School Administrator III  $8,933
31School Administrator IV  $9,281
32School Administrator V  $9,652
33School Administrator VI  $10,223
34School Administrator VII  $10,632
35The local board of education shall determine the appropriate category and placement
36 for each assistant superintendent, associate superintendent, director/coordinator, supervisor, or
37 finance officer within the maximums and within funds appropriated by the General Assembly
38 for central office administrators and superintendents. The category in which an employee is
39 placed shall be included in the contract of any employee.
40SECTION 7A.9.(f) The monthly salary maximums that follow apply to public
41 school superintendents for the 2026-2027 fiscal year, beginning July 1, 2026:
422026-2027 Fiscal Year
43Maximum
44Superintendent I  $11,270
45Superintendent II  $11,941
46Superintendent III  $12,659
47Superintendent IV  $13,419
48Superintendent V  $14,227
49The local board of education shall determine the appropriate category and placement
50 for the superintendent based on the average daily membership of the local school administrative
 Page 42  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 unit and within funds appropriated by the General Assembly for central office administrators and
2 superintendents.
3SECTION 7A.9.(g) Longevity pay for superintendents, assistant superintendents,
4 associate superintendents, directors/coordinators, supervisors, and finance officers shall be as
5 provided for State employees under the North Carolina Human Resources Act.
6SECTION 7A.9.(h)  Superintendents, assistant superintendents, associate
7 superintendents, directors/coordinators, supervisors, and finance officers with certification based
8 on academic preparation at the six-year degree level shall receive a salary supplement of one
9 hundred twenty-six dollars ($126.00) per month in addition to the compensation provided
10 pursuant to this section. Superintendents, assistant superintendents, associate superintendents,
11 directors/coordinators, supervisors, and finance officers with certification based on academic
12 preparation at the doctoral degree level shall receive a salary supplement of two hundred
13 fifty-three dollars ($253.00) per month in addition to the compensation provided for under this
14 section.
15SECTION 7A.9.(i) The State Board of Education shall not permit local school
16 administrative units to transfer State funds from other funding categories for salaries for public
17 school central office administrators.
18
19 NON-CERTIFIED PERSONNEL SALARIES
20SECTION 7A.10.(a) For the 2025-2026 fiscal year, beginning July 1, 2025, the
21 annual salary for non-certified public school employees whose salaries are supported from State
22 funds shall be increased as follows:
23(1)    For permanent, full-time employees on a 12-month contract, by two and one
24half percent (2.5%).
25(2)    For the following employees, by a prorated and equitable amount based on the
26amount specified in subdivision (1) of this subsection:
27a.      Permanent, full-time employees on a contract for fewer than 12
28months.
29b.      Permanent, part-time employees.
30c.      Temporary and permanent hourly employees.
31SECTION 7A.10.(b) For the 2026-2027 fiscal year, beginning July 1, 2026, the
32 annual salary for non-certified public school employees whose salaries are supported from State
33 funds shall be increased as follows:
34(1)    For permanent, full-time employees on a 12-month contract, by an additional
35two and one half percent (2.5%).
36(2)    For the following employees, by a prorated and equitable amount based on the
37amount specified in subdivision (1) of this subsection:
38a.      Permanent, full-time employees on a contract for fewer than 12
39months.
40b.      Permanent, part-time employees.
41c.      Temporary and permanent hourly employees.
42
43 PART VII-B. GOVERNOR MOREHEAD SCHOOL FOR THE BLIND – RESERVED
44
45 PART VII-C. EASTERN NORTH CAROLINA SCHOOL FOR THE DEAF –
46RESERVED
47
48 PART VII-D. NORTH CAROLINA SCHOOL FOR THE DEAF - RESERVED
49
50 PART VIII. THE UNIVERSITY OF NORTH CAROLINA SYSTEM
51
 House Bill 1146-First Edition  Page 43
 General Assembly Of North Carolina  Session 2025
1 COMPLETION ASSISTANCE PROGRAMS
2SECTION 8.1.(a) For purposes of this section, the term "eligible constituent
3 institutions" refers to the following constituent institutions of The University of North Carolina:
4(1)      Elizabeth City State University.
5(2)      Fayetteville State University.
6(3)      NC Central University.
7(4)      University of North Carolina at Pembroke.
8(5)      Winston-Salem State University.
9SECTION 8.1.(b) The Board of Governors of The University of North Carolina shall
10 establish a Completion Assistance Program (Program) at each eligible constituent institution. At
11 a minimum, each Program shall meet the following criteria:
12(1)      A student enrolled in a Program established by this section may receive up to
13one thousand dollars ($1,000) per academic semester under the Program to
14pay for the costs of continuing attendance and earning necessary credit hours
15at the eligible constituent institution.
16(2)      A student shall be eligible to receive funds under a Program if the student
17meets at least the following requirements:
18a.      Needs financial assistance to remain enrolled at the eligible constituent
19institution and earn credits necessary to graduate on time.
20b.      Is a resident for tuition purposes, as provided in G.S. 116-143.1.
21c.      Meets satisfactory academic progress, as determined by the Board.
22d.      Has completed or is on track to complete at least 60 academic credit
23hours by the end of the semester in which the funds are provided.
24e.      Has completed the Free Application for Federal Student Aid (FAFSA)
25for the academic year in which the funds are provided.
26f.      Has an unpaid balance with the eligible constituent institution. This
27may include an unpaid balance for tuition, fees, room, board, or other
28expenses of attendance.
29SECTION 8.1.(c) The Board of Governors of The University of North Carolina shall
30 report on each Completion Assistance Program established pursuant to this section to the Joint
31 Legislative Education Oversight Committee no later than March 15, 2028. The report shall
32 include, at a minimum, an analysis of the impact of each Program on the following:
33(1)      On-time graduation rates.
34(2)      Student debt at graduation.
35SECTION 8.1.(d) Of the funds appropriated in this act to the Board of Governors
36 of The University of North Carolina for Completion Assistance Programs, the Board shall
37 allocate funds to each eligible constituent institution of The University of North Carolina
38 proportional to the number of undergraduate students enrolled at each eligible constituent
39 institution who are residents of North Carolina and recipients of a federal Pell Grant.
40
41 EXPAND CHEATHAM-WHITE SCHOLARSHIP PROGRAM
42SECTION 8.2.(a) G.S. 116-290 reads as rewritten:
43 "§ 116‐290. Cheatham-White Scholarships; establishment and purpose; benefits.
44     (a)    Scholarships Established; Purpose. – The Cheatham-White Scholarships are
45 established as a merit scholarship program at North Carolina Agricultural and Technical State
46 University, and at North Carolina Central University, and Winston‐Salem State University. The
47 purpose of the scholarships is to provide an outstanding educational experience for students who
48 are exceptional scholars, versatile and well‐ rounded individuals with a broad range of interests,
49 and who are accomplished and proficient in areas of both the arts and the sciences. They must
50 also demonstrate leadership potential and a strong commitment to service.
 Page 44  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1     (b)     Scholarship Benefits. – Each scholarship is a fully funded four-year scholarship that
2 covers the cost of all of the following: full tuition, student fees, housing, meals, textbooks, a
3 laptop, supplies, travel, and personal expenses. Each scholarship also provides four summers of
4 fully funded enrichment and networking opportunities that may include international travel and
5 study.
6     (c)     Number of Scholarships Awarded. – Up to 50 150 scholarships, 40 120 for resident
7 students and 10 30 for nonresident students, may be awarded each academic year to students
8 admitted to North Carolina Agricultural and Technical State University. Up to 50 100
9 scholarships, 40 80 for resident students and 10 20 for nonresident students, may be awarded each
10 academic year to students admitted to North Carolina Central University. Up to 50 scholarships,
11 40 for resident students and 10 for nonresident students, may be awarded each academic year to
12 students admitted to Winston‐Salem State University."
13SECTION 8.2.(b) G.S. 116-292(a) reads as rewritten:
14 "§ 116‑292. Cheatham-White Scholarships; eligibility and selection criteria.
15     (a)     Eligibility. – To be eligible to be nominated as a potential candidate for a
16 Cheatham-White Scholarship, a person must satisfy all of the following criteria:
17(1)     Be a competitive applicant for admission as a freshman in the fall semester
18into a baccalaureate program at either North Carolina Agricultural and
19Technical State University, or North Carolina Central University, or Winston-
20Salem State University.
21(2)     Be a United States citizen or permanent resident.
22(3)     Be on course to graduate from high school in the spring semester prior to
23college admission."
24SECTION 8.2.(c) G.S. 116-294 reads as rewritten:
25 "§ 116‑294. Cheatham-White Scholarships; administration of scholarships.
26     The University of North Carolina System Office shall administer the Cheatham‐White
27 Scholarships, in consultation and collaboration with North Carolina Agricultural and Technical
28 State University, and North Carolina Central University, and Winston‐Salem State University,
29 pursuant to policies adopted by the Board of Trustees of both constituent institutions. As part of
30 its administrative responsibilities, The University of North Carolina System Office, in
31 consultation and collaboration with North Carolina Agricultural and Technical State University,
32 and North Carolina Central University, and Winston‐Salem State University, shall do all of the
33 following:
34(1)     Design and implement an application and school nomination process to be
35used to identify potential scholarship candidates and a process for awarding
36the scholarships.
37…
38(9)     Any other function necessary for the successful implementation of the
39Cheatham-White Scholarships program and administration of the
40Cheatham-White Scholarships Fund."
41
42 NORTH CAROLINA SCHOOL OF SCIENCE AND MATH RECEIPT FLEXIBILITY
43SECTION 8.3. G.S. 116-30.3A reads as rewritten:
44 "§ 116-30.3A. Availability of excess receipts.
45     Notwithstanding the provisions of Chapter 143C of the General Statutes, receipts within The
46 University of North Carolina realized in excess of budgeted levels shall be available, up to a
47 maximum of ten percent (10%) above budgeted levels, for each Budget Code, in addition to
48 appropriations to support the operations generating the receipts as approved by the Director of
49 the Budget. Notwithstanding G.S. 143C-6-4(g), the North Carolina School of Science and
50 Mathematics shall be subject to subsections b1 and b2 of G.S. 143C-6-4."
51
 House Bill 1146-First Edition  Page 45
 General Assembly Of North Carolina  Session 2025
1 NORTH CAROLINA SCHOOL OF SCIENCE AND MATH RESIDENCY
2     DETERMINATION
3SECTION 8.4. G.S. 116-235 reads as rewritten:
4 "§ 116-235. Board of Trustees; additional powers and duties.
5     …
6     (b)   Students. –
7(1)    Admission of Students. – The School shall admit students in accordance with
8criteria, standards, and procedures established by the Board of Trustees. To be
9eligible to be considered for admission, an applicant must be either a legal
10resident of the State, as defined by G.S. 116-143.1(a)(1) G.S. 116-143.1(b) or
11a student whose parent is an active duty member of the Armed Forces, as
12defined by G.S. 116-143.3(a)(2), who is abiding in this State incident to active
13military duty at the time the application is submitted, provided the student
14shares the abode of that parent; eligibility to remain enrolled in the School
15shall terminate at the end of any school year during which a student becomes
16a nonresident of the State. The Board of Trustees shall ensure, insofar as
17possible without jeopardizing admission standards, that an equal number of
18qualified applicants is admitted to the program and to the residential summer
19institutes in science and mathematics from each of North Carolina's
20congressional districts. In no event shall the differences in the number of
21qualified applicants offered admission to the program from each of North
22Carolina's congressional districts be more than two and one-half percentage
23points from the average number per district who are offered admission.
24…."
25
26 PART VIII-A. NORTH CAROLINA STATE EDUCATION ASSISTANCE AUTHORITY
27
28 OPPORTUNITY SCHOLARSHIPS ACCOUNTABILITY
29SECTION 8A.1.(a) G.S. 115C-562.1 reads as rewritten:
30 "§ 115C-562.1. Definitions.
31     The following definitions apply in this Part:
32…
33(3a) Eligible student. – A student residing in North Carolina who has not yet
34received a high school diploma and who meets all of the following
35requirements:
36a.     Is eligible to attend a North Carolina public school pursuant to Article
3725 of this Chapter. A child who is the age of 4 on or before April 16 is
38eligible to attend the following school year if the principal, or
39equivalent, of the school in which the child seeks to enroll finds that
40the student meets the requirements established by the Authority
41pursuant to G.S. 115C-562.2(d) and those findings are submitted to the
42Authority.
43b.     Has not been enrolled in a postsecondary institution as a full-time
44student taking at least 12 hours of academic credit.
45c.     Has not been placed in a nonpublic school or facility by a public
46agency at public expense.
47d.     Received a scholarship grant during the previous school year."
48SECTION 8A.1.(b) G.S. 115C-562.2 reads as rewritten:
49 "§ 115C-562.2. Scholarship grants.
50     (a)     The Authority shall make available no later than February 1 annually applications to
51 eligible students for the award of scholarship grants to attend any nonpublic school on a full or
 Page 46  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 part-time basis. Information about scholarship grants and the application process shall be made
2 available on the Authority's Web site. Beginning March 15, the Authority shall begin awarding
3 scholarship grants to students who have applied by March 1 in the following order: according to
4 the following criteria:
5(1)     Eligible students who received a scholarship grant for the school year prior to
6the school year for which the students are applying.
7(2)     Eligible students qualifying for a scholarship grant in the amount provided
8under subdivision (1) of subsection (b2) of this section.
9(3)     Eligible students qualifying for a scholarship grant in the amount provided
10under subdivision (2) of subsection (b2) of this section.
11(4)     Eligible students qualifying for a scholarship grant in the amount provided
12under subdivision (3) of subsection (b2) of this section.
13(5)     All other students.
14     (b)     Repealed by Session Laws 2023-134, s. 8A.6(c), effective July 1, 2023.
15     (b1) Repealed by Session Laws 2021-180, s. 8A.3(e), effective July 1, 2021.
16     (b2) Scholarship grants shall be awarded to eligible students as follows:
17(1)     For students residing in households with an income level not in excess of the
18amount required for the student to qualify for the federal free or reduced-price
19lunch program, per year per eligible student, an amount of up to one hundred
20percent (100%) of the average State per pupil allocation for average daily
21membership in the prior fiscal year.
22(2)     For students residing in households with an income level between the amount
23required for the student to qualify for the federal free or reduced-price lunch
24program and not in excess of two hundred percent (200%) one hundred and
25fifty percent (150%) of that amount, per year per eligible student, an amount
26of up to ninety percent (90%) of the average State per pupil allocation for
27average daily membership in the prior fiscal year.
28(3)     For students residing in households with an income level of between two
29hundred percent (200%) of the amount required for the student to qualify for
30the federal free or reducedprice lunch program and not in excess of four
31hundred fifty percent (450%) of that amount, per year per eligible student, an
32amount of up to sixty percent (60%) of the average State per pupil allocation
33for average daily membership in the prior fiscal year.
34(4)     For all students, per year per eligible student, an amount of up to fortyfive
35percent (45%) of the average State per pupil allocation for average daily
36membership in the prior fiscal year, unless the student qualifies for a higher
37amount under this subsection.
38     (b3) Tuition and fees for a nonpublic school may include tuition and fees for books,
39 transportation, equipment, or other items required by the nonpublic school.
40     (b4) No scholarship grant shall exceed, per year per eligible student, an amount equal to
41 one hundred percent (100%) of the average State per pupil allocation for average daily
42 membership in the prior fiscal year, and no scholarship grant shall exceed the required tuition
43 and fees for the nonpublic school the eligible student will attend.
44     (b5) In addition to the amount of the scholarship grant, for any student receiving a
45 scholarship grant in grades three, eight, or 11, the Authority shall provide to the nonpublic school
46 an amount equal to the cost of the nationally standardized test required to be administered as
47 provided in G.S. 115C-562.5.
48     (c)     The Authority shall permit an eligible student receiving a scholarship grant to enroll
49 in a different nonpublic school and remain eligible. An eligible student receiving a scholarship
50 grant who transfers to another nonpublic school during the year may be eligible to receive a pro
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 General Assembly Of North Carolina  Session 2025
1 rata share of any unexpended portion of the scholarship grant for tuition and fees at the nonpublic
2 school to which the student transfers.
3     (c1) An eligible student awarded a scholarship grant shall participate in administration of
4 examinations required by G.S. 115C-562.5 to maintain eligibility for receipt of the scholarship
5 grant."
6SECTION 8A.1.(c) G.S. 115C-562.5 reads as rewritten:
7 "§ 115C-562.5. Obligations of nonpublic schools accepting eligible students receiving
8scholarship grants.
9     (a)     A nonpublic school that accepts eligible students receiving scholarship grants shall
10 comply with the following:
11(1)     Provide to the Authority annually documentation for required tuition and fees
12charged to the student by the nonpublic school.
13(1a) Shall not increase tuition each year by more than the Consumer Price Index
14as calculated by the United States Bureau of Labor Statistics and reported on
15January 1 of the year in which the school is increasing tuition.
16(2)     Provide to the Authority a criminal background check conducted for the staff
17member with the highest decision-making authority, as defined by the bylaws,
18articles of incorporation, or other governing document, to ensure that person
19has not been convicted of any crime listed in G.S. 115C-332.
20(3)     Provide to the parent or guardian of an eligible student, whose tuition and fees
21are paid in whole or in part with a scholarship grant, an annual written
22explanation of the student's progress, including the student's scores on
23standardized achievement tests.
24(4)     Administer, at least once in each school year (or more as required by State or
25Federal Requirements), tests as provided in this subdivision. Student-level test
26performance data shall be submitted to the Authority by July 15 of each year
27and retained by the nonpublic school for a five-year period and shall be subject
28to audit by the Authority to ensure compliance with this subdivision.year. Test
29Personally identifiable individual test performance data reported to the
30Authority or audited or collected for evaluation purposes by the Authority
31under this subdivision is not a public record under Chapter 132 of the General
32Statutes. Nothing in this subdivision shall be deemed to prohibit a nonpublic
33school from administering other standardized tests or tests at other grade
34levels for its own purposes. Tests shall be administered to all eligible students
35enrolled in grades three and higher whose tuition and fees are paid in whole
36or in part with a scholarship grant as follows:
37a.      The nationally standardized test norm-referenced assessment
38designated by the Authority in grades three and eight.
39b.      The ACT in grade 11.
40c.      A nationally standardized test or other nationally standardized
41equivalent measurement norm-referenced assessment selected by the
42chief administrative officer of the nonpublic school from the list of
43approved assessments determined by the Authority in all other grades
44four and higher. For grades four through seven, the nationally
45standardized test or other equivalent measurement selected must
46measure achievement nationally norm-referenced assessments
47approved by the Authority must assess student performance in the
48areas of English grammar, reading, spelling, and mathematics. For
49grades nine, 10, and 12, the nationally standardized test or other
50equivalent measurement selected must nationally norm-referenced
51assessments approved by the Authority must measure either (i)
 Page 48  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1achievement student performance in the areas of English grammar,
2reading, spelling, and mathematics or (ii) competencies in the verbal
3and quantitative areas. The Authority shall approve at least two but not
4more than three nationally norm-referenced assessments for each
5grade level for this purpose.
6d.      The assessments and tests required by the State Board of Education
7for public schools to comply with federal law according to grade level
8pursuant to G.S. 115C-174.11(c)(1).
9(4b)    Pursuant to G.S. 115C-107.6, educate each child with a disability awarded
10scholarship funds in accordance with that child's Individualized Education
11Program (IEP) and in compliance with the Individuals with Disabilities Act
12(IDEA) and State Board of Education policies.
13(5)     Provide to the Authority four-year cohort graduation rates of the students
14receiving scholarship grants in a manner consistent with requirements of Title
15I, Part A of ESEA and 34 C.F.R. § 200.19. nationally recognized standards.
16(5b)    Provide to the Authority by August 1 of each year attendance records of
17students receiving scholarship grants during the previous school year
18including the name of any schools attended during that time.
19(5c)    Report annually to the State Board of Education the incidents of reportable
20crime pursuant to G.S. 115C-228.
21(6)     Contract with a certified public accountant to perform a financial reviewaudit,
22consistent with generally accepted methods of accounting or any other
23comprehensive basis of accounting recognized by the American Institute of
24Certified Public Accountants (AICPA) a minimum of once every two years
25for each school year in which the school enrolls 70 or more students receiving
26scholarship grants or scholarship funds awarded by the Authority. students
27who collectively receive more than one hundred thousand dollars ($100,000)
28in scholarship grants awarded under this Part. If a nonpublic school accepts
29students receiving less than one hundred thousand dollars ($100,000) in
30scholarship grants, the school shall contract with a certified public accountant
31to perform a financial audit once every three years. The nonpublic school shall
32submit the audit report to the Authority by December 31 of each year an audit
33is conducted. The Authority may require a school to be audited annually after
34the school has two consecutive financial audits with findings. The Authority
35shall ensure that all schools are audited in accordance with this section.
36(7)     Maintain a school facility within the State where in-person instruction is
37provided. This subdivision does not prohibit a school from offering
38remote-only courses of instruction in addition to in-person instruction.
39(8)     Provide the following information annually to the Division:
40a.      Name and address of the school, including physical location address.
41A school with more than one physical location shall establish a
42separate notice of intent for each physical location and shall provide
43all information required by this subdivision for each physical location.
44b.      The name of the owners and chief administrator, as well as their
45contact information.
46c.      Number of students in attendance at the school as of October 1.
47d.      Total number of students enrolled in the school as of the last day of
48the previous school year.
49e.      Documentation of a completed fire inspection within the previous 365
50days.
 House Bill 1146-First Edition  Page 49
 General Assembly Of North Carolina  Session 2025
1(9)      In coordination with local law enforcement agencies, adopt a School Risk
2Management Plan (SRMP) relating to incidents of school violence as detailed
3in G.S. 115C-47(40). In constructing and maintaining these plans, the school
4shall utilize the School Risk and Response Management System (SRRMS)
5established pursuant to G.S. 115C-105.49A. These plans are not considered a
6public record as the term "public record" is defined under G.S. 132-1.
7(10) Pursuant to G.S. 115C-105.53, provide schematic diagrams and keys to the
8main entrance of school facilities to local law enforcement agencies. These
9diagrams are not considered a public record as the term "public record" is
10defined under G.S. 132-1.
11(11) Pursuant to G.S. 115C-105.49, at least once a year, hold a full school-wide
12lockdown exercise with local law enforcement and emergency management
13agencies that are part of the qualified nonpublic school's SRMP.
14(12) Provide the following: (i) schematic diagrams, including digital schematic
15diagrams, and (ii) emergency response information requested by the
16Department of Public Safety, Division of Emergency Management for the
17SRMP. These diagrams and emergency response information are not
18considered a public record as the term "public record" is defined under
19G.S. 132-1.
20     (b)     A nonpublic school that accepts students receiving scholarship grants shall not require
21 any additional fees based on the status of the student as a scholarship grant recipient.
22     (c)     A nonpublic school enrolling more than 25 10 students in any grade whose tuition
23 and fees are paid in whole or in part with a scholarship grant shall provide and retain information
24 on student test performance in each grade with more than 25 10 students, as follows:
25(1)     Report to the Authority on the aggregate standardized test performance of the
26individual student test performance of eligible students in grades three, eight,
27and 11 under subsection (4) of this section. Aggregate test performance data
28reported to the Authority which does not contain personally identifiable
29student data shall be a public record under Chapter 132 of the General Statutes.
30The Authority shall make these reports of aggregate student test performance
31publicly available. Test performance data may be shared with public or private
32institutions of higher education located in North Carolina and shall be
33provided to an independent research organization selected by the Authority
34for research purposes as permitted by the Federal Education Rights and
35Privacy Act, 20 U.S.C. § 1232g.
36(2)     Retain standardized test performance data for eligible students in all other
37grades and annually certify to the Authority compliance with the requirements
38of subdivision (4) of subsection (a) of this section.
39     (c1) A nonpublic school shall not discriminate with respect to: the categories listed in 42
40 U.S.C. § 2000d, as that statute read on January 1, 2014
41(1)     race, color, and national origin as listed in 42 U.S.C. § 2000d, as that statute
42read on January 1, 2014,
43(2)     disability as defined in the Americans With Disabilities Act of 1990, 42
44U.S.C. § 12101 as that statute read on January 1, 2024, and
45(3)     sexual orientation."
46SECTION 8A.1.(d) G.S. 115C-562.7(b) is amended by adding a new subdivision
47 to read:
48 "§ 115C-562.7. Reporting requirements.
49     …
50(6)     Information on the compliance with the academic assessment requirement
51pursuant to G.S. 115C-562.5(3a-b).
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 General Assembly Of North Carolina  Session 2025
1(7)      School-level assessment data for each participating nonpublic school serving
210 or more students receiving scholarship funds."
3SECTION 8A.1.(e) G.S. 115C-562.8(b) reads as rewritten:
4 "§ 115C-562.8. The Opportunity Scholarship Grant Fund Reserve.
5     …
6     (b)     The General Assembly finds that, due to the critical need in this State to provide
7 opportunity for school choice for North Carolina students, it is imperative that the State provide
8 an increase of funds for 15 years to the Opportunity Scholarship Grant Fund Reserve. Therefore,
9 there There is appropriated from the General Fund to the Reserve the following amounts for each
10 fiscal year to be used for the purposes set forth in this section:
11Fiscal Year  Appropriation
122017-2018  $44,840,000
132018-2019  $54,840,000
142019-2020  $64,840,000
152020-2021  $74,840,000
162021-2022  $84,840,000
172022-2023  $94,840,000
182023-2024  $176,540,000
192024-2025  $191,540,000
202025-2026  $625,000,000
212026-2027  $675,000,000
222027-2028  $700,000,000$234,488,935
232028-2029  $725,000,000$217,270,804
242029-2030  $750,000,000$195,951,245
252030-2031  $775,000,000$193,426,448
262031-2032  $800,000,000$149,580,223
272032-2033  $126,221,744
282033-2034  $101,647,252
292034-2035  $76,338,957
302035-2036  $50,912,730
312036-2037  $25,344,985
32     For the 2032-2033 2037-2038 fiscal year and each fiscal year thereafter, there is appropriated
33 from the General Fund to the Reserve the sum of eight hundred twenty-five million dollars
34 ($825,000,000) zero dollars ($0) to be used for the purposes set forth in this section. When
35 developing the base budget, as defined by G.S. 143C-11, for each fiscal year specified in this
36 subsection, the Director of the Budget shall include the appropriated amount specified in this
37 subsection for that fiscal year."
38SECTION 8A.1.(f) The State Education Assistance Authority shall not award
39 scholarship funds to new recipients pursuant to Part 2A of Article 39 of Subchapter X of Chapter
40 115C of the General Statutes after the 2025-2026 academic year.
41SECTION 8A.1.(g) G.S. 115C-112.7 is amended by adding a new subsection to
42 read:
43     "…
44     (c)     The State Education Assistance Authority, in coordination with the Department of
45 Public Instruction, shall make publicly available by September 30 of each year school
46 achievement, growth, and performance scores and associated performance grades pursuant to
47 G.S. 115C--83.15 for nonpublic schools that enroll more than 10 students whose tuition and fees
48 are paid in whole or in part with a scholarship grant. This section is effective with the 2026-27
49 school year. The first school achievement, growth, and performance scores and associated
50 performance grades shall be made publicly available by September 30, 2027.
51     …."
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 General Assembly Of North Carolina  Session 2025
1SECTION 8A.1.(h) Section 8A.6(i) and Section 8A.6(j) of Session Law 2023-134
2 are repealed.
3SECTION 8A.1.(i) The State Education Assistance Authority shall transfer one
4 hundred fourteen million, seven hundred twenty-one thousand, four hundred nine dollars
5 ($114,721,409) in unused fund balance from the Opportunity Scholarship Grant Fund Reserve
6 to budget code 16012 in the General Fund.
7SECTION 8A.1.(j) This provision is effective when it becomes law and applies
8 beginning with the 2026-27 school year.
9
10 CHILDREN OF WARTIME VETERANS SCHOLARSHIP FUND AWARDS
11      FLEXIBILITY
12SECTION 8A.2. G.S. 143B-1227 reads as rewritten:
13 "143B-1227. Administration and funding.
14      …
15      (c)     Allowances for room and board in State educational institutions shall be at such a rate
16 as established by the Secretary of the Department of Military and Veterans Affairs.
17      (d)     Within funds available for the Program, the following shall be determined:
18      Due to the sacrifice of veterans for the State of North Carolina and the unique needs and
19 challenges of the children of wartime veterans to ensure they have the greatest opportunities to
20 reach their higher education attainment goals, if there are additional eligible recipients, other than
21 those identified by the Department under this Program, who are attending public colleges and
22 universities of the State who may qualify to have their scholarships funded with monies from the
23 Escheat Fund, the Authority, after consultation with the Secretary, may fund those scholarships
24 with monies from the Escheat Fund.
25      (e)     After consultation with the Authority, the Secretary shall determine whether to
26 prioritize the award of new applicants for the 2025-2026 academic year in Class I-A, I-B, and IV
27 scholarships, prior to awarding Class II and III scholarships. Class II and Class III awards may
28 be determined following awards for Class I-A, I-B, and IV depending on the availability of funds
29 for the Program.
30      (f)     The Secretary, after consulting with the Authority, may determine based on the
31 number of eligible students, including new and renewal students, that have applied for the
32 2026-2027 academic year, whether to reduce the room and board allowance award for students
33 attending a public institution and the maximum allowance award for students attending private
34 institutions, prior to August 15, 2026.
35      (g)     After the actions set forth in sub-subdivisions d., e., and f. of this subdivision have
36 been taken, for awards for the 2026-2027 academic year, if funds available for the Program are
37 still insufficient to provide scholarships to all eligible students, the Authority may adjust and
38 standardize award amounts as necessary, including providing pro rata scholarship awards for
39 room and board, to ensure the efficient administration of the scholarship funds.
40      (h)     All scholarship notifications shall include language that the award of the scholarship
41 is contingent upon the availability of funds.
42      (i)     The Authority shall disburse scholarship funds in accordance with
43 G.S. 116-204(11a).
44      (j)     From the total amount of funding appropriated to the Board of Governors of The
45 University of North Carolina and allocated to the Authority in a fiscal year to support the award
46 of scholarship funds under the Program, the Authority may use an amount of up to two and
47 one-half percent (2.5%) for administration costs related to the Program from the allocation from
48 the General Fund. The Authority shall place any unexpended and unencumbered appropriated
49 funds remaining at the end of the 2025-2026 and 2026-2027 fiscal years into an institutional trust
50 fund established in accordance with the provisions of G.S. 116-36.1. Those funds may be used
 Page 52  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 for the purpose of awarding scholarships under the Program and for administration costs of the
2 Authority related to the Program."
3
4 PART IX. HEALTH AND HUMAN SERVICES
5
6 PART IX-A. AGING AND ADULT SERVICES [RESERVED]
7
8 PART IX-B. CENTRAL MANAGEMENT AND SUPPORT
9
10 COMMUNITY HEALTH GRANT PROGRAM
11SECTION 9B.1.(a) Funds appropriated in this act to the Department of Health and
12 Human Services, Division of Central Management, Office of Rural Health, for each year of the
13 2025-2027 fiscal biennium for the Community Health Grant Program shall be used to continue
14 to administer the Community Health Grant Program as modified by Section 11A.8 of S.L.
15 2017-57.
16SECTION 9B.1.(b) The Office of Rural Health shall make the final decision about
17 awarding grants under this Program, but no single grant award shall exceed one hundred fifty
18 thousand dollars ($150,000) during the fiscal year. In awarding grants, the Office of Rural Health
19 shall consider the availability of other funds for the applicant; the incidence of poverty in the area
20 served by the applicant or the number of indigent clients served by the applicant; the availability
21 of, or arrangements for, after-hours care; and collaboration between the applicant and a
22 community hospital or other safety net organizations.
23SECTION 9B.1.(c) Grant recipients shall not use these funds to do any of the
24 following:
25(1)     Enhance or increase compensation or other benefits of personnel,
26administrators, directors, consultants, or any other persons receiving funds for
27program administration; provided, however, funds may be used to hire or
28retain health care providers. The use of grant funds for this purpose does not
29obligate the Department of Health and Human Services to continue to fund
30compensation beyond the grant period.
31(2)     Supplant existing funds, including federal funds traditionally received by
32federally qualified community health centers. However, grant funds may be
33used to supplement existing programs that serve the purposes described in
34subsection (a) of this section.
35(3)     Finance or satisfy any existing debt.
36SECTION 9B.1.(d) The Office of Rural Health may use up to two hundred thousand
37 dollars ($200,000) in recurring funds for each fiscal year of the 2025-2027 fiscal biennium for
38 administrative purposes.
39SECTION 9B.1.(e) By September 1 of each year, the Office of Rural Health shall
40 submit a report to the Joint Legislative Oversight Committee on Health and Human Services on
41 community health grants that includes at least all of the following information:
42(1)     The identity and a brief description of each grantee and each program or
43service offered by the grantee.
44(2)     The amount of funding awarded to each grantee.
45(3)     The number of individuals served by each grantee and, for the individuals
46served, the types of services provided to each.
47(4)     Any other information requested by the Office of Rural Health as necessary
48for evaluating the success of the Community Health Grant Program.
49
50 REPLACEMENT FOR CRITICAL IT SYSTEMS THAT SUPPORT SUBSTANCE USE
51   DISORDER PREVENTION AND TREATMENT
 House Bill 1146-First Edition  Page 53
 General Assembly Of North Carolina  Session 2025
1SECTION 9B.2. The Department of Health and Human Services shall develop and
2 implement a replacement for outdated data systems supporting substance use prevention and
3 treatment goals, specifically concerning the Driving While Impaired Services, the Drug
4 Education School, and the Drug Control Unit programs designed to prevent progression of
5 misuse of substances through education and regulatory supports. The project shall not proceed
6 until the business case has been approved by the Office of State Budget and Management and
7 the State Chief Information Officer in the Enterprise Project Management Office's Touchdown
8 System. Upon approval, Mixed Use Beverage tax receipts available in Budget Code 14460,
9 Budget Fund 134603, may be budgeted for transfer to Budget Code 24410 for information
10 technology projects in an amount not to exceed one million two hundred thousand dollars
11 ($1,200,000). Following project completion, the Division of Mental Health, Developmental
12 Disabilities, and Substance Use Services may use Mixed Use Beverage Tax receipts to cover
13 operations and maintenance costs for the new IT system.
14
15 USE OF TALC SETTLEMENT FUNDS
16SECTION 9B.3.(a) The Ovarian Cancer Mitigation Fund (Fund) is created within
17 the Department of Health and Human Services, Division of Central Management and Support,
18 as a nonreverting special fund. The Fund shall consist of (i) monies received by the State as a
19 beneficiary of the final consent judgment resolving the case, State of North Carolina, ex rel.
20 Joshua H. Stein, Attorney General v. Johnson & Johnson (J&J Case), and (ii) all interest and
21 investment earnings received on monies in the Fund. Monies in the Fund shall be expended only
22 by an act of appropriation by the General Assembly and in accordance with the final consent
23 judgment resolving the J&J Case.
24SECTION 9B.3.(b) There is appropriated from the Ovarian Cancer Mitigation Fund
25 created in subsection (a) of this section to the Department of Health and Human Services,
26 Division of Central Management and Support, the sum of four million dollars ($4,000,000) in
27 nonrecurring funds for the 2026-2027 fiscal year to be allocated and used as follows:
28(1)     Up to two million dollars ($2,000,000) in nonrecurring funds for 2026-2027
29shall be used to support a public-private partnership consisting of community-
30based organizations, medical providers, and others to develop, strengthen, and
31promote improved access to ovarian cancer educational materials, screenings,
32and care providers. Funds may be used to contract with a lead community-
33based organization with statewide reach to implement related initiatives,
34including technical assistance and subgrants to other community-based
35organizations for these purposes.
36(2)     Up to seven hundred and fifty thousand dollars ($750,000) in nonrecurring
37funds for 2026-27 shall be used to invest in data collection and analysis
38infrastructure to support timely and accurate cancer surveillance and improved
39capacity to address emerging threats.
40(3)     Up to one million two hundred fifty thousand dollars ($1,250,000) in
41nonrecurring funds for 2026-2027 shall be used to design and implement
42communication and education strategies designed to raise awareness of
43ovarian cancer and promote preventive measures, screening, and treatment.
44In addition to these uses, the Department of Health and Human Services may use up
45 to two hundred thousand dollars ($200,000) of funds allocated by this subdivision for each year
46 of the fiscal biennium for administrative purposes.
47SECTION 9B.3.(c) Funds allocated under subsection (b) of this section shall remain
48 available for expenditure in the amounts and for the purposes specified in subsection (a) of this
49 section until expended.
50SECTION 9B.3.(d) Beginning November 1, 2027, the Department of Health and
51 Human Services shall report to the Joint Legislative Oversight Committee on Health and Human
 Page 54  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 Services and the Fiscal Research Division on the expenditures made from the Ovarian Cancer
2 Mitigation Fund during the preceding fiscal year.
3
4 APPROPRIATION OF RURAL HEALTH TRANSFORMATION GRANT FUNDS
5SECTION 9B.4. The grant funds received from the federal Rural Health
6 Transformation Program authorized under H.R.1 are appropriated in the amounts provided in the
7 notification of award from the federal government or any entity acting on behalf of the federal
8 government to administer the federal funds. State agencies may, with approval of the Director of
9 the Budget, spend funds received from the Rural Health Transformation Program.
10
11 PART IX-C. CHILD AND FAMILY WELL-BEING [RESERVED]
12
13 PART IX-D. CHILD DEVELOPMENT AND EARLY EDUCATION
14
15 NC PRE-K PROGRAMS/STANDARDS FOR FOUR AND FIVE-STAR RATED
16     FACILITIES
17SECTION 9D.1.(a) Eligibility. – The Department of Health and Human Services,
18 Division of Child Development and Early Education, shall continue implementing the
19 prekindergarten program (NC Pre-K). The NC Pre-K program shall serve children who are 4
20 years of age on or before August 31 of the program year. In determining eligibility, the Division
21 shall establish income eligibility requirements for the program not to exceed seventy-five percent
22 (75%) of the State median income. Up to twenty percent (20%) of children enrolled may have
23 family incomes in excess of seventy-five percent (75%) of median income if those children have
24 other designated risk factors. Furthermore, any age-eligible child who is a child of either of the
25 following shall be eligible for the program: (i) an active duty member of the Armed Forces of the
26 United States, including the North Carolina National Guard, State military forces, or a reserve
27 component of the Armed Forces who was ordered to active duty by the proper authority within
28 the last 18 months or is expected to be ordered within the next 18 months, or (ii) a member of the
29 Armed Forces of the United States, including the North Carolina National Guard, State military
30 forces, or a reserve component of the Armed Forces who was injured or killed while serving on
31 active duty. Eligibility determinations for NC Pre-K participants may continue through local
32 education agencies and local North Carolina Partnership for Children, Inc., partnerships.
33Other than developmental disabilities or other chronic health issues, the Division shall
34 not consider the health of a child as a factor in determining eligibility for participation in the NC
35 Pre-K program.
36SECTION 9D.1.(a1) Staff-To-Child Ratio and Class Size. – The classroom shall not
37 exceed a maximum staff-to-child ratio of one to 10 with a maximum class size of 20 children,
38 with at least one teacher and one teacher assistant per classroom. A classroom of 10 children or
39 less shall have at least one teacher. The Child Care Commission shall adopt any rules and the
40 Division of Child Development and Early Education shall revise any rules or policies necessary
41 to implement the provisions of this subsection.
42SECTION 9D.1.(b) Multi-year Contracts. – The Division of Child Development and
43 Early Education shall require the NC Pre-K contractor to issue multi-year contracts for licensed
44 private child care centers providing NC Pre-K classrooms.
45SECTION 9D.1.(c) Building Standards. – Notwithstanding G.S. 110-91(4), private
46 child care facilities and public schools operating NC Pre-K classrooms shall meet the building
47 standards for preschool students as provided in G.S. 115C-521.1.
48SECTION 9D.1.(d) Programmatic Standards. – Except as provided in subsection (c)
49 of this section, entities operating NC Pre-K classrooms shall adhere to all of the policies
50 prescribed by the Division of Child Development and Early Education regarding programmatic
51 standards and classroom requirements.
 House Bill 1146-First Edition  Page 55
 General Assembly Of North Carolina  Session 2025
1SECTION 9D.1.(e) NC Pre-K Committees. – Local NC Pre-K committees shall use
2 the standard decision-making process developed by the Division of Child Development and Early
3 Education in awarding NC Pre-K classroom slots and student selection.
4SECTION 9D.1.(f) Reporting. – The Division of Child Development and Early
5 Education shall submit an annual report no later than March 15 of each year to the Joint
6 Legislative Oversight Committee on Health and Human Services, the Office of State Budget and
7 Management, and the Fiscal Research Division. The report shall include the following:
8(1)     The number of children participating in the NC Pre-K program by county.
9(2)     The number of children participating in the NC Pre-K program who have
10never been served in other early education programs such as child care, public
11or private preschool, Head Start, Early Head Start, or early intervention
12programs.
13(3)     The expected NC Pre-K expenditures for the programs and the source of the
14local contributions.
15(4)     The results of an annual evaluation of the NC Pre-K program.
16SECTION 9D.1.(g) Audits. – The administration of the NC Pre-K program by local
17 partnerships shall be subject to the financial and compliance audits authorized under
18 G.S. 143B-168.14(b).
19
20 CHILD CARE SUBSIDY RATES
21SECTION 9D.2.(a) The maximum gross annual income for initial eligibility,
22 adjusted annually, for subsidized child care services shall be determined based on a percentage
23 of the federal poverty level as follows:
24     AGE  INCOME PERCENTAGE LEVEL
25     0–5  200%
26     6 – 12  133%
27The eligibility for any child with special needs, including a child who is 13 years of
28 age or older, shall be two hundred percent (200%) of the federal poverty level.
29SECTION 9D.2.(b) Fees for families who are required to share in the cost of care
30 are established based on ten percent (10%) of gross family income. When care is received at the
31 blended rate, the copayment shall be eighty-three percent (83%) of the full-time copayment.
32 Copayments for part-time care shall be seventy-five percent (75%) of the full-time copayment.
33SECTION 9D.2.(c) Payments for the purchase of child care services for low-income
34 children shall be in accordance with the following requirements:
35(1)     Religious sponsored child care facilities operating pursuant to G.S. 110-106
36and licensed child care centers and homes that meet the minimum licensing
37standards that are participating in the subsidized child care program shall be
38paid the one-star county market rate unless prohibited by subsection (f) of this
39section.
40(2)     Licensed child care centers and homes with two or more stars shall receive the
41county market rate for that rated license level for that age group or the
42statewide rate floor, whichever is higher, unless prohibited by subsection (g)
43of this section.
44(3)     Certified Developmental Day Centers shall receive the statewide average or
45county market rate, whichever is higher, plus a multiplier of 0.75 for children
46with special needs and multiplier of 0.5 for typically developing children.
47(4)     No payments shall be made for transportation services charged by child care
48facilities.
49(5)     Payments for subsidized child care services for postsecondary education shall
50be limited to a maximum of 20 months of enrollment. This shall not be
51determined before a family's annual recertification period.
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1(6)      The Department of Health and Human Services shall implement necessary
2rule changes to restructure services, including, but not limited to, targeting
3benefits to employment.
4SECTION 9D.2.(d) Provisions of payment rates for child care providers in counties
5 that do not have at least 50 children in each age group for center-based and homebased care are
6 as follows:
7(1)     Except as applicable in subdivision (2) of this subsection, payment rates shall
8be set at the statewide or regional market rate for licensed child care centers
9and homes.
10(2)     If it can be demonstrated that the application of the statewide or regional
11market rate to a county with fewer than 50 children in each age group is lower
12than the county market rate and would inhibit the ability of the county to
13purchase child care for low-income children, then the county market rate may
14be applied.
15SECTION 9D.2.(e) A market rate shall be calculated for child care centers and
16 homes at each rated license level for each county and for each age group or age category of
17 enrollees and shall be representative of fees charged to parents for each age group of enrollees
18 within the county. The Division of Child Development and Early Education shall also calculate
19 a statewide rate and regional market rate for each rated license level for each age category.
20SECTION 9D.2.(f) Beginning July 1, 2026, the Department of Health and Human
21 Services, Division of Child Development and Early Education, shall increase the child care
22 subsidy market rates to the seventy-fifth percentile as recommended by the 2023 Child Care
23 Market Rate Study for children in three-, four-, and five-star-rated child care centers and homes.
24 The Department shall also implement a subsidy statewide floor rate based on the seventy-fifth
25 percentile of the 2021 Child Care Market Rate Study for children in three-, four-, and
26 five-star-rated child care centers and homes.
27SECTION 9D.2.(g) The Division of Child Development and Early Education shall
28 continue implementing policies that improve the quality of child care for subsidized children,
29 including a policy in which child care subsidies are paid, to the extent possible, for child care in
30 the higher quality centers and homes only. The Division shall define higher quality, and subsidy
31 funds shall not be paid for one or two-star-rated facilities. For those counties with an inadequate
32 number of four and five-star-rated facilities, the Division shall continue a transition period that
33 allows the facilities to continue to receive subsidy funds while the facilities work on the increased
34 star ratings. The Division may allow exemptions in counties where there is an inadequate number
35 of four and five-star-rated facilities for non-star-rated programs, such as religious programs.
36SECTION 9D.2.(h) Facilities licensed pursuant to Article 7 of Chapter 110 of the
37 General Statutes and facilities operated pursuant to G.S. 110-106 may participate in the program
38 that provides for the purchase of care in child care facilities for minor children of needy families.
39 Except as authorized by subsection (f) of this section, no separate licensing requirements shall
40 be used to select facilities to participate. In addition, child care facilities shall be required to meet
41 any additional applicable requirements of federal law or regulations. Child care arrangements
42 exempt from State regulation pursuant to Article 7 of Chapter 110 of the General Statutes shall
43 meet the requirements established by other State law and by the Social Services Commission.
44County departments of social services or other local contracting agencies shall not
45 use a provider's failure to comply with requirements in addition to those specified in this
46 subsection as a condition for reducing the provider's subsidized child care rate.
47SECTION 9D.2.(i) Payment for subsidized child care services provided with
48 Temporary Assistance for Needy Families Block Grant funds shall comply with all regulations
49 and policies issued by the Division of Child Development and Early Education for the subsidized
50 child care program.
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 General Assembly Of North Carolina  Session 2025
1SECTION 9D.2.(j) Non-citizen families who reside in this State legally shall be
2 eligible for child care subsidies if all other conditions of eligibility are met. If all other conditions
3 of eligibility are met, non-citizen families who reside in this State illegally shall be eligible for
4 child care subsidies only if at least one of the following conditions is met:
5(1)     The child for whom a child care subsidy is sought is receiving child protective
6services or foster care services.
7(2)     The child for whom a child care subsidy is sought is developmentally delayed
8or at risk of being developmentally delayed.
9(3)     The child for whom a child care subsidy is sought is a citizen of the United
10States.
11SECTION 9D.2.(k) The Department of Health and Human Services, Division of
12 Child Development and Early Education, shall require all county departments of social services
13 to include on any forms used to determine eligibility for child care subsidy whether the family
14 waiting for subsidy is receiving assistance through the NC Pre-K Program or Head Start.
15SECTION 9D.2.(l) Department of Defense-certified child care facilities licensed
16 pursuant to G.S. 110-106.2 may participate in the State-subsidized child care program that
17 provides for the purchase of care in child care facilities for minor children in needy families,
18 provided that funds allocated from the State-subsidized child care program to Department of
19 Defense-certified child care facilities shall supplement and not supplant funds allocated in
20 accordance with G.S. 143B-168.15(g). Payment rates and fees for military families who choose
21 Department of Defense-certified child care facilities and who are eligible to receive subsidized
22 child care shall be as set forth in this section.
23
24 CHILD CARE ALLOCATION FORMULA
25SECTION 9D.3.(a) The Department of Health and Human Services, Division of
26 Child Development and Early Education (Division), shall allocate child care subsidy voucher
27 funds to pay the costs of necessary child care for minor children of needy families. The
28 mandatory thirty percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation
29 under G.S. 143B-168.15(g) shall constitute the base amount for each county's child care subsidy
30 allocation. The Department of Health and Human Services shall use the following method when
31 allocating federal and State child care funds, not including the aggregate mandatory thirty percent
32 (30%) North Carolina Partnership for Children, Inc., subsidy allocation:
33(1)     Funds shall be allocated to a county based upon the projected cost of serving
34children under age 11 in families with all parents working who earn less than
35the applicable federal poverty level percentage set forth in Section 9D.3(a) of
36this act.
37(2)     The Division may withhold up to two percent (2%) of available funds from
38the allocation formula for (i) preventing termination of services throughout
39the fiscal year and (ii) repayment of any federal funds identified by counties
40as overpayments, including overpayments due to fraud. The Division shall
41allocate to counties any funds withheld before the end of the fiscal year when
42the Division determines the funds are not needed for the purposes described
43in this subdivision. The Division shall submit a report to the Joint Legislative
44Oversight Committee on Health and Human Services and the Fiscal Research
45Division, which report shall include each of the following:
46a.       The amount of funds used for preventing termination of services and
47the repayment of any federal funds.
48b.       The date the remaining funds were distributed to counties.
49c.       As a result of funds withheld under this subdivision and after funds
50have been distributed, any counties that did not receive at least the
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 General Assembly Of North Carolina  Session 2025
1amount the counties received the previous year and the amount by
2which funds were decreased.
3The Division shall submit a report in each year of the 2025-2027 fiscal biennium 30
4 days after the funds withheld pursuant to this subdivision are distributed but no later than April
5 1 of each respective year.
6(3)     The Division shall set aside four percent (4%) of child care subsidy allocations
7for vulnerable populations, which include a child identified as having special
8needs and a child whose application for assistance indicates that the child and
9the child's family is experiencing homelessness or is in a temporary living
10situation. A child identified by this subdivision shall be given priority for
11receiving services until such time as set-aside allocations for vulnerable
12populations are exhausted.
13SECTION 9D.3.(b) The Division may reallocate unused child care subsidy voucher
14 funds in order to meet the child care needs of low-income families. Any reallocation of funds
15 shall be based upon the expenditures of all child care subsidy voucher funding, including North
16 Carolina Partnership for Children, Inc., funds within a county. Counties shall manage service
17 levels within the funds allocated to the counties. A county with a spending coefficient over one
18 hundred percent (100%) shall submit a plan to the Division for managing the county's allocation
19 before receiving any reallocated funds.
20SECTION 9D.3.(c) When implementing the formula under subsection (a) of this
21 section, the Division shall include the market rate increase in the formula process rather than
22 calculate the increases outside of the formula process. Additionally, the Department shall do the
23 following:
24(1)     Deem a county's initial allocation as the county's expenditure in the previous
25fiscal year or a prorated share of the county's previous fiscal year expenditures
26if sufficient funds are not available.
27(2)     Effective immediately following the next new decennial census data release,
28implement (i) one-third of the change in a county's allocation in the year
29following the data release, (ii) an additional one-third of the change in a
30county's allocation beginning two years after the initial change under this
31subdivision, and (iii) the final one-third change in a county's allocation
32beginning the following two years thereafter.
33
34 SMART START INITIATIVES
35SECTION 9D.4.(a) Policies. – The North Carolina Partnership for Children, Inc.,
36 and its Board shall ensure policies focus on the North Carolina Partnership for Children, Inc.'s
37 mission of improving child care quality in North Carolina for children from birth to five years of
38 age. North Carolina Partnership for Children, Inc., funded activities shall include assisting child
39 care facilities with (i) improving quality, including helping one, two, and three-star-rated
40 facilities increase their star ratings, and (ii) implementing prekindergarten programs. State
41 funding for local partnerships shall also be used for evidence-based or evidence-informed
42 programs for children from birth to five years of age that do the following:
43(1)    Increase children's literacy.
44(2)    Increase the parents' ability to raise healthy, successful children.
45(3)    Improve children's health.
46(4)    Assist four and five-star-rated facilities in improving and maintaining quality.
47SECTION 9D.4.(b) Administration. – Administrative costs shall be equivalent to,
48 on an average statewide basis for all local partnerships, not more than ten percent (10%) of the
49 total statewide allocation to all local partnerships. For purposes of this subsection, administrative
50 costs shall include costs associated with partnership oversight, business and financial
51 management, general accounting, human resources, budgeting, purchasing, contracting, and
 House Bill 1146-First Edition  Page 59
 General Assembly Of North Carolina  Session 2025
1 information systems management. The North Carolina Partnership for Children, Inc., shall
2 continue using a single statewide contract management system that incorporates features of the
3 required standard fiscal accountability plan described in G.S. 143B-168.12(a)(4). All local
4 partnerships are required to participate in the contract management system and, directed by the
5 North Carolina Partnership for Children, Inc., to collaborate, to the fullest extent possible, with
6 other local partnerships to increase efficiency and effectiveness.
7SECTION 9D.4.(c) Salaries. – The salary schedule developed and implemented by
8 the North Carolina Partnership for Children, Inc., shall set the maximum amount of State funds
9 that may be used for the salary of the Executive Director of the North Carolina Partnership for
10 Children, Inc., and the directors of the local partnerships. The North Carolina Partnership for
11 Children, Inc., shall base the schedule on the following criteria:
12(1)     The population of the area serviced by a local partnership.
13(2)     The amount of State funds administered.
14(3)     The amount of total funds administered.
15(4)     The professional experience of the individual to be compensated.
16(5)     Any other relevant factors pertaining to salary, as determined by the North
17Carolina Partnership for Children, Inc.
18The salary schedule shall be used only to determine the maximum amount of State
19 funds that may be used for compensation. Nothing in this subsection shall be construed to prohibit
20 a local partnership from using non-State funds to supplement an individual's salary in excess of
21 the amount set by the salary schedule established under this subsection.
22SECTION 9D.4.(d) Match Requirements. – The North Carolina Partnership for
23 Children, Inc., and all local partnerships shall, in the aggregate, be required to match one hundred
24 percent (100%) of the total amount budgeted for the program in each fiscal year of the 2025-2027
25 biennium. Of the funds that the North Carolina Partnership for Children, Inc., and the local
26 partnerships are required to match, contributions of cash shall be equal to at least thirteen percent
27 (13%) and in-kind donated resources shall be equal to no more than six percent (6%) for a total
28 match requirement of nineteen percent (19%) for each year of the 2025-2027 fiscal biennium.
29 The North Carolina Partnership for Children, Inc., may carry forward any amount in excess of
30 the required match for a fiscal year in order to meet the match requirement of the succeeding
31 fiscal year. Only in-kind contributions that are quantifiable shall be applied to the in-kind match
32 requirement. Volunteer services may be treated as an in-kind contribution for the purpose of the
33 match requirement of this subsection. Volunteer services that qualify as professional services
34 shall be valued at the fair market value of those services. All other volunteer service hours shall
35 be valued at the statewide average wage rate as calculated from data compiled by the Division of
36 Employment Security of the Department of Commerce in the Employment and Wages in North
37 Carolina Annual Report for the most recent period for which data are available. Expenses,
38 including both those paid by cash and in-kind contributions, incurred by other participating non-
39 State entities contracting with the North Carolina Partnership for Children, Inc., or the local
40 partnerships also may be considered resources available to meet the required private match. In
41 order to qualify to meet the required private match, the expenses shall:
42(1)     Be verifiable from the contractor's records.
43(2)     If in-kind, other than volunteer services, be quantifiable in accordance with
44generally accepted accounting principles for nonprofit organizations.
45(3)     Not include expenses funded by State funds.
46(4)     Be supplemental to and not supplant preexisting resources for related program
47activities.
48(5)     Be incurred as a direct result of the Early Childhood Initiatives Program and
49be necessary and reasonable for the proper and efficient accomplishment of
50the Program's objectives.
51(6)     Be otherwise allowable under federal or State law.
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 General Assembly Of North Carolina  Session 2025
1(7)       Be required and described in the contractual agreements approved by the
2North Carolina Partnership for Children, Inc., or the local partnership.
3(8)     Be reported to the North Carolina Partnership for Children, Inc., or the local
4partnership by the contractor in the same manner as reimbursable expenses.
5Failure to obtain a nineteen percent (19%) match by June 30 of each year of the
6 2025-2027 fiscal biennium shall result in a dollar-for-dollar reduction in the appropriation for the
7 Program for a subsequent fiscal year. The North Carolina Partnership for Children, Inc., shall be
8 responsible for compiling information on the private cash and in-kind contributions into a report,
9 to be included in its annual report as required under G.S. 143B-168.12(d), in a format that allows
10 verification by the Department of Revenue. The same match requirements shall apply to any
11 expansion funds appropriated by the General Assembly.
12SECTION 9D.4.(e) Bidding. – The North Carolina Partnership for Children, Inc.,
13 and all local partnerships shall use competitive bidding practices in contracting for goods and
14 services on contract amounts as follows:
15(1)     For amounts of five thousand dollars ($5,000) or less, the procedures specified
16by a written policy as developed by the Board of Directors of the North
17Carolina Partnership for Children, Inc.
18(2)     For amounts greater than five thousand dollars ($5,000) but less than fifteen
19thousand dollars ($15,000), three written quotes.
20(3)     For amounts of fifteen thousand dollars ($15,000) or more but less than forty
21thousand dollars ($40,000), a request for proposal process.
22(4)     For amounts of forty thousand dollars ($40,000) or more, a request for
23proposal process and advertising in a major newspaper.
24SECTION 9D.4.(f) Allocations. – The North Carolina Partnership for Children, Inc.,
25 shall not reduce the allocation for counties with less than 35,000 in population below the
26 2012-2013 funding level.
27SECTION 9D.4.(g) Performance-Based Evaluation. – The Department of Health
28 and Human Services shall continue to implement the performance-based evaluation system.
29SECTION 9D.4.(h) Expenditure Restrictions. – Except as provided in subsection (i)
30 of this section, the Department of Health and Human Services and the North Carolina Partnership
31 for Children, Inc., shall ensure that the allocation of funds for Early Childhood Education and
32 Development Initiatives for the 2025-2027 fiscal biennium shall be administered and distributed
33 in the following manner:
34(1)     Capital expenditures are prohibited for the 2025-2027 fiscal biennium. For the
35purposes of this section, "capital expenditures" means expenditures for capital
36improvements as defined in G.S. 143C-1-1(d)(5).
37(2)     Expenditures of State funds for advertising and promotional activities are
38prohibited for the 2025-2027 fiscal biennium.
39For the 2025-2027 fiscal biennium, local partnerships shall not spend any State funds
40 on marketing campaigns, advertising, or any associated materials. Local partnerships may spend
41 any private funds the local partnerships receive on those activities.
42SECTION 9D.4.(i) Notwithstanding subsection (h) of this section, the North
43 Carolina Partnership for Children, Inc., and local partnerships may use up to one percent (1%) of
44 State funds for fundraising activities. The North Carolina Partnership for Children, Inc., shall
45 include in its annual report required under G.S. 143B-168.12(d) a report on the use of State funds
46 for fundraising. The report shall include the following:
47(1)     The amount of funds expended on fundraising.
48(2)     Any return on fundraising investments.
49(3)     Any other information deemed relevant.
50
51 PART IX-E. HEALTH BENEFITS
 House Bill 1146-First Edition  Page 61
 General Assembly Of North Carolina  Session 2025
1
2 CONTINUE MEDICAID ANNUAL REPORT
3SECTION 9E.1. The Department of Health and Human Services, Division of Health
4 Benefits (DHB), shall continue the publication of the Medicaid Annual Report and
5 accompanying tables. DHB shall publish the report and tables on its website no later than
6 December 31 following each State fiscal year.
7
8 VOLUME PURCHASE PLANS AND SINGLE SOURCE PROCUREMENT
9SECTION 9E.2. The Department of Health and Human Services, Division of Health
10 Benefits, may, subject to the approval of a change in the State Medicaid Plan, contract for
11 services, medical equipment, supplies, and appliances by implementation of volume purchase
12 plans, single source procurement, or other contracting processes in order to improve cost
13 containment.
14
15 ADMINISTRATIVE HEARINGS FUNDING
16SECTION 9E.3. Of the funds appropriated in this act to the Department of Health
17 and Human Services, Division of Health Benefits, for administrative contracts and interagency
18 transfers, the Department of Health and Human Services (DHHS) shall transfer the sum of one
19 million dollars ($1,000,000) for the 2025-2026 fiscal year and the sum of one million dollars
20 ($1,000,000) for the 2026-2027 fiscal year to the Office of Administrative Hearings (OAH).
21 These funds shall be allocated by OAH for mediation services provided for Medicaid applicant
22 and recipient appeals and to contract for other services necessary to conduct the appeals process.
23 OAH shall continue the Memorandum of Agreement (MOA) with DHHS for mediation services
24 provided for Medicaid recipient appeals and contracted services necessary to conduct the appeals
25 process. Upon receipt of invoices from OAH for covered services rendered in accordance with
26 the MOA, DHHS shall transfer the federal share of Medicaid funds drawn down for this purpose.
27
28 ACCOUNTING FOR MEDICAID RECEIVABLES AS NONTAX REVENUE
29SECTION 9E.4.(a) The Department of Health and Human Services, Division of
30 Health Benefits (DHB), receivables reserved at the end of the 2025-2026 and 2026-2027 fiscal
31 years shall, when received, be accounted for as nontax revenue for each of those fiscal years. The
32 treatment under this section of any revenue derived from federal programs shall be in accordance
33 with the requirements specified in the Code of Federal Regulations, Title 2, Part 225.
34SECTION 9E.4.(b) For the 2025-2026 fiscal year, the Department of Health and
35 Human Services shall deposit from its revenues one hundred seven million seven hundred
36 thousand dollars ($170,965,305) with the Department of State Treasurer to be accounted for as
37 nontax revenue. For the 2026-2027 fiscal year, the Department of Health and Human Services
38 shall deposit from its revenues one hundred nine million dollars ($174,565,305) with the
39 Department of State Treasurer to be accounted for as nontax revenue. These deposits shall
40 represent the return of advanced General Fund appropriations, nonfederal revenue, fund
41 balances, or other resources from State-owned and State operated hospitals that are used to
42 provide indigent and nonindigent care services. The return from State-owned and State operated
43 hospitals to the Department of Health and Human Services shall be made from nonfederal
44 resources in the following manner:
45(1)     The University of North Carolina Hospitals at Chapel Hill shall make the
46following deposits:
47a.     For the 2025-2026 fiscal year, the amount of thirty-one million three
48hundred sixty-five thousand three hundred five dollars ($31,365,305).
49b.     For the 2026-2027 fiscal year, the amount of thirty-one million three
50hundred sixty-five thousand three hundred five dollars ($31,365,305).
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 General Assembly Of North Carolina  Session 2025
1(2)    All State-owned and State operated hospitals, other than the University of
2North Carolina Hospitals at Chapel Hill, that specialize in psychiatric care
3shall annually deposit an amount equal to the amount of the payments from
4DHB for uncompensated care.
5
6 LME/MCO INTERGOVERNMENTAL TRANSFERS
7SECTION 9E.5.(a) The local management entities/managed care organizations
8 (LME/MCOs) shall make intergovernmental transfers to the Department of Health and Human
9 Services, Division of Health Benefits (DHB), in an aggregate amount of eighteen million twenty-
10 eight thousand two hundred seventeen dollars ($18,028,217) in the 2025-2026 fiscal year and in
11 an aggregate amount of eighteen million twenty-eight thousand two hundred seventeen dollars
12 ($18,028,217) for the 2026-2027 fiscal year. The due date and frequency of the
13 intergovernmental transfer required by this section shall be determined by DHB. The amount of
14 the intergovernmental transfer that each individual LME/MCO is required to make in each fiscal
15 year shall be as follows:
162025-2026      2026-2027
17 Alliance Behavioral Healthcare  $4,508,857     $4,508,857
18 Partners Health Management  $3,544,348     $3,544,348
19 Trillium Health Resources  $6,448,693     $6,448,693
20 Vaya Health  $3,526,319     $3,526,319
21SECTION 9E.5.(b) In the event that a county disengages from an LME/MCO and
22 realigns with another LME/MCO during the 2025-2027 fiscal biennium, DHB shall have the
23 authority to reallocate the amount of the intergovernmental transfer that each affected
24 LME/MCO is required to make under subsection (a) of this section, taking into consideration the
25 change in catchment area and covered population, provided that the aggregate amount of the
26 transfers received from all LME/MCOs in each year of the fiscal biennium is achieved.
27
28 MEDICAID TRANSFORMATION FUND BALANCE
29SECTION 9E.6. The unexpended balance in the Medicaid Transformation Fund of
30 six million eight hundred forty-one thousand four hundred sixty-six dollars ($6,841,466) shall be
31 transferred to the Division of Health Benefits for Medicaid administration needs in FY 2026-27.
32
33 CREATE DESIGNATED STATE HEALTH PROGRAM SAVINGS BUDGET FUND
34SECTION 9E.7.(a) Fund created. – The Designated State Health Programs budget
35 fund is created as a nonreverting budget fund within the Department of Health and Human
36 Services (DHHS), Division of Health Benefits (DHB) 24445 budget code. The Division of
37 Central Management Services, Division of Child and Family Well-Being, Division of Mental
38 Health, Developmental Disabilities, and Substance Use Services, and Division of Public Health
39 shall transfer and deposit all freed-up state funds that result from additional receipts realized
40 through Designated State Health Programs authority in the North Carolina Medicaid Reform
41 Section 1115 Demonstration approved by the Centers for Medicare and Medicaid Services in
42 December, 2024 to this budget fund.
43
44 APPROPRIATION OF GOVERNMENT EFFICIENCY GRANT
45SECTION 9E.8. The federal Government Efficiency Grant funds awarded to
46 implement the State Medicaid Community Engagement requirements and other necessary
47 eligibility system requirements resulting from Medicaid expansion eligibility changes in H.R.1
48 are appropriated in the amounts provided in the notification of award from the federal
49 government or any entity acting on behalf of the federal government to administer the federal
50 funds. DHB, with approval of the Director of the Budget, may spend the grant awards.
51
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 General Assembly Of North Carolina  Session 2025
1 LEGISLATIVE INTENT
2SECTION 9E.9.1. It is the intent of the General Assembly to provide funding for
3 the increased administrative costs of compliance with frequency of eligibility redeterminations
4 requirements and community engagement requirements in the Medicaid program under Sections
5 71107 and 71119 of P.L. 119-21 from a source that meets the limitations on funding sources in
6 G.S. 108A-54.3B for NC Health Works.
7
8 SHIFT  EXISTING  PUBLIC  HOSPITAL  ASSESSMENTS  TO
9     INTERGOVERNMENTAL TRANSFERS
10SECTION 9E.9.2.(a) G.S. 108A-146.1 reads as rewritten:
11 "§ 108A-146.1. Public hospital modernized assessment.
12     (a)     The public hospital modernized assessment imposed under this Part shall apply to all
13 public acute care hospitals.
14     (b)     The public hospital modernized assessment shall be assessed as a percentage of each
15 public acute care hospital's hospital costs. The assessment percentage shall be calculated
16 quarterly by the Department of Health and Human Services in accordance with this Part. The
17     (c)     Through June 30, 2026, the percentage for each quarter shall equal the aggregate acute
18 care hospital modernized assessment collection amount under G.S. 108A-146.5 multiplied by the
19 public hospital historical assessment share and divided by the total hospital costs for all public
20 acute care hospitals holding a license on the first day of the assessment quarter.
21     (d)     Beginning July 1, 2026, the public hospital modernized assessment quarterly
22 percentage shall equal the modernized IGT actual receipts adjustment component under
23 G.S. 108A-146.14 divided by the total hospital costs for all public acute care hospitals holding a
24 license on the first day of the assessment quarter."
25SECTION 9E.9.2.(b) Part 2 of Article 7B of Chapter 108A of the General Statutes
26 is amended by adding a new section to read:
27 "§ 108A-146.1A. Public hospital modernized presumptive IGT offset amount.
28     The public hospital modernized presumptive IGT offset amount is the aggregate acute care
29 hospital modernized assessment collection amount under G.S. 108A-146.5 multiplied by the
30 public hospital historical assessment share."
31SECTION 9E.9.2.(c) G.S. 108A-146.5(a) reads as rewritten:
32 "§ 108A-146.5. Aggregate acute care hospital modernized assessment collection amount.
33     (a)     The aggregate modernized assessment collection amount is an amount of money that
34 is calculated by subtracting the modernized intergovernmental transfer presumptive IGT
35 adjustment component under G.S. 108A-146.13 from the total modernized nonfederal receipts
36 under subsection (b) of this section and then adding the positive or negative amount of the
37 modernized IGT actual receipts adjustment component under G.S. 108A-146.14. section."
38SECTION 9E.9.2.(d) G.S. 108A-146.14 reads as rewritten:
39 "§ 108A-146.14. Modernized IGT actual receipts adjustment component.
40     The modernized IGT actual receipts adjustment components is a positive or negative dollar
41 amount equal to the amount of the modernized presumptive IGT adjustment component under
42 G.S 108A-146.13 G.S. 108A-146.13(c) for the previous quarter plus the public hospital
43 modernized presumptive IGT offset amount under G.S. 108A-146.1A for the previous quarter
44 minus the amount of money received during the previous quarter by the Department through the
45 intergovernmental transfer and designated in the Department’s accounting system as a receipt
46 related to the modernized assessments. If this calculation results in a negative number, the
47 modernized IGT actual receipts adjustment component is zero."
48SECTION 9E.9.2.(e) G S. 108A-146.14 reads as rewritten:
49 "§ 108A-146.14. Modernized IGT actual receipts adjustment component.
50     The modernized IGT actual receipts adjustment components is a dollar amount equal to the
51 amount of the modernized presumptive IGT adjustment component under G.S. 108A-146.13(c)
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 General Assembly Of North Carolina  Session 2025
1 for the previous quarter plus the public hospital modernized presumptive IGT offset amount
2 under G.S. 108A-146.1A for the previous quarter minus the amount of money received during
3 the previous quarter by the Department through the intergovernmental transfer and designated in
4 the Department’s accounting system as a receipt related to the modernized assessments. If this
5 calculation results in a negative number, the modernized IGT actual receipts adjustment
6 component is zero."
7SECTION 9E.9.2.(f) Subsection (e) of this section is effective October 1, 2026 and
8 applies to assessments imposed on or after that date.
9SECTION 9E.9.2.(g) G.S. 108A-147.1 reads as rewritten:
10 "§ 108A-147.1. Public hospital health advancement assessment.
11     (a)     The public hospital health advancement assessment imposed under this Part shall
12 apply to all public acute care hospitals.
13     (b)     The public hospital health advancement assessment shall be assessed as a percentage
14 of each public acute care hospital's hospital costs. The assessment percentage shall be calculated
15 quarterly by the Department in accordance with this Part. The
16     (c)     Through June 30, 2026, the percentage for each quarter shall equal the aggregate acute
17 care hospital health advancement assessment collection amount calculated under
18 G.S. 108A-147.3 multiplied by the public hospital historical assessment share and divided by the
19 total hospital costs for all public acute care hospitals holding a license on the first day of the
20 assessment quarter.
21     (d)     Beginning July 1, 2026, the public hospital health advancement assessment quarterly
22 percentage shall equal the health advancement IGT actual receipts adjustment components under
23 G.S. 108A-147.10 divided by the total hospital costs for all public acute care hospitals holding a
24 license on the first day of the assessment quarter."
25SECTION 9E.9.2.(h) Part 3 of Article 7B of Chapter 108A of the General Statutes
26 is amended by adding a new section to read:
27 "§ 108A-147.1A. Public hospital health advancement presumptive IGT offset amount.
28     The public hospital health advancement presumptive IGT offset amount is the aggregate
29 acute care hospital health advancement assessment collection amount under G.S. 108A-147.3
30 multiplied by the public hospital historical assessment share."
31SECTION 9E.9.2.(i) G.S. 108A-147.3(a) reads as rewritten:
32     "(a) The aggregate health advancement assessment collection amount is an amount of
33 money that is calculated quarterly by adjusting the total nonfederal receipts for health
34 advancement calculates under subsection (b) of this section by (i) subtracting the health
35 advancement presumptive IGT adjustment component calculated under G.S. 108A-147.9, (ii)
36 adding the positive or negative health advancement IGT actual receipts adjustment component
37 calculated under G.S. 108A-147.10, G.S. 108A-147.9 and (iii) then subtracting the positive or
38 negative total IGT share of the reconciliation adjustment component calculated under G.S. 108A-
39 147.11(b)G.S. 108A-147.11(e)."
40SECTION 9E.9.2.(j) G.S. 108A-147.10 reads as rewritten:
41 "§ 108A-147.10. Health advancement IGT actual receipts adjustment component.
42     The health advancement IGT actual receipts adjustment component is a positive or negative
43 dollar amount equal to the health advancement presumptive IGT adjustment component
44 calculated under G.S. 108A-147.9 for the previous quarter, plus the positive or negative total IGT
45 share of the reconciliation adjustment component calculated under G.S.
46 108A-147.11(b)G.S. 108A-147.11(e) for the previous quarter, and minus the amount of money
47 received during the previous quarter by the Department through intergovernmental transfer and
48 designated in the Department's accounting system as a receipt for health advancement. If this
49 calculation results in a negative number, the health advancement IGT actual receipts adjustment
50 component is zero."
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 General Assembly Of North Carolina  Session 2025
1SECTION 9E.9.2.(k) G.S. 108A-147.10 as amended by subsection (j) of this section
2 reads as rewritten:
3 "§ 108A-147.10. Health advancement IGT actual receipts adjustment component.
4     The health advancement IGT actual receipts adjustment component is a positive or negative
5 dollar amount equal to the total of (i) the amount of the health advancement presumptive IGT
6 adjustment component calculated under G.S. 108A-147.9 for the previous quarter, plus (ii) the
7 positive or negative IGT share of the reconciliation adjustment component calculated under
8 G.S. 108A-147.11(e) for the previous quarter, andand (iii) the public hospital health
9 advancement presumptive IGT offset amount for the previous quarter, minus the amount of
10 money received during the previous quarter by the Department through intergovernmental
11 transfer and designated in the Department's accounting system as a receipt for health
12 advancement. If this calculation results in a negative number, the health advancement IGT actual
13 receipts adjustment component is zero."
14SECTION 9E.9.2.(l) G.S. 108A-147.11 reads as rewritten:
15 "§ 108A-147.11. Health advancement reconciliation adjustment component.
16     (a)     The health advancement reconciliation adjustment component is a positive or
17 negative dollar amount equal to the actual nonfederal expenditures for the quarter that is two
18 quarters prior to the current quarter minus the sum of the following specified amounts:
19(1)     The presumptive service cost component calculated under G.S. 108A-147.5
20for the quarter that is two quarters prior to the current quarter.
21(2)     The amount transferred during the current quarter by the Department of
22Revenue to the State Treasurer for the Health Advancement Receipts Special
23Fund under G.S. 105-228.5C.
24(3)     The health advancement acute care hospital HASP component calculated
25under G.S. 108A-147.6 for the quarter that is two quarters prior to the current
26quarter.
27(4)     The health advancement freestanding psychiatric hospital HASP component
28calculated under G.S. 108A-147.6A for the quarter that is two quarters prior
29to the current quarter.
30     (b)     The base IGT share of the reconciliation adjustment component is a positive or
31 negative dollar amount that is calculated by multiplying the health advancement reconciliation
32 adjustment component calculated under subsection (a) of this section by the share of public
33 hospital costs calculated under subsection (c) of this section.
34     (c)     The share of public hospital costs is calculated by adding total hospital costs for the
35 UNC Health Care System, total hospital costs for the primary affiliated teaching hospital for the
36 East Carolina University Brody School of Medicine, and sixty percent (60%) of the total hospital
37 costs for all public acute care hospitals and dividing that sum by the total hospital costs for all
38 acute care hospitals except for critical access hospitals.
39     (d)     The supplemental IGT share of the reconciliation adjustment component is a positive
40 or negative dollar amount that is calculated by subtracting the base IGT share of the reconciliation
41 adjustment component calculated under subsection (b) of this section from the health
42 advancement reconciliation component calculated under subsection (a) of this section and
43 multiplying that difference by the public hospital historical assessment share.
44     (e)     The total IGT share of the reconciliation adjustment component is a positive or
45 negative dollar amount that is the sum of the base IGT share of the reconciliation adjustment
46 component calculated under subsection (b) of this section and the supplemental IGT share of the
47 reconciliation adjustment component calculated under subsection (d) of this section."
48SECTION 9E.9.2.(m) Subsection (k) of this section is effective October 1, 2026,
49 and applies to assessments imposed on or after that date.
50SECTION 9E.9.2.(n) Except as otherwise provided, this section is effective July 1,
51 2026, and applies to assessments imposed on or after that date.
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1
2 THE 2026 ONE-TIME ASSESSMENTS FOR NEW HEALTH ADVANCEMENT
3     ADMINISTRATIVE COSTS
4SECTION 9E.9.3.(a) For purposes of this section, the following definitions apply:
5(1)     Acute care hospital. – As defined in G.S. 108A-145.3.
6(2)     Aggregate collection amount. – Fourteen million three hundred thousand
7dollars ($14,300,000) minus intergovernmental transfer receipts.
8(3)     DHHS. – The Department of Health and Human Services.
9(4)     Hospital costs. – As defined in G.S. 108A-145.3.
10(5)     Intergovernmental transfer receipts. – The amount of money received during
11the quarter in which this section becomes effective by DHHS through
12intergovernmental transfers and that is designated in DHHS's accounting
13system as a receipt for the 2026 one-time assessments.
14(6)     Private acute care hospital. – As defined in G.S. 108A-145.3.
15(7)     Private hospital historical assessment share. – As defined in G.S. 108A-145.3.
16(8)     Public acute care hospital. – As defined in G.S. 108A-145.3.
17(9)     Public hospital historical assessment share. – As defined in G.S. 108A-145.3.
18SECTION 9E.9.3.(b) Effective when this act becomes law, each private acute care
19 hospital is subject to a 2026 one-time assessment that is a percentage of its hospital costs. The
20 percentage shall equal the aggregate collection amount multiplied by the private hospital
21 historical assessment share and divided by the total hospital costs for all private acute care
22 hospitals.
23SECTION 9E.9.3.(c) Effective when this act becomes law, each public acute care
24 hospital is subject to a 2026 one-time assessment that is a percentage of its hospital costs. The
25 percentage shall equal the aggregate collection amount multiplied by the public hospital historical
26 assessment share and divided by the total hospital costs for all public acute care hospitals.
27SECTION 9E.9.3.(d) The proceeds of the assessments under this section
28 and intergovernmental transfer receipts shall be deposited in the Health Advancement
29 Receipts Special Fund under G.S. 143C-9-10 and shall be used for the increased
30 administrative costs described in Section 9E.9 as allowed under G.S. 108A-147.13(a)(2). From
31 the proceeds of this assessment and intergovernmental transfer receipts, DHHS shall use the sum
32 of seven million eight hundred thousand dollars ($7,800,000) to provide funding to county
33 departments of social services to support the counties with the increased administrative costs
34 described in Section 9E.9.9.
35SECTION 9E.9.3.(e) The hospital assessments under this section shall be imposed
36 by DHHS in accordance with the following procedures:
37(1)     The assessment shall be calculated, imposed, and due in the time and manner
38prescribed by DHHS and shall be considered delinquent if not paid within
39seven calendar days of this due date.
40(2)     With respect to any hospital owing a past due assessment amount, DHHS may
41withhold the unpaid amount from Medicaid payments otherwise due or
42impose a late payment penalty. DHHS may waive a penalty for good cause
43shown.
44(3)     A hospital may appeal a determination of the assessment amount owed
45through a reconsideration review. The pendency of an appeal does not relieve
46a hospital from its obligation to pay an assessment amount when due.
47(4)     The assessment may be included as allowable costs of a hospital for purposes
48of any applicable Medicaid reimbursement formula, except the assessment
49shall be excluded from cost settlement.
50(5)     The assessment may not be added as a surtax or assessment on a patient's bill.
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1SECTION 9E.9.3.(f) For purposes of determining the aggregate amount of all
2 assessments due from hospitals under Article 7B of Chapter 108A of the General Statutes
3 pursuant to G.S. 108A-148.1(c)(2), the assessments under this section shall be considered an
4 assessment due from hospitals under that Article.
5SECTION 9E.9.3.(g) No later than February 1, 2027, DHHS shall submit to the
6 Joint Legislative Oversight Committee on Medicaid and the Fiscal Research Division a report
7 that details the amount of the proceeds from the assessments imposed under this section that
8 DHHS provided to each county department of social services and the date that those proceeds
9 were provided to each county department of social services.
10
11 HOSPITAL HEALTH ADVANCEMENT ASSESSMENT FUNDING FOR NEW
12     ADMINISTRATIVE COSTS
13SECTION 9E.9.4.(a) G.S. 108A-147.7 reads as rewritten:
14 "§ 108A-147.7. Administration Base administration component.
15     (a)     The base administration component is an amount of money that is calculated by
16 adding the base State administration subcomponent calculated under subsection (b) of this
17 section and the base county administration subcomponent calculated under subsection (c) of this
18 section.
19     (b)     For each quarter of the 2023-2024 State fiscal year, the State administration
20 subcomponent is the product of one million three hundred fifty thousand dollars ($1,350,000)
21 multiplied by the number of months in that State fiscal quarter in which G.S. 108A-54.3A(24) is
22 effective during any part of the month. For each quarter of the 2024-2025 State fiscal year, the
23 base State administration subcomponent is four million one hundred eighty-seven thousand seven
24 hundred dollars ($4,187,700). For each subsequent State fiscal year, the base State administration
25 subcomponent shall be increased over the prior year's quarterly amount by a percentage that is
26 the sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers
27 for the most recent 12 months available on March 1 of the previous State fiscal year.
28     (c)     For each quarter of the 2022-2023 State fiscal year and the 2023-2024 State fiscal
29 year, the county administration subcomponent is the product of one million six hundred
30 sixty-seven thousand dollars ($1,667,000) multiplied by the number of months in that State fiscal
31 quarter in which G.S. 108A-54.3A(24) is effective during any part of the month. The base county
32 administration subcomponent is seven million four hundred thousand dollars ($7,400,000) for
33 each quarter of the 2024-2025 State fiscal year and seven million eight hundred thousand dollars
34 ($7,800,000) for each quarter of the 2025-2026 State fiscal year. For each State fiscal year after
35 the 2025-2026 State fiscal year, the base county administration subcomponent shall be increased
36 over the prior year's quarterly amount by a percentage that is the sum of each monthly percentage
37 change in the Consumer Price Index: All Urban Consumers for the most recent 12 months
38 available on March 1 of the previous State fiscal year."
39SECTION 9E.9.4.(b) Part 3 of Article 7B of Chapter 108A of the General Statutes
40 is amended by adding a new section to read:
41 "§ 108A-147.7A. Supplemental administration component.
42     (a)     The supplemental administration component is an amount of money that is calculated
43 by adding the supplemental State administration subcomponent calculated under subsection (b)
44 of this section and the supplemental county administration subcomponent calculated under
45 subsection (c) of this section.
46     (b)     For the quarter of the 2026-2027 fiscal year beginning on July 1, 2026, the
47 supplemental State administration subcomponent is zero. For the quarter of the 2026-2027 fiscal
48 year beginning on October 1, 2026, the supplemental State administration subcomponent is three
49 million three hundred thousand dollars ($3,300,000). For the quarter of the 2026-2027 fiscal year
50 beginning on January 1, 2207, the supplement State administration subcomponent is two million
51 three hundred fifty thousand dollars ($2,350,000). For the quarter of the 2026-27 fiscal year
 Page 68  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 beginning on April 1,2027, the supplemental State administration subcomponent is three million,
2 three hundred thousand dollars ($3,300,000). For the 2027-2028 fiscal year, the quarterly
3 supplemental State administration subcomponent shall be three million three hundred thousand
4 dollars ($3,300,000) increased by a percentage that is the sum of each monthly percentage change
5 in the Consumer Price Index: All Urban Consumers for the most recent 12 months available on
6 March1 of the previous State fiscal year. For each subsequent State fiscal year through the 2035-
7 2036 State fiscal year, the supplemental State administration subcomponent shall be increased
8 over the prior year’s quarterly amount by a percentage that is the sum of each monthly percentage
9 change in the Consumer Price Index: All Urban Consumers for the most recent 12 months
10 available March 1 of the previous State fiscal year. For each State Fiscal year beginning on or
11 after July 1, 2036, the supplemental State administration subcomponent quarterly amount is zero.
12     (c)      For each quarter of the 2026-2027 fiscal year, the supplemental county administration
13 component is seven million eight hundred thousand dollars ($7,800,000). For each subsequent
14 State fiscal year through the 2035-2036 State fiscal year, the supplemental county administration
15 subcomponent shall be increased over the prior year’s quarterly amount by a percentage that is
16 the sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers
17 for the most recent 12 months available on March 1 of the previous State fiscal year. For each
18 State fiscal year beginning on or after July 1, 2036, the supplemental county administration
19 subcomponent quarterly amount is zero."
20
21SECTION 9E.9.4.(c) G.S. 108A-147.3, as amended by Section 6.1(n) of S.L.
22 2025-64 reads as rewritten:
23 "§ 108A-147.3. Aggregate acute care hospital health advancement assessment collection
24amount.
25     …
26     (b)    The total nonfederal receipts for health advancement is an amount of money that is
27 calculated quarterly by adding all of the following:
28(1)     The presumptive service cost component calculated under G.S. 108A-147.5.
29(2)     The health advancement acute care hospital HASP component calculated
30under G.S. 108A-147.6.
31(2a) The health advancement freestanding psychiatric hospital HASP component
32calculated under G.S. 108A-147.6A.
33(3)     The base administration component calculated under G.S. 108A-147.7.
34(3a) The supplemental administration component calculated under G.S. 108A-
35147.7A.
36(4)     The State retention component under G.S. 108A-147.9.
37(5)     The positive or negative health advancement reconciliation adjustment
38component calculated under G.S. 108A-147.11(a).
39     …."
40SECTION 9E.9.4.(d) G.S. 108A-147.9 reads as rewritten:
41 "§ 108A-147.9. Health advancement presumptive IGT adjustment component.
42     …
43     (b)    The public hospital health advancement IGT adjustment subcomponent is the total of
44 the following amounts:
45(1)     Sixty percent (60%) of the public hospital share of the sum of the presumptive
46service cost component calculated under G.S. 108A-147.5 for the current
47quarter, the base administration component calculated under G.S. 108A-147.7
48for the current quarter, the supplemental administration component calculated
49under G.S. 108A-147.7A, and the State retention component under
50G.S. 108A-147.8 for the current quarter. The public hospital share is the total
51hospital costs for all public acute care hospitals divided by the total hospital
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 General Assembly Of North Carolina  Session 2025
1costs for all acute care hospitals except for critical access hospitals and rural
2emergency hospitals for the current quarter.
3…
4     (c)      The UNC Health Care System health advancement IGT adjustment subcomponent is
5 the total of the following amounts:
6(1)     The UNC Health Care System share of the sum of the presumptive service
7cost component calculated under G.S. 108A-147.5 for the current quarter
8andquarter, the base administration component calculated under
9G.S. 108A-147.7 for the current quarterquarter, and the supplemental
10administration component calculated under G.S. 108A-147.7A for the current
11quarter. The UNC Health Care System share is the total hospital costs for the
12UNC Health Care System hospitals divided by the total hospital costs for all
13acute care hospitals except for critical access hospitals and rural emergency
14hospitals for the current quarter.
15…
16     (d)      The East Carolina University health advancement IGT adjustment subcomponent is
17 the total of the following amounts:
18(1)     The East Carolina University share of the sum of the presumptive service cost
19component calculated under G.S. 108A-147.5 for the current quarter and
20quarter, the administration component calculated under G.S. 108A-147.7 for
21the current quarter, quarter, and the supplemental administration component
22calculated under G.S. 108A-147.7A for the current quarter. The East Carolina
23University share is the total hospital costs for the primary affiliated teaching
24hospital for the East Carolina University Brody School of Medicine divided
25by the total hospital costs for all acute care hospitals except for critical access
26hospitals and rural emergency hospitals for the current quarter.
27…."
28SECTION 9E.9.4.(e) G.S. 108A-147.13 reads as rewritten:
29 "§ 108A-147.13. Use of funds.
30     …
31     (b)      The Department shall use an amount of the proceeds of the health advancement
32 assessments that is equal to the sum of the base county administration subcomponent of the
33 administration component in G.S. 108A-147.7 and the supplemental county administration
34 subcomponent of the supplemental administration component in G.S. 108A-147.7A to provide
35 funding to county departments of social services to support the counties in determining eligibility
36 for newly eligible individuals.
37     (c)      The amount of the proceeds of the health advancement assessments that may be used
38 for administrative expenses attributable to providing Medicaid coverage to newly eligible
39 individuals and administrative expenditures associated with the HASP program shall not exceed,
40 for any State fiscal year, an amount equal to the sum of the base State administration
41 subcomponent of the base administration component in G.S. 108A-147.7 for each quarter of the
42 State fiscal year, the supplemental State administration subcomponent of the supplemental
43 administration component in G.S. 108A-147.7A for each quarter of the State fiscal year, and all
44 corresponding matching federal funds.funds corresponding to those subcomponents.
45     …."
46SECTION 9E.9.4.(f) This section is effective July 1, 2026, and applies to
47 assessments imposed on or after that date.
48
49 ADMINISTRATIVE COST REPORTING AND RECONCILIATION
50SECTION 9E.9.5. No later than October 1, 2029, the Department of Health and
51 Human Services, Division of Health Benefits (DHB), shall submit a report to the House of
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 General Assembly Of North Carolina  Session 2025
1 Representatives Appropriations Committee on Health and Human Services, the Senate
2 Appropriations Committee on Health and Human Services, the Joint Legislative Oversight
3 Committee on Medicaid, and the Fiscal Research Division that includes all of the following:
4(1)    The estimated share of the actual administrative costs expended through June
530, 2029, by DHB that is attributable to compliance with the requirements
6described in Section 9E.9 of this act.
7(2)    A description of any reduction to the administrative costs described in Section
89E.9 of this act resulting from (i) actions taken by DHB to achieve efficiencies
9or (ii) decreases in enrollment in NC Health Works.
10(3)    The total amount of assessment receipts and intergovernmental transfer
11receipts from April 1, 2026, through June 30, 2029, that are attributable to
12G.S. 108A-147.7A or 9E.9.3. of this act.
13(4)    A proposal for crediting against future assessments owed under Article 7B of
14Chapter 108A of the General Statutes any amounts under subdivision (3) of
15this section that exceed the amount under subdivision (1) of this section.
16(5)    Any proposed legislative changes to ensure that hospital assessment and
17intergovernmental transfer amounts attributable to G.S. 108A-147.7A do not
18exceed the administrative costs expended to comply with the requirements
19described in Section 9E.9 of this act, including any of the following:
20a.       Adjustments to the supplemental administration component in
21G.S. 108A-147.7A.
22b.       Addition of a statutory annual reconciliation of any hospital
23assessment and intergovernmental transfer amounts attributable to
24G.S. 108A-147.7A in excess of actual administrative costs expended
25to comply with the requirements described in Section 9E.9 of this act.
26
27 REPORTING ON CERTAIN CHANGES RESULTING IN REDUCTION IN
28     ADMINISTRATIVE COSTS
29SECTION 9E.9.6.(a) If the Department of Health and Human Services, Division
30 of Health Benefits (DHB), determines that the requirements described in Section 9E.9 of this
31 act as applied to NC Health Works will be modified or eliminated due to a change in federal or
32 State law, rule, or regulation and the modification or elimination will reduce the administrative
33 costs described in Section 9E.9 of this act, then DHB shall submit a report on its determination
34 to the House of Representatives Appropriations Committee on Health and Human Services, the
35 Senate Appropriations Committee on Health and Human Services, the Joint Legislative
36 Oversight Committee on Medicaid, and the Fiscal Research Division. This report shall be due 60
37 days after DHB identifies the anticipated modification or elimination and shall include all of the
38 following:
39(1)     An explanation of the anticipated modification or elimination.
40(2)     The date the modification or elimination is expected to be effective.
41(3)     A fiscal analysis of the anticipated reduction in administrative costs
42attributable to the modification or elimination.
43(4)     A proposal for a decrease or elimination of the amounts included in the
44assessments to hospitals under G.S. 108A-147.7A that corresponds to the
45anticipated reduction in administrative costs.
46SECTION 9E.9.6.(b) This section expires June 30, 2036.
47
48 END NEW HOSPITAL ASSESSMENT AMOUNTS UNDER CERTAIN CONDITIONS
49SECTION 9E.9.7.(a) In developing the average commercial rate demonstration for
50 the Healthcare Access and Stabilization Program (HASP), the Department of Health and
51 Human Services, Division of Health Benefits (DHB), shall use the payment methodology or
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 General Assembly Of North Carolina  Session 2025
1 approach that produces the maximum allowable level of HASP reimbursements to hospitals and
2 receives federal approval.
3SECTION 9E.9.7.(b) DHB shall submit a report to the House of Representatives
4 Appropriations Committee on Health and Human Services, the Senate Appropriations
5 Committee on Health and Human Services, the Joint Legislative Oversight Committee on
6 Medicaid, and the Fiscal Research Division if DHB determines that any of the following
7 conditions have been met:
8(1)     Centers for Medicare and Medicaid Services (CMS) approved a HASP
9preprint that is less than ninety-five percent (95%) of the maximum allowable
10amount for HASP under federal law or regulation, calculated based on all of
11the following:
12a.      Limits on state directed payments and provider taxes established under
13P.L. 119-21.
14b.      Any federal laws or regulations related to state directed payments,
15provider taxes, and intergovernmental transfers that are applicable to
16the period for which the CMS approval is received.
17(2)     The gross HASP reimbursements to hospitals approved by CMS for a fiscal
18year are less than one billion five hundred million dollars ($1,500,000,000).
19(3)     The gross HASP reimbursements paid to hospitals, calculated on an accrual
20basis, for a fiscal year are less than one billion five hundred million dollars
21($1,500,000,000).
22(4)     A change in federal law or regulation resulted in adjusted hospital
23intergovernmental transfers, in any quarter, that were at least twenty percent
24(20%) lower than the amount of base hospital intergovernmental transfers for
25that quarter. For purposes of this subdivision, the following definitions apply:
26a.      Actual hospital intergovernmental transfers. – The sum of all
27intergovernmental transfers designated in DHHS's accounting system
28as either a receipt for health advancement or a receipt related to the
29modernized assessments.
30b.      Adjusted hospital intergovernmental transfers. – The amount of the
31base hospital intergovernmental transfers adjusted to account for any
32new federal restrictions on intergovernmental transfers established
33through federal law or regulation.
34c.      Base hospital intergovernmental transfers. – The sum of actual hospital
35intergovernmental transfers collected during the quarter of fiscal
36year 2025-2026 beginning on October 1, 2025, plus the amount of
37hospital assessments under Article 7B of Chapter 108A of the
38General Statutes collected in that quarter from public acute care
39hospitals, adjusted for any changes in hospital status that occurred after
40October 1, 2025.
41d.      Changes in hospital status. – As defined in G.S. 108A-146.17.
42e.      Public acute care hospital. – As defined in G.S. 108A-145.3.
43SECTION 9E.9.7.(c) The report required by subsection (b) of this section is due 120
44 days after DHB's determination that one of the conditions has been met. Prior to submitting the
45 report, DHB shall allow at least 30 days for the North Carolina Healthcare Association to
46 review the determination and to provide written confirmation or disagreement with the
47 determination. Once a report required under subsection (b) of this section has been submitted,
48 DHB shall not be required to submit any further reports under subsection (b) of this section.
49SECTION 9E.9.7.(d) On the date DHB submits the report required by subsection
50 (b) of this section, DHB shall notify, in writing, the Revisor of Statutes that the report has
51 been submitted.
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 General Assembly Of North Carolina  Session 2025
1SECTION 9E.9.7.(e) G.S. 108A-147.7A, as enacted by Section 9E.9.4.(b) reads
2 as rewritten:
3 "§ 108A-147.7A. Supplemental administration component.
4      (a)     The supplemental administration component is an amount of money that is calculated
5 by adding the supplemental State administration subcomponent calculated under subsection (b)
6 of this section and the supplemental county administration subcomponent calculated under
7 subsection (c) of this section.
8      (b)     For the quarter of the 2026-2027 fiscal year beginning on July 1, 2026, the
9 supplemental State administration subcomponent is zero. For the quarter of the 2026-2027 fiscal
10 year beginning on October 1, 2026, the supplemental State administration subcomponent is three
11 million three hundred thousand dollars ($3,300,000). For the quarter of the 2026-2027 fiscal year
12 beginning on January 1, 2027, the supplemental State administration subcomponent is two
13 million three hundred fifty thousand dollars ($2,350,000). For the quarter of the 2026-2027 fiscal
14 year beginning on April 1, 2027, the supplemental State administration subcomponent is three
15 million three hundred thousand dollars ($3,300,000). For each quarter of the 2027-2028 fiscal
16 year, the supplemental State administration subcomponent shall be three million three hundred
17 thousand dollars ($3,300,000) increased by a percentage that is the sum of each monthly
18 percentage change in the Consumer Price Index: All Urban Consumers for the most recent 12
19 months available on March 1 of the previous Sstate fiscal year. For each subsequent State fiscal
20 year through the 2035-2036 State fiscal year, the supplemental State administration
21 subcomponent shall be increased over the prior year’s quarterly amount by a perentage that is the
22 sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers for
23 the most recent 12 months available on March 1 of the previous State fiscal year. For each State
24 fiscal year beginning on or after July 1, 2036, the The supplemental State administration
25 subcomponent quarterly amount is zero.
26      (c)     For each quarter of the 2026-2027 fiscal year, the supplemental county administration
27 component is seven million eight hundred thousand dollars ($7,800,000). For each subsequent
28 State fiscal year through the 2035-2036 State fiscal year, the supplemental county administration
29 subcomponent shall be increased over the prior year’s quarterly amount by a percentage that is
30 the sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers
31 for the most recent 12 months available on March 1 of the previous State fiscal year. For each
32 State fiscal year beginning on or after July 1, 2036, theThe supplemental county administration
33 subcomponent quarterly amount is zero."
34SECTION 9E.9.7.(f) Section 9E.6 of this act is repealed.
35SECTION 9E.9.7.(g) Subsections (e) and (f) of this section are effective on the
36 first day of the next assessment quarter that is two years after the date the report required by
37 subsection (b) of this section is submitted. Subsection (e) of this section applies to assessments
38 imposed on or after the date subsection (e) of this section becomes effective.
39SECTION 9E.9.7.(h) This section expires on July 1, 2034, if no report required
40 by subsection (b) of this section has been submitted by that date.
41
42 REPORT ON OPTIONS FOR CONTINUED FUNDING AFTER JUNE 30, 2036
43SECTION 9E.9.8. No later than October 1, 2031, the Department of Health and
44 Human Services, Division of Health Benefits (DHB), shall submit a report, in consultation with
45 relevant stakeholders, to the House of Representatives Appropriations Committee on Health and
46 Human Services, the Senate Appropriations Committee on Health and Human Services, the
47 Joint Legislative Oversight Committee on Medicaid, and the Fiscal Research Division
48 outlining options for the continued funding of the increased administrative costs described in
49 Section 9E.9 of this act after June 30, 2036.
50
51 EFFECTIVE DATE
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1SECTION 9E.9.9. Except as otherwise provided in Sections 9E.9.1 through 9E.9.8
2 of this act, those sections of this act are effective when they become law.
3
4 PART IX-F. HEALTH SERVICES REGULATION
5
6 CONSTRUCTION SECTION PLAN REVIEW FEES REMAIN IN DHSR
7SECTION 9F.1. G.S. 131E-267(a) reads as rewritten:
8 "§ 131E-267. Fees for departmental review of licensed health care facility or Medical Care
9Commission bond-financed construction projects.
10     (a)      The Department of Health and Human Services shall charge a fee for the review of
11 each health care facility construction project to ensure that project plans and construction are in
12 compliance with State law. The fee shall be charged on a one-time, per-project basis as provided
13 in this section. In no event shall a fee imposed under this section exceed two hundred thousand
14 dollars ($200,000) for any single project. The first seven hundred twelve thousand six hundred
15 twenty-six dollars ($712,626) one million dollars ($1,000,000) in plan review fees collected
16 under this section shall remain in the Division of Health Service Regulation. Additional fees
17 collected shall be credited to the General Fund as nontax revenue and are intended to offset rather
18 than replace appropriations made for this purpose."
19
20 PART IX-G. MENTAL HEALTH/DEVELOPMENTAL DISABILITIES/SUBSTANCE
21USE SERVICES
22
23 SINGLE STREAM FUNDING FOR DMH/DD/SUS COMMUNITY SERVICES
24SECTION 9G.1.(a) For the purpose of mitigating cash flow problems that many
25 local management entities/managed care organizations (LME/MCOs) experience at the
26 beginning of each fiscal year relative to single stream funding, the Department of Health and
27 Human Services, Division of Mental Health, Developmental Disabilities, and Substance Use
28 Services (DMH/DD/SUS), shall distribute not less than one-twelfth of each LME/MCO's base
29 budget allocation at the beginning of the fiscal year and subtract the amount of that distribution
30 from the LME/MCO's total reimbursements for the fiscal year. For each month of the fiscal year
31 after July, DMH/DD/SUS shall distribute, on the third working day of the month, one eleventh
32 of the amount of each LME/MCO's single stream allocation that remains after subtracting the
33 amount of the distribution that was made to the LME/MCO in July of the fiscal year.
34SECTION 9G.1.(b) If, on or after June 1, 2027, the Office of State Budget
35 Management (OSBM) certifies a Medicaid budget surplus and sufficient case in Budget Code
36 14445 to meet total obligations for the 2026-2027 fiscal year, then DHB shall transfer to
37 DMH/DD/SUS funds not to exceed the amount of the certified surplus or thirty million dollars
38 ($30,000,000), whichever is less, to be used for single stream funding.
39
40 LOCAL INPATIENT PSYCHIATRIC BEDS OR BED DAYS
41SECTION 9G.2.(a) Use of Funds. – Funds appropriated in this act to the Department
42 of Health and Human Services, Division of Mental Health, Developmental Disabilities, and
43 Substance Use Services, shall continue to be used for the purchase of local inpatient psychiatric
44 beds or bed days. The Department of Health and Human Services (DHHS) shall continue to
45 implement a two-tiered system of payment for purchasing these local inpatient psychiatric beds
46 or bed days based on acuity level with an enhanced rate of payment for inpatient psychiatric beds
47 or bed days for individuals with higher acuity levels, as defined by DHHS. The enhanced rate of
48 payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels shall
49 not exceed the lowest average cost per patient bed day among the State psychiatric hospitals. In
50 addition, at the discretion of the Secretary of Health and Human Services, existing funds allocated
51 to LME/MCOs for community-based mental health, developmental disabilities, and substance
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1 use disorder services may be used to purchase additional local inpatient psychiatric beds or bed
2 days. DHHS may allocate funding to the LME/MCOs for the purchase of facility-based crisis,
3 nonhospital detoxification services and peer respite services to support individuals that do not
4 meet the medical necessity for inpatient treatment and can be diverted from an inpatient hospital
5 stay.
6SECTION 9G.2.(b) Distribution and Management of Beds or Bed Days. – DHHS
7 shall work to ensure that any local inpatient psychiatric beds or bed days purchased in accordance
8 with this section are utilized solely for individuals who are medically indigent, except that DHHS
9 may use up to forty percent (40%) of the funds appropriated in this act to the Department of
10 Health and Human Services, Division of Mental Health, Developmental Disabilities, and
11 Substance Use Services, for the purchase of local inpatient psychiatric beds, bed days to pay for
12 facility-based crisis services, non-hospital detoxification services, and peer respite services for
13 individuals in need of these services, regardless of whether the individuals are medically indigent.
14 For the purposes of this subsection, "medically indigent" shall mean uninsured persons who (i)
15 are financially unable to obtain private insurance coverage, as determined by DHHS and (ii) are
16 not eligible for government-funded health coverage such as Medicare or Medicaid.
17In addition, DHHS shall work to ensure that any local inpatient psychiatric beds or
18 bed days purchased in accordance with this section are distributed across the State and according
19 to need, as determined by DHHS. DHHS shall ensure that beds or bed days for individuals with
20 higher acuity levels are distributed across the State and according to greatest need based on
21 hospital bed utilization data. DHHS shall enter into contracts with LME/MCOs and local
22 hospitals for the purchase and management of the local inpatient psychiatric beds or days and
23 allocate up to forty percent (40%) of the total funding to the LME/MCO’s for the purpose of
24 facility-based crisis services, nonhospital detoxification services, and peer respite services.
25 DHHS shall work to ensure that these contracts are awarded equitably around all regions of the
26 State. LME/MCOs shall manage and control these local inpatient psychiatric beds or bed days,
27 including the determination of the specific local hospital or State psychiatric hospital to which
28 an individual should be admitted pursuant to an involuntary commitment order.
29SECTION 9G.2.(c) Funds to be Held in Statewide Reserve. – Funds appropriated in
30 this act to DHHS for the purchase of local inpatient psychiatric beds or bed days shall not be
31 allocated to LME/MCOs but shall be held in a statewide reserve at the Division of Mental Health,
32 Developmental Disabilities, and Substance Use Services to pay for services authorized by the
33 LME/MCOs and billed by the hospitals through the LME/MCOs. LME/MCOs shall remit claims
34 for payment to DHHS within 15 working days after receipt of a clean claim from the hospital
35 and shall pay the hospital within 30 working days after receipt of payment from DHHS.
36SECTION 9G.2.(d) Ineffective LME/MCO Management of Beds or Bed Days. – If
37 DHHS determines that (i) an LME/MCO is not effectively managing the beds or bed days for
38 which it has responsibility, as evidenced by beds or bed days in the local hospital not being
39 utilized while demand for services at the State psychiatric hospitals has not decreased, or (ii) the
40 LME/MCO has failed to comply with the prompt payment provisions of this section, DHHS may
41 contract with another LME/MCO to manage the beds or bed days or, notwithstanding any other
42 provision of law to the contrary, may pay the hospital directly.
43SECTION 9G.2.(e) Reporting by LME/MCOs. – LME/MCOs shall be required to
44 report to DHHS regarding the utilization of these beds or bed days.
45SECTION 9G.2.(f) Reporting by DHHS. – By no later than December 1, 2025, and
46 by no later than December 1, 2026, DHHS shall report to the Joint Legislative Oversight
47 Committee on Health and Human Services and the Fiscal Research Division on all of the
48 following:
49(1)     A uniform system for beds or bed days purchased during the preceding fiscal
50year from (i) existing State appropriations and (ii) local funds.
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1(2)     An explanation of the process used by DHHS to ensure that, except as
2otherwise provided in subsection (a) of this section, local inpatient psychiatric
3beds or bed days purchased in accordance with this section are utilized solely
4for individuals who are medically indigent, along with the number of
5medically indigent individuals served by the purchase of these beds or bed
6days.
7(3)     The amount of funds used to pay for facility-based crisis services, along with
8the number of individuals who received these services and the outcomes for
9each individual.
10(4)     The amount of funds used to pay for nonhospital detoxification services, along
11with the number of individuals who received these services and the outcomes
12for each individual.
13(5)     Other DHHS initiatives funded by State appropriations to reduce State
14psychiatric hospital use.
15
16 PART IX-H. PUBLIC HEALTH
17
18 USE OF JUUL SETTLEMENT FUNDS
19SECTION 9H.1.(a) There is appropriated from the Youth Electronic Nicotine
20 Dependence Abatement Fund created in Section 9G.10(a) of S.L. 2021-180 to the Department of
21 Health and Human Services, Division of Public Health (DPH), the sum of six million dollars
22 ($6,000,000) in nonrecurring funds for the 2026-2027 fiscal year to be allocated and used as
23 follows:
24(1)     One million two hundred and fifty thousand dollars ($1,250,000) in
25nonrecurring funds for the 2026-2027 fiscal year shall be used to support data
26monitoring to track tobacco/nicotine use and exposure among youth and
27young adults and populations at risk; for independent evaluation of the reach,
28effectiveness, and outcomes of the State's evidence based programs designed
29to help youth addicted to nicotine through electronic cigarettes and other new
30and emerging tobacco and nicotine products quit; and to prepare the report
31required by subsection (f) of this section.
32(2)     One million dollars ($1,000,000) in nonrecurring funds for the 2026-2027
33fiscal year shall be used for tobacco cessation media campaigns, resources,
34and programs to help both youth and young adults who have become addicted
35to nicotine using e-cigarettes and other tobacco/nicotine products quit.
36(3)     One million seven hundred and fifty thousand dollars ($1,750,000) in
37nonrecurring funds for the 2026-2027 fiscal year shall be used for
38evidence-based media and education campaigns to prevent initiation of
39tobacco use, especially with respect to e-cigarettes and other new and
40emerging tobacco/nicotine products.
41(4)     Two million dollars ($2,000,000) in nonrecurring funds for the 2026-2027
42fiscal year shall be used for staff and projects and systems to educate partners
43and stakeholders about evidence-based approaches that help youth quit
44tobacco/nicotine products and prevent initiation of tobacco/nicotine products.
45SECTION 9H.1.(b) Funds allocated under subsections (a) and (b) of this section
46 shall remain available for expenditure in the amounts and for the purposes specified in those
47 sections until expended.
48SECTION 9H.1.(c) Annually on November 1 the Department of Health and Human
49 Services shall report to the Joint Legislative Oversight Committee on Health and Human Services
50 and the Fiscal Research Division on the expenditures made from the Youth Electronic Nicotine
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1 Dependence Abatement Fund during the preceding fiscal year. The report shall include at least
2 all of the following:
3(1)    An itemized list of expenditures and for each expenditure, an indication of the
4authority under this section for the expenditure.
5(2)    An evaluation of the reach, effectiveness, and outcomes of each activity
6funded pursuant to subdivision (a)(2) of this section.
7(3)    An evaluation of the reach, effectiveness, and outcomes of each activity
8funded by Section 9G.10 of S.L. 2021-180, as amended by Section 9G.3 of
9S.L. 2022-74.
10
11 USE OF ELECTRIC TOBACCONIST SETTLEMENT FUNDS
12SECTION 9H.2.(a) The Electric Tobacconist Fund (Fund) is created within the
13 Department of Health and Human Services, Division of Public Health, as a non-reverting special
14 fund. The Fund shall consist of (i) monies received by the State as a beneficiary of the final
15 consent judgment resolving the case, State of North Carolina, ex rel. Joshua H. Stein, Attorney
16 General v. The Electric Tobacconist, LLC, in the General Court of Justice, Superior Court
17 Division, Durham County (Electric Tobacconist Case) and (ii) all interest and investment
18 earnings received on monies in the Fund. Monies in the Fund shall be expended only by an act
19 of appropriation by the General Assembly and in accordance with the final consent judgment
20 resolving the Electric Tobacconist Case.
21SECTION 9H.2.(b) There is appropriated from the Electric Tobacconist Fund
22 created in Section 9H.2.(a) to the Department of Health and Human Services, Division of Public
23 Health (DPH), the sum of two hundred seventy-five thousand dollars ($275,000) in nonrecurring
24 funds for the 2026-2027 fiscal year to be allocated and used as follows:
25(1)    Forty thousand seven hundred and fifty dollars ($40,750) shall be transferred
26to the Department of Justice to cover the costs of litigation incurred by the
27Office of the Attorney General with respect to the Electric Tobacconist case.
28(2)    Two hundred thirty-four thousand, two hundred and fifty dollars ($234,250)
29shall be used for staff, projects and systems to educate partners and
30stakeholders about evidence-based approaches that help youth quit
31tobacco/nicotine products and prevent initiation of tobacco/nicotine products.
32SECTION 9H.2.(c) Funds allocated under subsection (a) of this section shall remain
33 available for expenditure in the amounts and for the purposes specified in those sections until
34 expended.
35
36 USE OF BEARD VAPE SETTLEMENT FUNDS
37SECTION 9H.3.(a) The Beard Vape Fund (Fund) is created within the Department
38 of Health and Human Services, Division of Public Health, as a non-reverting special fund. The
39 Fund shall consist of (i) monies received by the State as a beneficiary of the final consent
40 judgment resolving the case, State of North Carolina, ex rel. Joshua H. Stein, Attorney General
41 v. Beard Vape Co., LLC, in the General Court of Justice, Superior Court Division, Durham
42 County (Beard Vape Case) and (ii) all interest and investment earnings received on monies in the
43 Fund. Monies in the Fund shall be expended only by an act of appropriation by the General
44 Assembly and in accordance with the final consent judgment resolving the Beard Vape Case.
45SECTION 9H.3.(b) There is appropriated from the Beard Vape Fund created in
46 Section XX.X(a) to the Department of Health and Human Services, Division of Public Health
47 (DPH), the sum of twenty-five thousand dollars ($25,000) in nonrecurring funds for the
48 2026-2027 fiscal year to be allocated and used as follows:
49(1)    Four thousand seventy-five dollars ($4,075) shall be transferred to the
50Department of Justice to cover the costs of litigation incurred by the Office of
51the Attorney General with respect to the Beard Vape case.
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 General Assembly Of North Carolina  Session 2025
1(2)    Forty-five thousand and nine hundred twenty-five dollars ($20,925) shall be
2used for staff, projects and systems to educate partners and stakeholders about
3evidence-based approaches that help youth quit tobacco/nicotine products and
4prevent initiation of tobacco/nicotine products.
5SECTION 9H.3.(c) Funds allocated under subsection (a) of this section shall remain
6 available for expenditure in the amounts and for the purposes specified in those sections until
7 expended.
8
9 PART IX-I. SERVICES FOR THE BLIND/DEAF/HARD OF HEARING [RESERVED]
10
11 PART IX-J. SOCIAL SERVICES
12
13 TANF BENEFIT IMPLEMENTATION
14SECTION 9J.1.(a) Beginning October 1, 2025, the General Assembly approves the
15 plan titled "North Carolina Temporary Assistance for Needy Families State Plan FFY
16 2026-2028," prepared by the Department of Health and Human Services and presented to the
17 General Assembly. The North Carolina Temporary Assistance for Needy Families State Plan
18 covers the period of October 1, 2025, through September 30, 2028. The Department shall submit
19 the State Plan, as revised in accordance with subsection (b) of this section, to the United States
20 Department of Health and Human Services.
21SECTION 9J.1.(b) The counties approved as Electing Counties in the North
22 Carolina Temporary Assistance for Needy Families State Plan FFY 2026-2028, as approved by
23 this section, are Beaufort, Caldwell, Catawba, Lenoir, Lincoln, Macon, and Wilson.
24SECTION 9J.1.(c) Counties that submitted the letter of intent to remain as an
25 Electing County or to be redesignated as an Electing County and the accompanying county plan
26 for years 2026 through 2028, pursuant to G.S. 108A-27(e), shall operate under the Electing
27 County budget requirements effective July 1, 2025. For programmatic purposes, all counties
28 referred to in this subsection shall remain under their current county designation through
29 September 30, 2028.
30SECTION 9J.1.(d) For each year of the 2025-2027 fiscal biennium, Electing
31 Counties shall be held harmless to their Work First Family Assistance allocations for the 2024-
32 2025 fiscal year, provided that remaining funds allocated for Work First Family Assistance and
33 Work First Diversion Assistance are sufficient for payments made by the Department on behalf
34 of Standard Counties pursuant to G.S. 108A-27.11(b).
35SECTION 9J.1.(e) In the event that departmental projections of Work First Family
36 Assistance and Work First Diversion Assistance for the 2025-2026 fiscal year or the 2026-2027
37 fiscal year indicate that remaining funds are insufficient for Work First Family Assistance and
38 Work First Diversion Assistance payments to be made on behalf of Standard Counties, the
39 Department is authorized to deallocate funds, of those allocated to Electing Counties for Work
40 First Family Assistance in excess of the sums set forth in G.S. 108A-27.11, up to the requisite
41 amount for payments in Standard Counties. Prior to deallocation, the Department shall obtain
42 approval by the Office of State Budget and Management. If the Department adjusts the allocation
43 set forth in subsection (d) of this section, then a report shall be made to the Joint Legislative
44 Oversight Committee on Health and Human Services and the Fiscal Research Division.
45
46 INTENSIVE FAMILY PRESERVATION SERVICES FUNDING, PERFORMANCE
47     ENHANCEMENTS, AND REPORT
48SECTION 9J.2.(a) Notwithstanding the provisions of G.S. 143B-150.6, the
49 Intensive Family Preservation Services (IFPS) Program shall provide intensive services to
50 children and families in cases of abuse, neglect, and dependency where a child is at imminent
51 risk of removal from the home and to children and families in cases of abuse where a child is not
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 General Assembly Of North Carolina  Session 2025
1 at imminent risk of removal. The Program shall be implemented statewide on a regional basis.
2 The IFPS shall ensure the application of standardized assessment criteria for determining
3 imminent risk and clear criteria for determining out-of-home placement.
4SECTION 9J.2.(b) The Department of Health and Human Services shall require that
5 any program or entity that receives State, federal, or other funding for the purpose of IFPS shall
6 provide information and data that allows for the following:
7(1)     An established follow-up system with a minimum of six months of follow-up
8services.
9(2)     Detailed information on the specific interventions applied, including
10utilization indicators and performance measurement.
11(3)     Cost-benefit data.
12(4)     Data on long-term benefits associated with IFPS. This data shall be obtained
13by tracking families through the intervention process.
14(5)     The number of families remaining intact and the associated interventions
15while in IFPS and 12 months thereafter.
16(6)     The number and percentage, by race, of children who received IFPS compared
17to the ratio of their distribution in the general population involved with Child
18Protective Services.
19SECTION 9J.2.(c)  The Department shall continue implementing a
20 performance-based funding protocol and shall only provide funding to those programs and
21 entities providing the required information specified in subsection (b) of this section. The amount
22 of funding shall be based on the individual performance of each program.
23SECTION 9J.2.(d) The Department shall submit an annual report to the Joint
24 Legislative Oversight Committee on Health and Human Services and the Fiscal Research
25 Division by December 1 of each year that provides the information and data collected pursuant
26 to subsection (b) of this section.
27
28 CHILD CARING INSTITUTIONS
29SECTION 9J.3. Until the Social Services Commission adopts rules setting
30 standardized rates for child caring institutions as authorized under G.S. 143B-153(8), the
31 maximum reimbursement for child caring institutions shall not exceed the rate established for the
32 specific child caring institution by the Department of Health and Human Services, Office of the
33 Controller. In determining the maximum reimbursement, the State shall include county and IV-E
34 reimbursements.
35
36 USE FOSTER CARE BUDGET FOR GUARDIANSHIP ASSISTANCE PROGRAM
37SECTION 9J.4. Of the funds available for the provision of foster care services, the
38 Department of Health and Human Services, Division of Social Services, may continue to provide
39 for the financial support of children who are deemed to be (i) in a permanent family placement
40 setting, (ii) eligible for legal guardianship, and (iii) otherwise unlikely to receive permanency.
41 No additional expenses shall be incurred beyond the funds budgeted for foster care for the
42 Guardianship Assistance Program (GAP). The Guardianship Assistance Program shall include
43 provisions for extending guardianship services for individuals and youth who exited foster care
44 through the Guardianship Assistance Program after 14 years of age or who have attained the age
45 of 18 years and opt to continue to receive guardianship services until reaching 21 years of age if
46 the individual is (i) completing secondary education or a program leading to an equivalent
47 credential, (ii) enrolled in an institution that provides postsecondary or vocational education, (iii)
48 participating in a program or activity designed to promote, or remove barriers to, employment,
49 (iv) employed for at least 80 hours per month, or (v) incapable of completing the educational or
50 employment requirements of this section due to a medical condition or disability. The
51 Guardianship Assistance Program rates shall reimburse the legal guardian for room and board
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1 and be set at the same rate as the foster care room and board rates in accordance with rates
2 established under G.S. 108A-49.1.
3
4 CHILD WELFARE POSTSECONDARY SUPPORT PROGRAM (NC REACH)
5SECTION 9J.5.(a) Funds appropriated in this act from the General Fund to the
6 Department of Health and Human Services for the child welfare postsecondary support program
7 shall be used to continue providing assistance with the "cost of attendance" as that term is defined
8 in 20 U.S.C. § 1087ll for the educational needs of foster youth aging out of the foster care system,
9 youth who exit foster care to a permanent home through the Guardianship Assistance Program
10 (GAP), or special needs children adopted from foster care after age 12. These funds shall be
11 allocated by the State Education Assistance Authority.
12SECTION 9J.5.(b) Of the funds appropriated in this act from the General Fund to
13 the Department of Health and Human Services, the sum of fifty thousand dollars ($50,000) for
14 each year of the 2025-2027 fiscal biennium shall be allocated to the North Carolina State
15 Education Assistance Authority (SEAA). The SEAA shall use these funds only to perform
16 administrative functions necessary to manage and distribute scholarship funds under the child
17 welfare postsecondary support program.
18SECTION 9J.5.(c) Of the funds appropriated in this act from the General Fund to
19 the Department of Health and Human Services, the sum of three hundred thirty-nine thousand
20 four hundred ninety-three dollars ($339,493) for each year of the 2025-2027 fiscal biennium shall
21 be used to contract with an entity to administer the child welfare postsecondary support program
22 described under subsection (a) of this section, which administration shall include the performance
23 of case management services.
24SECTION 9J.5.(d) Funds appropriated in this act to the Department of Health and
25 Human Services for the child welfare postsecondary support program shall be used only for
26 students attending public institutions of higher education in this State.
27
28 FEDERAL CHILD SUPPORT INCENTIVE PAYMENTS
29SECTION 9J.6.(a) Centralized Services. – The North Carolina Child Support
30 Services Section (NCCSS) of the Department of Health and Human Services, Division of Social
31 Services, shall retain up to fifteen percent (15%) of the annual federal incentive payments it
32 receives from the federal government to enhance centralized child support services. To
33 accomplish this requirement, NCCSS shall do the following:
34(1)    In consultation with representatives from county child support services
35programs, identify how federal incentive funding could improve centralized
36services.
37(2)    Use federal incentive funds to improve the effectiveness of the State's
38centralized child support services by supplementing and not supplanting State
39expenditures for those services.
40(3)    Continue to develop and implement rules that explain the State process for
41calculating and distributing federal incentive funding to county child support
42services programs.
43SECTION 9J.6.(b) County Child Support Services Programs. – NCCSS shall
44 allocate no less than eighty-five percent (85%) of the annual federal incentive payments it
45 receives from the federal government to county child support services programs to improve
46 effectiveness and efficiency using the federal performance measures. To that end, NCCSS shall
47 do the following:
48(1)    In consultation with representatives from county child support services
49programs, examine the current methodology for distributing federal incentive
50funding to the county programs and determine whether an alternative formula
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 General Assembly Of North Carolina  Session 2025
1would be appropriate. NCCSS shall use its current formula for distributing
2federal incentive funding until an alternative formula is adopted.
3(2)    Upon adopting an alternative formula, develop a process to phase in the
4alternative formula for distributing federal incentive funding over a four-year
5period.
6SECTION 9J.6.(c) Reporting by County Child Support Services Programs. –
7 NCCSS shall continue implementing guidelines that identify appropriate uses for federal
8 incentive funding. To ensure those guidelines are properly followed, NCCSS shall require county
9 child support services programs to comply with each of the following:
10(1)    Submit an annual plan describing how federal incentive funding would
11improve program effectiveness and efficiency as a condition of receiving
12federal incentive funding.
13(2)    Report annually on the following: (i) how federal incentive funding has
14improved program effectiveness and efficiency and been reinvested into their
15programs, (ii) provide documentation that the funds were spent according to
16their annual plans, and (iii) explain any deviations from their plans.
17SECTION 9J.6.(d) Reporting by NCCSS. – NCCSS shall submit a report on federal
18 child support incentive funding to the Joint Legislative Oversight Committee on Health and
19 Human Services and the Fiscal Research Division by November 1 of each year. The report shall
20 describe how federal incentive funds enhanced centralized child support services to benefit
21 county child support services programs and improved the effectiveness and efficiency of county
22 child support services programs. The report shall further include any changes to the State process
23 that NCCSS used in calculating and distributing federal incentive funding to county child support
24 services programs and any recommendations for further changes.
25
26 SUCCESSFUL TRANSITION/FOSTER CARE YOUTH
27SECTION 9J.7. The Foster Care Transitional Living Initiative Fund shall continue
28 to fund and support transitional living services that demonstrate positive outcomes for youth,
29 attract significant private sector funding, and lead to the development of evidence-based
30 programs to serve the at-risk population described in this section. The Fund shall continue to
31 support a demonstration project with services provided by Youth Villages to (i) improve
32 outcomes for youth ages 17-21 years who transition from foster care through implementation of
33 outcome-based Transitional Living Services, (ii) identify cost-savings in social services and
34 juvenile and adult correction services associated with the provision of Transitional Living
35 Services to youth aging out of foster care, and (iii) take necessary steps to establish an
36 evidence-based transitional living program available to all youth aging out of foster care. In
37 continuing to implement these goals, the Foster Care Transitional Living Initiative Fund shall
38 support the following strategies:
39(1)    Transitional Living Services, which is an outcome-based program that follows
40the Youth Villages Transitional Living Model. Outcomes on more than 7,000
41participants have been tracked since the program's inception. The program has
42been evaluated through an independent randomized controlled trial. Results
43indicate that the Youth Villages Transitional Living Model had positive
44impacts in a variety of areas, including housing stability, earnings, economic
45hardship, mental health, and intimate partner violence in comparison to the
46control population.
47(2)    Public-Private Partnership, which is a commitment by private-sector funding
48partners to match at least twenty-five percent (25%) of the funds appropriated
49to the Foster Care Transitional Living Initiative Fund for the 2025-2027 fiscal
50biennium for the purposes of providing Transitional Living Services through
 House Bill 1146-First Edition  Page 81
 General Assembly Of North Carolina  Session 2025
1the Youth Villages Transitional Living Model to youth aging out of foster
2care.
3(3)    Impact Measurement and Evaluation, which are services funded through
4private partners to provide independent measurement and evaluation of the
5impact the Youth Villages Transitional Living Model has on the youth served,
6the foster care system, and on other programs and services provided by the
7State which are utilized by former foster care youth.
8(4)    Advancement of Evidence-Based Process, which is the implementation and
9ongoing evaluation of the Youth Villages Transitional Living Model for the
10purposes of establishing the first evidence-based transitional living program
11in the nation. To establish the evidence-based program, additional randomized
12controlled trials may be conducted to advance the model.
13
14 PART IX-K. DIVISION OF EMPLOYMENT AND INDEPENDENCE FOR PEOPLE
15WITH DISABILITIES [RESERVED]
16
17 PART IX-L. DHHS BLOCK GRANTS
18
19 DHHS BLOCK GRANTS
20SECTION 9L.1.(a) Except as otherwise provided, appropriations from federal Block
21 Grant funds are made for each year of the fiscal biennium ending June 30, 2027, according to the
22 following schedule:
23
24 TEMPORARY ASSISTANCE FOR NEEDY  FY 2025-2026  FY 2026-2027
25 FAMILIES (TANF) FUNDS
26
27 Local Program Expenditures
28
29 Division of Social Services
30
31    01. Work First Family Assistance  $23,259,794  $23,259,794
32
33    02. Work First County Block Grants  80,093,566  80,093,566
34
35    03. Work First Electing Counties  2,378,213  2,378,213
36
37    04. Adoption Services – Special Children
38    Adoption Fund  4,001,676  4,001,676
39
40    05. Child Protective Services – Child Welfare
41    Workers for Local DSS  11,387,190  11,387,190
42
43    06. Child Welfare Program Improvement Plan  775,176  775,176
44
45    07. Child Welfare Collaborative  400,000  400,000
46
47    08. Child Welfare Initiatives  1,400,000  2,900,000
48
49 Division of Child Development and Early Education
50
51    09. Subsidized Child Care Program  67,913,694  67,913,694
 Page 82  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1
2    10. Swap-Child Care Subsidy  0  0
3
4    11. NC Pre-K Services  68,300,000    68,300,000
5
6 Division of Public Health
7
8    12. Teen Pregnancy Prevention Initiatives  3,538,541     3,538,541
9
10 DHHS Administration
11
12    13. Division of Social Services  2,478,284     2,478,284
13
14    14. Division of Child and Family Well Being  3,976  3,976
15
16    15. Office of the Secretary  34,042  34,042
17
18    16. Eligibility Systems – Operations and
19    Maintenance  431,733        431,733
20
21    17. NC FAST Implementation  428,239        428,239
22
23    18. Division of Social Services – Workforce
24    Innovation & Opportunity Act (WIOA)  93,216  93,216
25
26    19. Division of Social Services TANF Modernization    2,000,000     2,000,000
27
28 Transfers to Other Block Grants
29
30 Division of Child Development and Early Education
31
32    20. Transfer to the Child Care and
33Development Fund  21,773,001    21,773,001
34
35 Division of Social Services
36
37    21. Transfer to Social Services Block
38Grant for Child Protective Services –
39Training  285,612      2,285,612
40
41    22. Transfer to Social Services Block
42Grant for Child Protective Services  5,040,000     5,040,000
43
44    23. Transfer to Social Services Block
45Grant for County Departments of
46Social Services for Children's Services  13,166,244    22,413,218
47
48    24. Transfer to Social Services Block
49Grant – Foster Care Services  3,422,219     3,422,219
50
51    25. Transfer to Social Services Block
 House Bill 1146-First Edition  Page 83
 General Assembly Of North Carolina  Session 2025
1Grant – Child Advocacy Centers  1,582,000  1,582,000
2
3    26. Transfer to Social Services Block
4Grant – Adult Protective Services  0  5,000,000
5
6 TOTAL TEMPORARY ASSISTANCE FOR
7 NEEDY FAMILIES (TANF) FUNDS  $314,186,416       $331,933,390
8
9 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
10 EMERGENCY CONTINGENCY FUNDS
11
12 Local Program Expenditures
13
14 Division of Child Development and Early Education
15
16    01. Subsidized Child Care  34,337,395  34,337,395
17
18 TOTAL TEMPORARY ASSISTANCE FOR
19 NEEDY FAMILIES (TANF) EMERGENCY
20 CONTINGENCY FUNDS  $34,337,395        $34,337,395
21
22 SOCIAL SERVICES BLOCK GRANT
23
24 Local Program Expenditures
25
26 Divisions of Social Services and Aging and Adult Services
27
28    01. County Departments of Social Services  19,837,388  19,837,388
29
30    02. County Departments of Social Services
31(Transfer From TANF)  13,166,244  22,413,218
32
33    03. EBCI Tribal Public Health and Human Services  244,740  244,740
34
35    04. Child Protective Services
36(Transfer From TANF)  5,040,000  5,040,000
37
38    05. State In-Home Services Fund  1,943,950  1,943,950
39
40    06. Adult Protective Services  3,864,547  3,820,378
41
42    07. Adult Protective Services
43(Transfer from TANF)  0  5,000,000
44
45    08. State Adult Day Care Fund  1,994,084  1,994,084
46
47    09. Child Protective Services/CPS
48Investigative Services – Child Medical
49Evaluation Program  901,868  901,868
50
51    10. Special Children Adoption Incentive Fund  462,600  462,600
 Page 84  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1
2    11. Child Protective Services – Child
3Welfare Training for Counties
4(Transfer From TANF)  285,612  2,285,612
5
6    12. Home and Community Care Block
7Grant (HCCBG)  2,696,888  2,696,888
8
9    13. Child Advocacy Centers
10(Transfer from TANF $1,582,000)  1,582,000  1,582,000
11
12    14. Guardianship – Division of Social Services  1,802,671  1,802,671
13
14    15. Foster Care Services
15(Transfer From TANF)  3,422,219  3,422,219
16
17    15A. Big Brothers Big Sisters of the Triangle, Inc.       350,000  350,000
18
19 Division of Mental Health, Developmental Disabilities, and Substance Abuse Services
20
21    16. Mental Health Services – Adult and
22Child/Developmental Disabilities Program/
23Substance Abuse Services – Adult  4,149,595  4,149,595
24
25    16A. Autism Society of North Carolina, Inc.  2,541,392  2,541,392
26
27    16B. The Arc of North Carolina, Inc.  271,074  271,074
28
29    16C. Easterseals UCP North Carolina & Virginia, Inc.    1,612,059  1,612,059
30
31 DHHS Program Expenditures
32
33 Division of Services for the Blind
34
35    17. Independent Living Program & Program Oversight      4,237,849  4,237,849
36
37 Division of Health Service Regulation
38
39    18. Adult Care Licensure Program  891,520  1,209,402
40
41    19. Mental Health Licensure and
42Certification Program  266,158  266,158
43
44 Division of Social Services
45
46    20. Guardianship  3,825,443  3,825,443
47
48 DHHS Administration
49
50    21. Division of Aging and Adult Services  188,787  188,787
51
 House Bill 1146-First Edition  Page 85
 General Assembly Of North Carolina  Session 2025
1    22. Division of Social Services  1,724,551  1,724,551
2
3    23. Office of the Secretary/Controller's Office  673,990  673,990
4
5    24. Legislative Increases/Fringe Benefits  293,655  587,310
6
7    25. Division of Child Development and
8Early Education  13,878  13,878
9
10    26. Division of Mental Health, Developmental
11Disabilities, and Substance Abuse Services  29,966  29,966
12
13    27. Division of Health Service Regulation  592,882  275,000
14
15 TOTAL SOCIAL SERVICES BLOCK GRANT  $78,907,610  $95,404,070
16
17 LOW-INCOME ENERGY ASSISTANCE BLOCK GRANT
18
19 Local Program Expenditures
20
21 Division of Social Services
22
23    01. Low-Income Energy Assistance
24Program (LIEAP)  56,369,281  62,655,888
25
26    02. Crisis Intervention Program (CIP)  44,804,354  48,995,425
27
28 Local Administration
29
30 Division of Social Services
31
32    03. County DSS Administration  8,037,889  8,037,889
33
34 DHHS Administration
35
36 Division of Central Management and Support
37
38    04. Administration  10,000  10,000
39
40    05. Energy Portal (FIS Transaction Fees)  25,000  25,000
41
42    06. Office of the Secretary/ Division of Information Resource
43Management (DIRM) (Accountable Results for
44Community Action (AR4CA) Replacement System)  166,750  166,750
45
46    07. Office of the Secretary/DIRM  278,954  278,954
47
48    08. Office of the Secretary/Controller's Office  18,378  18,378
49
50    09. NC FAST Development  627,869  627,869
51
 Page 86  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1    10. NC FAST Operations and Maintenance  1,330,323      1,330,323
2
3 Transfers to Other State Agencies
4
5 Department of Environmental Quality
6
7    11. Weatherization Program  10,356,943     10,356,943
8
9    12. Heating Air Repair and Replacement
10Program (HARRP)  5,898,508      5,898,508
11
12    13. Local Residential Energy Efficiency Service
13Providers – Weatherization  574,945        574,945
14
15    14. Local Residential Energy Efficiency Service
16Providers – HARRP  319,414        319,414
17
18    15. DEQ – Weatherization Administration  628,180        628,180
19
20    16. DEQ – HARRP Administration  393,944        393,944
21
22 Department of Administration
23
24    17. N.C. Commission on Indian Affairs  87,736        87,736
25
26 TOTAL LOW-INCOME ENERGY
27   ASSISTANCE BLOCK GRANT  $129,928,468   $140,406,146
28
29 CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT
30
31 Local Program Expenditures
32
33 Division of Child Development and Early Education
34
35    01. Child Care Services  347,089,929    387,089,929
36
37    02. Smart Start Subsidy  7,392,654      7,392,654
38
39    03. Transfer from TANF Block Grant
40for Child Care Subsidies  21,773,001     21,773,001
41
42    04. Quality and Availability Initiatives
43(TEACH Program $3,800,000)  77,480,526     67,780,527
44
45 DHHS Administration
46
47 Division of Child Development and Early Education
48
49    05. DCDEE Administrative Expenses  9,710,886     12,710,886
50
51    06. Indirect Cost  7,346  7,346
 House Bill 1146-First Edition  Page 87
 General Assembly Of North Carolina  Session 2025
1
2 Division of Social Services
3
4    07. Direct Deposit for Child Care Payments  5,000  5,000
5
6    08. Local Subsidized Child Care
7Services Support  18,780,355  18,780,355
8
9 Division of Central Management and Support
10
11    09. NC FAST Operations and Maintenance  1,450,316  1,450,316
12
13    10. DHHS Central Administration – DIRM
14Technical Services  1,029,762  1,029,762
15
16    11. DHHS Central Administration  118,000  118,000
17
18 Division of Child and Family Well-Being
19
20    12. Child Care Health Consultation Contracts  62,205  62,205
21
22 TOTAL CHILD CARE AND DEVELOPMENT
23   FUND BLOCK GRANT  $484,899,980       $518,199,981
24
25 MENTAL HEALTH SERVICES BLOCK GRANT
26
27 Local Program Expenditures
28
29    01. Mental Health Services – Child  2,477,666  2,477,666
30
31    02. Mental Health Services – Adult/Child  19,443,833  22,815,152
32
33    03. Mental Health Services – First
34Psychotic Symptom Treatment  4,208,378  4,208,378
35
36 04. Child Behavioral Health (Division of Child
37     and Family Well-Being)  5,246,350  5,246,350
38
39 DHHS Administration
40
41 Division of Child and Family Well Being
42
43    05. Administration  140,000  140,000
44
45 Division of Mental Health, Developmental Disabilities, and Substance Abuse Services
46
47    06. Crisis Services  2,377,047  7,377,047
48
49    07. Administration  332,351  332,351
50
51    08. Adult/Child Mental Health Services  350,150  375,150
 Page 88  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1
2 Division of Public Health
3
4    09. NC Detect – Behavioral Health ER  35,000  35,000
5
6 TOTAL MENTAL HEALTH SERVICES
7   BLOCK GRANT  $34,610,775        $43,007,094
8
9 SUBSTANCE ABUSE PREVENTION, TREATMENT, AND RECOVERY SERVICES
10 BLOCK GRANT
11
12 Local Program Expenditures
13
14 Division of Mental Health, Developmental Disabilities, and Substance Use Services
15
16    01. Substance Abuse – IV Drug  2,000,000  2,000,000
17
18    02. Substance Abuse Prevention  13,351,864  13,351,864
19
20    03. Substance Use Services – Treatment for
21Children/Adults  40,038,949  50,696,855
22
23    04. Crisis Solutions Initiatives – Collegiate
24Wellness/Addiction Recovery  1,545,205  6,545,205
25
26    05. Veterans Initiatives  250,000  10,000,000
27
28 DHHS Administration
29
30 Division of Mental Health, Developmental Disabilities, and Substance Use Services
31
32    06. Administration  $2,297,852  $2,617,280
33
34    07. Controlled Substance Reporting System
35Enhancement  675,000  675,000
36
37 TOTAL SUBSTANCE ABUSE PREVENTION
38   AND TREATMENT BLOCK GRANT  $60,158,870        $85,886,204
39
40 MATERNAL AND CHILD HEALTH BLOCK GRANT
41
42 Local Program Expenditures
43
44 Division of Child and Family Well-Being
45
46    01. Children’s Health Services  11,646,618  11,572,418
47
48 Division of Public Health
49
50    02. Women’s and Children’s Health Services  5,453,930  5,453,930
51
 House Bill 1146-First Edition  Page 89
 General Assembly Of North Carolina  Session 2025
1    03. Oral Health  58,413  60,523
2
3    04. Evidence-Based Programs in Counties
4With Highest Infant Mortality Rates  1,727,307  1,727,307
5
6 DHHS Program Expenditures
7
8    05. Children's Health Services  1,287,619  1,287,619
9
10    06. Women's Health – Maternal Health  489,568  489,568
11
12    07. Women's and Children's Health – Perinatal
13Strategic Plan Support Position  81,112  84,067
14
15    08. State Center for Health Statistics  158,583  158,583
16
17    09. Health Promotion – Injury and
18Violence Prevention  87,271  87,271
19
20 DHHS Administration
21
22    11. Division of Public Health Administration       340,646  340,646
23
24    12. Division of Child and Family Well Being
25Administration  211,925  211,925
26
27 TOTAL MATERNAL AND CHILD
28   HEALTH BLOCK GRANT  $21,542,992        $21,963,519
29
30 PREVENTIVE HEALTH AND HEALTH SERVICES BLOCK GRANT
31
32 Local Program Expenditures
33
34    01. Physical Activity and Prevention  $3,081,442  $3,081,442
35
36 DHHS Program Expenditures
37
38 Division of Public Health
39
40    02. HIV/STD Prevention and
41Community Planning  135,063  135,063
42
43    03. Oral Health Preventive Services  150,000  150,000
44
45    04. Injury and Violence Prevention
46(Services to Rape Victims – Set-Aside)  217,935  217,935
47
48    05. Performance Improvement and
49Accountability  1,384,421  1,199,557
50
51    06. State Center for Health Statistics  48,000  48,000
 Page 90  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1
2 DHHS Administration
3
4 Division of Public Health
5
6    07. Division of Public Health  65,000  65,000
7
8 TOTAL PREVENTIVE HEALTH AND HEALTH
9   SERVICES BLOCK GRANT  $5,081,861  $4,896,997
10
11 COMMUNITY SERVICES BLOCK GRANT
12
13    01. Community Action Agencies  22,370,334  23,286,497
14
15    02. Limited Purpose Agencies/Discretionary Funding  504,718  541,000
16
17    03. Office of Economic Opportunity  1,070,001  1,015,712
18
19    04. Office of the Secretary/DIRM (Accountable Results for
20Community Action (AR4CA) Replacement System)  394,964  414,713
21
22    05. Office of Economic Opportunity – Workforce
23Investment Opportunities Act (WIOA)  60,000  60,000
24
25 TOTAL COMMUNITY SERVICES
26   BLOCK GRANT  $24,400,017  $25,317,922
27
28 GENERAL PROVISIONS
29SECTION 9L.1.(b) Information to be Included in Block Grant Plans. – The
30 Department of Health and Human Services shall submit a separate plan for each Block Grant
31 received and administered by the Department, and each plan shall include the following:
32(1)     A delineation of the proposed allocations by program or activity, including
33State and federal match requirements.
34(2)     A delineation of the proposed State and local administrative expenditures.
35(3)     An identification of all new positions to be established through the Block
36Grant, including permanent, temporary, and time-limited positions.
37(4)     A comparison of the proposed allocations by program or activity with two
38prior years' program and activity budgets and two prior years' actual program
39or activity expenditures.
40(5)     A projection of current year expenditures by program or activity.
41(6)     A projection of federal Block Grant funds available, including unspent federal
42funds from the current and prior fiscal years.
43(7)     The required amount of maintenance of effort and the amount of funds
44qualifying for maintenance of effort in the previous year delineated by
45program or activity.
46SECTION 9L.1.(c) Changes in Federal Fund Availability. – If the Congress of the
47 United States increases the federal fund availability for any of the Block Grants or contingency
48 funds and other grants related to existing Block Grants administered by the Department of Health
49 and Human Services from the amounts appropriated in this act, the Department shall allocate the
50 increase proportionally across the program and activity appropriations identified for that Block
51 Grant in this section. In allocating an increase in federal fund availability, the Office of State
 House Bill 1146-First Edition  Page 91
 General Assembly Of North Carolina  Session 2025
1 Budget and Management shall not approve funding for new programs or activities not
2 appropriated in this act.
3If the Congress of the United States decreases the federal fund availability for any of
4 the Block Grants or contingency funds and other grants related to existing Block Grants
5 administered by the Department of Health and Human Services from the amounts appropriated
6 in this act, the Department shall develop a plan to adjust the Block Grants based on reduced
7 federal funding.
8Notwithstanding the provisions of this subsection, for fiscal years 2025-2026 and
9 2026-2027, increases in the federal fund availability for the Temporary Assistance to Needy
10 Families (TANF) Block Grant shall be used only for the North Carolina Child Care Subsidy
11 program to pay for child care and shall not be used to supplant State funds.
12Prior to allocating the change in federal fund availability, the proposed allocation
13 must be approved by the Office of State Budget and Management. If the Department adjusts the
14 allocation of any Block Grant due to changes in federal fund availability, then a report shall be
15 made to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal
16 Research Division.
17SECTION 9L.1.(d) Except as otherwise provided, appropriations from federal
18 Block Grant funds are made for each year of the fiscal biennium ending June 30, 2027, according
19 to the schedule enacted for State fiscal years 2025-2026 and 2026-2027, or until a new schedule
20 is enacted by the General Assembly.
21SECTION 9L.1.(e) Except as otherwise provided in subsection (e1) of this section,
22 all changes to the budgeted allocations to the Block Grants or contingency funds and other grants
23 related to existing Block Grants administered by the Department of Health and Human Services
24 that are not specifically addressed in this section shall be approved by the Office of State Budget
25 and Management. The Office of State Budget and Management shall not approve. funding for
26 new programs or activities not appropriated in this section The Office of State Budget and
27 Management shall consult with the Joint Legislative Oversight Committee on Health and Human
28 Services for review prior to implementing any changes. In consulting, the report shall include an
29 itemized listing of affected programs, including associated changes in budgeted allocations. All
30 changes to the budgeted allocations to the Block Grants shall be reported immediately to the Joint
31 Legislative Oversight Committee on Health and Human Services and the Fiscal Research
32 Division. This subsection does not apply to Block Grant changes caused by legislative salary
33 increases and benefit adjustments.
34SECTION 9L.1.(e) The Department of Health and Human Services shall have the
35 authority to realign appropriated funds under subsection (a) of this section for Item 01 or 02 in
36 the Maternal and Child Health Block Grant to maintain federal compliance and programmatic
37 alignment, so long as the realignment does not result in a reduction of funds designated for
38 subrecipients under subsection (a) of this section. The Department of Health and Human Services
39 is authorized to realign appropriated funds between the Maternal and Child Health Block Grant
40 categories as provided in this subsection without prior consultation with the Joint Legislative
41 Oversight Committee on Health and Human Services or without exceeding the total amount
42 appropriated for the items.
43SECTION 9L.1.(f) Except as otherwise provided, the Department of Health and
44 Human Services shall have flexibility to transfer funding between the Temporary Assistance for
45 Needy Families (TANF) Block Grant and the TANF Emergency Contingency Funds Block Grant
46 so long as the total allocation for the line items within those Block Grants remains the same.
47
48 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) FUNDS
49SECTION 9L.1.(g) The sum of eighty million ninety-three thousand five hundred
50 sixty-six dollars ($80,093,566) for each year of the 2025-2027 fiscal biennium appropriated in
51 this act in TANF funds to the Department of Health and Human Services, Division of Social
 Page 92  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 Services, shall be used for Work First County Block Grants. The Division shall certify these
2 funds in the appropriate State-level services based on prior year actual expenditures. The Division
3 has the authority to realign the authorized budget for these funds among the State-level services
4 based on current year actual expenditures. The Division shall also have the authority to realign
5 appropriated funds from Work First Family Assistance for electing counties to the Work First
6 County Block Grant for electing counties based on current year expenditures so long as the
7 electing counties meet Maintenance of Effort requirements.
8SECTION 9L.1.(h) The sum of eleven million three hundred eighty-seven thousand
9 one hundred ninety dollars ($11,387,190) for each year of the 2025-2027 fiscal biennium
10 appropriated in this act to the Department of Health and Human Services, Division of Social
11 Services, in TANF funds for child welfare improvements shall be allocated to the county
12 departments of social services for hiring or contracting staff to investigate and provide services
13 in Child Protective Services cases; to provide foster care and support services; to recruit, train,
14 license, and support prospective foster and adoptive families; and to provide interstate and
15 post-adoption services for eligible families.
16Counties shall maintain their level of expenditures in local funds for Child Protective
17 Services workers. Of the Block Grant funds appropriated for Child Protective Services workers,
18 the total expenditures from State and local funds for fiscal years 2025-2026 and 2026-2027 shall
19 not be less than the total expended from State and local funds for the 2012-2013 fiscal year.
20SECTION 9L.1.(i) The sum of four million one thousand six hundred seventy-six
21 dollars ($4,001,676) for each year of the 2025-2027 fiscal biennium appropriated in this act in
22 TANF funds to the Department of Health and Human Services, Special Children Adoption Fund,
23 shall be used in accordance with G.S. 108A-50.2. The Division of Social Services, in consultation
24 with the North Carolina Association of County Directors of Social Services and representatives
25 of licensed private adoption agencies, shall develop guidelines for the awarding of funds to
26 licensed public and private adoption agencies upon the adoption of children described in
27 G.S. 108A-50 and in foster care. Payments received from the Special Children Adoption Fund
28 by participating agencies shall be used exclusively to enhance the adoption services program. No
29 local match shall be required as a condition for receipt of these funds.
30SECTION 9L.1.(j) The sum of one million four hundred thousand ($1,400,000) in
31 for the 2025-26 fiscal year and two million nine hundred thousand dollars ($2,900,000) for the
32 2026-27 fiscal year appropriated in this act in TANF funds to the Department of Health and
33 Human Services, Division of Social Services, shall be used for child welfare initiatives to (i)
34 enhance the skills of social workers to improve the outcomes for families and children involved
35 in child welfare and (ii) enhance the provision of services to families in their homes in the least
36 restrictive setting.
37
38 SOCIAL SERVICES BLOCK GRANT
39SECTION 9L.1.(k) The sum of nineteen million eight hundred thirty-seven
40 thousand three hundred eighty-eight dollars ($19,837,388) for the 2025-2026 fiscal year and the
41 sum of nineteen million eight hundred thirty-seven thousand three hundred eighty-eight dollars
42 ($19,837,388) for the 2026-2027 fiscal year appropriated in this act in the Social Services Block
43 Grant to the Department of Health and Human Services, Division of Social Services, and the sum
44 of thirteen million one hundred sixty-six thousand two forty-four dollars ($13,166,244) for the
45 2025-2026 fiscal year and the sum of twenty-two million four hundred thirteen thousand two
46 hundred eighteen dollars ($22,413,218) for the 2026-2027 fiscal year transferred from funds
47 appropriated in the TANF Block Grant shall be used for county Block Grants. The Division shall
48 certify these funds in the appropriate State-level services based on prior year actual expenditures.
49 The Division has the authority to realign the authorized budget for these funds, as well as State
50 Social Services Block Grant funds, among the State-level services based on current year actual
51 expenditures.
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1SECTION 9L.1.(l) The sum of two hundred eighty-five thousand six hundred twelve
2 dollars ($285,612) for the 2025-26 fiscal year and the sum of two million two hundred eighty-five
3 six hundred twelve dollars ($2,285,612) for the 2026-27 fiscal year appropriated in this act in the
4 Social Services Block Grant to the Department of Health and Human Services, Division of Social
5 Services, shall be used to support the state’s child welfare training system. Training is delivered
6 to county child welfare staff that addresses the knowledge and skills needed to complete their
7 daily tasks in the areas of child protective services, foster care, on-going child welfare services,
8 and adoption.
9SECTION 9L.1.(m) The Department of Health and Human Services is authorized,
10 subject to the approval of the Office of State Budget and Management, to transfer Social Services
11 Block Grant funding allocated for departmental administration between divisions that have
12 received administrative allocations from the Social Services Block Grant.
13SECTION 9L.1.(n) Social Services Block Grant funds appropriated for the Special
14 Children Adoption Incentive Fund shall require a fifty percent (50%) local match.
15SECTION 9L.1.(o) The sum of five million forty thousand dollars ($5,040,000)
16 appropriated in this act in the Social Services Block Grant for each fiscal year of the 2025-2027
17 fiscal biennium transferred from funds appropriated in the TANF Block Grant shall be allocated
18 to the Department of Health and Human Services, Division of Social Services. The Division shall
19 allocate these funds to local departments of social services to replace the loss of Child Protective
20 Services State funds that are currently used by county governments to pay for Child Protective
21 Services staff at the local level. These funds shall be used to maintain the number of Child
22 Protective Services workers throughout the State. These Social Services Block Grant funds shall
23 be used to pay for salaries and related expenses only and are exempt from 10A NCAC 71R
24 .0201(3) requiring a local match of twenty-five percent (25%).
25SECTION 9L.1.(p) The sum of one million five hundred eighty-two thousand
26 dollars ($1,582,000) appropriated in this act in the Social Services Block Grant for each fiscal
27 year of the 2025-2027 fiscal biennium to the Department of Health and Human Services, Division
28 of Social Services, shall be used to continue support for the Child Advocacy Centers. These funds
29 are exempt from the provisions of 10A NCAC 71R .0201(3).
30SECTION 9L.1.(q) The sum of three million eight hundred twenty-five thousand
31 four hundred forty-three dollars ($3,825,443) for each fiscal year of the 2025-2027 fiscal
32 biennium appropriated in this act in the Social Services Block Grant to the Department of Health
33 and Human Services, Division of Social Services, shall be used for guardianship services
34 pursuant to Chapter 35A of the General Statutes. The Department may expend funds allocated in
35 this section to support existing corporate guardianship contracts during the 2025-2026 and
36 2026-2027 fiscal years.
37SECTION 9L.1.(r) Of the three million eight hundred sixty-four thousand five
38 hundred forty-seven dollars ($3,864,547) in the 2025-2026 fiscal year and three million eight
39 hundred twenty-two three hundred seventy-eight dollars ($3,820,378) for the 2026-2027 fiscal
40 year appropriated in this act in the Social Services Block Grant to the Division of Aging and
41 Adult Services for Adult Protective Services, the sum of eight hundred ninety-three thousand
42 forty-one dollars ($893,041) for each year of the 2025-2027 fiscal biennium shall be used to
43 increase the number of Adult Protective Services workers where these funds can be the most
44 effective. These funds shall be used to pay for salaries and related expenses and shall not be used
45 to supplant any other source of funding for staff. These funds are also exempt from 10A NCAC
46 71R .0201(3) requiring a local match of twenty-five percent (25%).
47SECTION 9L.1.(s) The following amounts appropriated in this act in the Social Services
48 Block Grant for each fiscal year of the 2025-2027 fiscal biennium to the Department of Health
49 and Human Services, Division of Social Services or Division of Mental Health, Developmental
50 Disabilities, and Substance Use Services, for the nonprofit organizations described in this
51 subsection shall be exempt from the provisions of 10A NCAC 71R .0201(3):
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1(1)     The sum of three hundred fifty thousand dollars ($350,000) for each fiscal
2year of the 2025-2027 fiscal biennium for Big Brothers Big Sisters of the
3Triangle, Inc.
4(2)     The sum of two million five hundred forty-one thousand three hundred
5ninety-two dollars ($2,541,392) for each fiscal year of the 2025-2027 fiscal
6biennium for Autism Society of North Carolina, Inc.
7(3)     The sum of two hundred seventy-one thousand seventy-four dollars
8($271,074) for each fiscal year of the 2025-2027 fiscal biennium for The Arc
9of North Carolina, Inc.
10(4)     The sum of one million six hundred twelve thousand fifty-nine dollars
11($1,612,059) for each fiscal year of the 2025-2027 fiscal biennium for
12Easterseals UCP of North Carolina & Virginia, Inc.
13
14 LOW-INCOME ENERGY ASSISTANCE BLOCK GRANT
15SECTION 9L.1.(t) The Division of Social Services shall have the authority to
16 realign appropriated funds between the State-level services Low-Income Energy Assistance
17 Payments and Crisis Assistance Payments without prior consultation with the Joint Legislative
18 Oversight Committee on Health and Human Services to ensure needs are effectively met without
19 exceeding the total amount appropriated for these State-level service items. Additional
20 emergency contingency funds received may be allocated for Energy Assistance Payments or
21 Crisis Intervention Payments without prior consultation with the Joint Legislative Oversight
22 Committee on Health and Human Services. Additional funds received shall be reported to the
23 Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research
24 Division upon notification of the award. The Department of Health and Human Services shall
25 not allocate funds for any activities, including increasing administration, other than assistance
26 payments, without prior consultation with the Joint Legislative Oversight Committee on Health
27 and Human Services.
28SECTION 9L.1.(u) The sum of fifty-six million three hundred sixty-nine thousand
29 two hundred eighty-one dollars ($56,369,281) in the 2025-26 fiscal year and sixty-two million
30 six hundred fifty-five thousand eight hundred eighty-eight dollars ($62,655,888) in the 2026-27
31 fiscal year appropriated in this act in the Low-Income Energy Assistance Block Grant to the
32 Department of Health and Human Services, Division of Social Services, shall be used for Energy
33 Assistance Payments for the households of (i) elderly persons age 60 and above with income up
34 to one hundred fifty percent (150%) of the federal poverty level and (ii) disabled persons eligible
35 for services funded through the Division of Aging and Adult Services.
36County departments of social services shall submit to the Division of Social Services
37 an outreach plan for targeting households with 60-year-old household members no later than
38 August 1 of each year. The outreach plan shall comply with the following:
39(1)     Ensure that eligible households are made aware of the available assistance,
40with particular attention paid to the elderly population age 60 and above and
41disabled persons receiving services through the Division of Aging and Adult
42Services.
43(2)     Include efforts by the county department of social services to contact other
44State and local governmental entities and community-based organizations to
45(i) offer the opportunity to provide outreach and (ii) receive applications for
46energy assistance.
47(3)     Be approved by the local board of social services or human services board
48prior to submission.
49
50 CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT
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1SECTION 9L.1.(v) Payment for subsidized child care services provided with federal
2 TANF funds shall comply with all regulations and policies issued by the Division of Child
3 Development and Early Education for the subsidized child care program.
4SECTION 9L.1.(w) If funds appropriated through the Child Care and Development
5 Fund Block Grant for any program cannot be obligated or spent in that program within the
6 obligation or liquidation periods allowed by the federal grants, the Department may move funds
7 to child care subsidies, unless otherwise prohibited by federal requirements of the grant, in order
8 to use the federal funds fully.
9
10 COMMUNITY MENTAL HEALTH SERVICES BLOCK GRANT
11SECTION 9L.1.(x) The sum of five million four hundred sixteen thousand seven
12 hundred fifty-six dollars ($4,208,378) for the 2025-2026 fiscal year and four million two hundred
13 and eight thousand, three hundred and seventy-eight dollars ($4,208,378) for the 2026-2027
14 fiscal year appropriated in this act in the Community Mental Health Services Block Grant to the
15 Department of Health and Human Services, Division of Mental Health, Developmental
16 Disabilities, and Substance Use Services, is to be used for Mental Health Services – First
17 Psychotic Symptom Treatment.
18
19 MATERNAL AND CHILD HEALTH BLOCK GRANT
20SECTION 9L.1.(y) The sum of one million seven hundred twenty-seven thousand
21 three hundred seven dollars ($1,727,307) appropriated in this act in the Maternal and Child
22 Health Block Grant to the Department of Health and Human Services, Division of Public Health,
23 for each year of the 2025-2027 fiscal biennium shall be used for evidence-based programs in
24 counties with the highest infant mortality rates. The Division shall report on (i) the counties
25 selected to receive the allocation, (ii) the specific evidence-based services provided, (iii) the
26 number of women served, and (iv) any impact on the counties' infant mortality rate. The Division
27 shall report its findings to the House of Representatives Appropriations Committee on Health
28 and Human Services, the Senate Appropriations Committee on Health and Human Services, and
29 the Fiscal Research Division no later than December 31 of each year.
30SECTION 9L.1.(z) The sum of eighty-one thousand one hundred twelve dollars
31 ($81,112) for fiscal year 2025-26 and eighty-four thousand sixty-seven dollars ($84,067) for
32 fiscal year 2026-27, allocated in this section in the Maternal and Child Health Block Grant to the
33 Department of Health and Human Services, Division of Public Health, Women and Children's
34 Health Section, shall not be used to supplant existing State or federal funds. This allocation shall
35 be used for a Public Health Program Consultant position assigned full-time to manage the North
36 Carolina Perinatal Health Strategic Plan and provide staff support for the stakeholder work group.
37SECTION 9L.1.(aa1) Notwithstanding any provision of law to the contrary, the
38 Department of Health and Human Services, Division of Public Health, shall have the authority
39 to realign appropriated funds between the Maternal and Child Health Block Grant categories to
40 maintain federal compliance and programmatic alignment without exceeding the total amount
41 appropriated for the Maternal and Child Health Block Grant.
42
43 PART X. AGRICULTURE AND CONSUMER SERVICES [RESERVED]
44
45 PART XI. COMMERCE
46
47 COMMUNITY DEVELOPMENT BLOCK GRANTS
48SECTION 11.1.(a) Allocations. – Of the funds appropriated in this act for federal
49 block grant funds, the following allocations are made for the fiscal year ending June 30, 2027,
50 according to the following schedule:
51
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1 COMMUNITY DEVELOPMENT BLOCK GRANT
2
3 01. State Administration  $1,484,872
4
5 02. Neighborhood Revitalization  $27,662,645
6
7 03. Economic Development  $14,065,752
8
9 04. Rural Community Development  $5,157,442
10
11 TOTAL COMMUNITY DEVELOPMENT BLOCK GRANT
122024 Program Year  $46,308,393
132025 Program Year  $46,272,979
142026 Program Year  $46,272,979
152027 Program Year  $48,370,711
16
17SECTION 11.1.(b) Availability Reduction. – If federal funds are reduced below the
18 amounts specified in this section after the effective date of this act, then every program in each
19 of these federal block grants shall be reduced by the same percentage as the reduction in federal
20 funds.
21SECTION 11.1.(c) Availability Increase. – Any block grant funds appropriated by
22 the Congress of the United States in addition to the funds specified in this section shall be
23 expended as follows: each program category under the Community Development Block Grant
24 shall be increased by the same percentage as the increase in federal funds.
25SECTION 11.1.(d) Reallocation. – The Department of Commerce shall consult with
26 the Joint Legislative Commission on Governmental Operations (Commission) prior to
27 reallocating Community Development Block Grant Funds. Notwithstanding the provisions of
28 this subsection, whenever the Director of the Budget finds either of the following conditions
29 exist:
30(1)     If a reallocation is required because of an emergency that poses an imminent
31threat to public health or public safety, then the Director of the Budget may
32authorize the reallocation without consulting the Commission. The
33Department of Commerce shall report to the Commission on the reallocation
34no later than 30 days after it was authorized and shall identify in the report the
35emergency, the type of action taken, and how it was related to the emergency.
36(2)     If the State will lose federal block grant funds or receive less federal block
37grant funds in the next fiscal year unless a reallocation is made, then the
38Department of Commerce shall provide a written report to the Commission
39on the proposed reallocation and shall identify the reason that failure to take
40action will result in the loss of federal funds. If the Commission does not hear
41the issue within 30 days of receipt of the report, the Department of Commerce
42may take the action without consulting the Commission.
43SECTION 11.1.(e) Report. – By October 1, 2026, and September 1, 2027, the
44 Department of Commerce shall report to the chairs of the House of Representatives
45 Appropriations Committee on Agriculture and Natural and Economic Resources; the chairs of
46 the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources; the
47 chairs of the Joint Legislative Economic Development and Global Engagement Oversight
48 Committee; and the Fiscal Research Division on the use of Community Development Block
49 Grant Funds appropriated in the prior fiscal year. The report shall include the following:
50(1)     A discussion of each of the categories of funding, including information on
51the statewide need in each category.
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1(2)       Information on the number of applications that were received in each category
2and the total dollar amount requested in each category.
3(3)      A list of grantees, including the grantee's name, county, category under which
4the grant was funded, the amount awarded, and a narrative description of the
5project.
6SECTION 11.1.(f) Neighborhood Revitalization. – Funds allocated to the
7 Neighborhood Revitalization Category in subsection (a) of this section shall be made available
8 as grants for eligible activities listed in this subsection. The funds available for grants under this
9 category may be used for all of the following, subject to the national objectives and eligible
10 activities allowed under guidance issued by the United States Department of Housing and Urban
11 Development (HUD):
12(1)      Essential repairs to prevent abandonment and deterioration of housing in
13low- and moderate-income neighborhoods.
14(2)      Demolition and rehabilitation of buildings and improvements.
15(3)      Public improvements, including parks, streets, sidewalks, and water and sewer
16lines.
17SECTION 11.1.(g) Economic Development. – Funds allocated to the Economic
18 Development Category in subsection (a) of this section shall be made available as grants for
19 eligible activities listed in this subsection. The funds available for grants under this category may
20 be used for all of the following, subject to the national objectives and eligible activities allowed
21 under guidance issued by HUD:
22(1)      Acquisition of real property.
23(2)      Demolition and rehabilitation of buildings and improvements.
24(3)      Removal of material and architectural barriers.
25(4)      Public improvements, including parks, streets, sidewalks, and water and sewer
26lines.
27(5)      Loans and grants to public or private nonprofit entities for construction and
28rehabilitation activities.
29(6)      Assistance to private, for-profit entities for economic development.
30(7)      Technical assistance to public or nonprofit entities for neighborhood
31revitalization or economic development activities.
32(8)      Assistance to for-profit and nonprofit entities to facilitate economic
33development activities.
34SECTION 11.1.(h) Rural Community Development. – Funds allocated for the Rural
35 Community Development Category in subsection (a) of this section shall be made available as
36 grants for eligible activities listed in this subsection. These funds shall provide grants that support
37 community development and comprehensive growth projects to be awarded by the North
38 Carolina Department of Commerce. The Rural Community Development Category will provide
39 grants to units of local government in development Tier one and development Tier two areas, as
40 defined in G.S. 143B-437.08, and in rural census tracts, as defined in G.S. 143B-472.127(a)(2),
41 in any other area to support projects that promote broad-based community development
42 activities, increased local investment and economic growth, and stronger and more viable rural
43 neighborhoods. In awarding grants under this section, preference shall be given to projects in
44 development tier one areas, as defined in G.S. 143B-437.08. The funds available for grants under
45 this category may be used for all of the following, subject to the national objectives and eligible
46 activities allowed under guidance issued by HUD:
47(1)      Essential repairs to prevent abandonment and deterioration of housing in low
48and moderate-income neighborhoods.
49(2)      Public improvements, including parks, streets, sidewalks, and water and sewer
50lines.
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1(3)       Public facilities, including neighborhood and community facilities and
2facilities for individuals with special needs.
3(4)     Public services, including employment, crime prevention, and energy
4conservation.
5(5)     Assistance to private, for-profit entities for economic development.
6(6)     Technical assistance to public or nonprofit entities for neighborhood
7revitalization or economic development activities.
8(7)     Assistance to for-profit and nonprofit entities to facilitate economic
9development activities.
10SECTION 11.1.(i) Deobligated Funds. – Throughout each year, deobligated funds
11 arise in the various funding categories and program years of the Community Development Block
12 Grant (CDBG) program as a result of (i) projects coming in under budget, (ii) projects being
13 cancelled, or (iii) projects being required to repay funds. Surplus federal administrative funds in
14 the CDBG program may vary from year to year based upon the amount of State appropriated
15 funds allocated and the amount of eligible in-kind funds identified. To allow the Department of
16 Commerce to quickly deploy deobligated and surplus federal administrative funds as they are
17 identified throughout the program year, the following shall apply to the use of deobligated CDBG
18 funds and surplus federal administrative funds:
19(1)     All surplus federal administrative funds shall be divided proportionally
20between the Department of Commerce programs and shall be used as provided
21in subdivisions (2) and (3) of this subsection.
22(2)     All deobligated funds allocated to the Department of Commerce and any
23surplus federal administrative funds, as provided for in subdivision (1) of this
24subsection, may be used by the Department for all of the following:
25a.       To issue grants in the CDBG Economic Development or
26Neighborhood Revitalization Program Category.
27b.       For providing training and guidance to local governments relative to
28the CDBG program, its management, and administrative requirements.
29c.       For any other purpose consistent with the Department's administration
30of the CDBG program if an equal amount of State matching funds is
31available.
32
33 COMMERCE NONPROFITS/REPORTING REQUIREMENTS
34SECTION 11.2.(a) The entities listed in subsection (b) of this section shall do the
35 following for each year that State funds are expended:
36(1)    By September 1 of each year, and more frequently as requested, report to the
37chairs of the Joint Legislative Oversight Committee on Agriculture and
38Natural and Economic Resources; the chairs of the House of Representatives
39Appropriations Committee on Agriculture and Natural and Economic
40Resources; the chairs of the Senate Appropriations Committee on Agriculture,
41Natural, and Economic Resources; and the Fiscal Research Division on prior
42State fiscal year program activities, objectives, and accomplishments and prior
43State fiscal year itemized expenditures and fund sources. If State funds are
44used to provide matching funds for competitive grants from the federal
45government or a nongovernmental entity, the report should include a list and
46description of the grants that are awarded.
47(2)    Provide to the chairs of the Joint Legislative Oversight Committee on
48Agriculture and Natural and Economic Resources; the chairs of the House of
49Representatives Appropriations Committee on Agriculture and Natural and
50Economic Resources; the chairs of the Senate Appropriations Committee on
51Agriculture, Natural, and Economic Resources; and the Fiscal Research
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1Division a copy of the entity's annual audited financial statement within 30
2days of issuance of the statement.
3SECTION 11.2.(b) The following entities shall comply with the requirements of
4 subsection (a) of this section:
5(1)      North Carolina Biotechnology Center.
6(2)      High Point Market Authority.
7(3)      RTI International.
8(4)      Carolina Small Business Development Fund.
9
10 ADMINISTRATIVE EXPENSES FOR ONE NC SMALL BUSINESS PROGRAM
11SECTION 11.3.(a) G.S. 143B-437.71 reads as rewritten:
12 "§ 143B-437.71. One North Carolina Fund established as a special fund.
13     …
14     (c)     [Special Account. –]There is created in the One North Carolina Fund a special
15 account, the One North Carolina Small Business Account, to be used for the North Carolina
16 SBIR/STTR Incentive Program and the North Carolina SBIR/STTR Matching Funds Program,
17 as specified in Part 2I of Article 10 of Chapter 143B of the General Statutes. Of the total moneys
18 in the One North Carolina Small Business Account, the Department may use up to two percent
19 (2%) annually for costs associated with administration of the North Carolina SBIR/STTR
20 Incentive Program and the North Carolina SBIR/STTR Matching Funds Program."
21
22 NC BIOTECHNOLOGY CENTER
23SECTION 11.4.(a) Except for the funds appropriated in subsection (b) of this
24 section, funds appropriated in this act to the Department of Commerce for the North Carolina
25 Biotechnology Center (Center) in the fiscal year 2026-27 shall be allocated for the following
26 purposes in the following proportions:
27(1)     Twenty-one percent (21%) for job creation, including funding for the
28AgBiotech Initiative, economic and industrial development, and related
29activities.
30(2)     Sixty-five percent (65%) for science and commercialization, including
31science and technology development, Centers of Innovation, business and
32technology development, education and training, and related activities.
33(3)     Fourteen percent (14%) for Center operations, including administration,
34professional and technical assistance and oversight, corporate
35communications, human resource management, financial and grant
36administration, legal, and accounting.
37SECTION 11.4.(b) Of the funds appropriated in this act to the Department of
38 Commerce for the Center, five hundred thousand dollars ($500,000) of recurring funds in each
39 fiscal year of the biennium shall be used to support funding for early stage loans to North Carolina
40 agricultural technology companies.
41SECTION 11.4.(c) The Center shall not use any of the recurring funds allocated in
42 subsection (b) of this section for administrative costs and shall report on the expenditure of those
43 funds each year pursuant to Section 11.2 of this act.
44SECTION 11.4.(d) The Center shall prioritize funding and distribution of loans over
45 funding and distribution of grants.
46SECTION 11.4.(e) Up to ten percent (10%) of the sum of each of the allocations in
47 subsection (a) of this section may be reallocated to subdivision (a)(1) or subdivision (a)(2) of this
48 section if, in the judgment of Center management, the reallocation will advance the mission of
49 the Center.
50
51 STRATEGIC WORKFORCE TRAINING FUND AND BUSINESS TAX CUT
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 General Assembly Of North Carolina  Session 2025
1SECTION 11.5.(a) Article 1 of Chapter 96 of the General Statutes is amended by
2 adding a new section to read:
3 "§ 96-6.3. Strategic WorkForce Training fund.
4     (a)      Establishment and Use. – There is established in the Department of Commerce a
5 Strategic WorkForce Training fund for the purposes of providing job training,
6 employment-related services, and economic development services to North Carolina job seekers
7 and employers in order to increase or improve labor supply, connect employers with employees,
8 and enhance the employer experience with the Division. The Trust consists of the revenues
9 derived from the Strategic WorkForce Training assessment imposed as outlined in 96-6.3.(b).
10     (b)      Assessment Imposed. – An assessment is imposed on an employer who is required to
11 make a contribution to the Unemployment Insurance equal to a percentage of the required
12 contribution calculated in accordance with G.S. 96-9.2 prior to the application of the reduction
13 in G.S. 96-9.2(f). The Division shall calculate the assessment percentage, rounded up to the
14 nearest half percent (0.5%), as the ratio of the Strategic WorkForce Training fund Annual Target
15 Amount divided by the total required contributions estimated using the most recently available
16 Experience Rating Report (ETA 204) prepared for the Employment and Training Administration
17 within the U.S. Department of Labor. The Annual Target Amount shall be one hundred million
18 dollars ($100,000,000) for taxable years beginning on or after January 1, 2027, and before
19 January 1, 2028, and shall increase by three and one-half percent (3.5%) in each subsequent
20 taxable year, rounded to the nearest one hundred thousand dollars ($100,000). Except as provided
21 in this section, the assessment is collected and administered in the same manner as contributions
22 as described in Article 2A of this Chapter, except that the full assessment amount is due on the
23 same date as the first quarterly payment of contributions. Assessments collected under this
24 section must be credited to the Strategic WorkForce Training fund established under subsection
25 (a) of this section. Interest and penalties collected on unpaid assessments imposed by this section
26 must be credited to the Supplemental Employment Security Administration. Penalties collected
27 on unpaid assessments imposed by this section must be transferred to the Civil Penalty and
28 Forfeiture established in G.S. 115C-457.1.
29     (c)      Suspension of Assessment. – The assessment does not apply in a taxable year if, as
30 of September 1 of the preceding calendar year, the amount in the State's account in the
31 Unemployment Trust is less than one billion dollars ($1,000,000,000)."
32SECTION 11.5.(b) G.S. 96-9.2 is amended by adding a new subsection to read:
33 "§ 96‑9.2. Required contributions to the Unemployment Insurance Fund.
34     …
35     (f)      Strategic Workforce Contribution Tax Credit. – Except when the surtax imposed
36 under G.S. 96-9.7 is in effect, an employer is allowed a tax credit for a contribution to the
37 Unemployment Insurance Fund payable under this section each calendar year equal to one
38 hundred and fifty percent (150%) of the amount of the Strategic WorkForce Training assessment
39 calculated pursuant to G.S. 96-6.3. An employer may claim the full amount of the credit against
40 the contributions payable with the report due on or before April 30 of each calendar year. The
41 Division may suspend the Strategic Workforce Contribution Tax Credit for any employer with
42 contributions more than 90 days past due."
43
44 ENHANCE UNEMPLOYMENT INSURANCE BENEFITS
45SECTION 11.6.(a) G.S. 96-14.2 reads as rewritten:
46 "§ 96-14.2. Weekly benefit amount.
47      (a)    Weekly Benefit Amount. – The weekly benefit amount for an individual who is totally
48 unemployed is an amount equal to the wages paid to the individual in the last two completed
49 quarters of the individual's base period divided by 52 and rounded to the next lower whole dollar.
50 If this amount is less than fifteen dollars ($15.00), the individual is not eligible for benefits. The
51 weekly benefit amount may not exceed three hundred fifty dollars ($350.00).four hundred ninety-
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1 five dollars ($495.00), adjusted annually for inflation. Beginning July 1, 2027, and on each July
2 1 thereafter, the Division shall adjust the maximum weekly benefit for claims filed on or after
3 that date by the percentage change in the annual average Consumer Price Index for All Items for
4 All Urban Consumers published by the Bureau of Labor Statistics for the preceding calendar
5 year, rounded to the nearest dollar."
6SECTION 11.6.(b) G.S. 96-14.3 reads as rewritten:
7 "§ 96-14.3. Duration of benefits.
8     (a)     Duration. – The number of weeks an individual is allowed to receive unemployment
9 benefits depends on the seasonal adjusted statewide unemployment rate that applies to the
10 six-month base period in which the claim is filed. One six-month base period begins on January
11 1 and one six-month base period begins on July 1. For the base period that begins January 1, the
12 average of the seasonal adjusted unemployment rates for the State for the preceding months of
13 July, August, and September applies. For the base period that begins July 1, the average of the
14 seasonal adjusted unemployment rates for the State for the preceding months of January,
15 February, and March applies. The Division must use the most recent seasonal adjusted
16 unemployment rate determined by the U.S. Department of Labor, Bureau of Labor Statistics, and
17 not the rate as revised in the annual benchmark.
18     Seasonal Adjusted  Number
19     Unemployment Rate  of Weeks
20     Less than or equal to 5.5%4.5%  1220
21     Greater than 5.5%4.5% up to 6%5.5% 1322
22     Greater than 6%5.5% up to 6.5%  1424
23     Greater than 6.5% up to 7%  1526
24     Greater than 7% up to 7.5%  16
25     Greater than 7.5% up to 8%  17
26     Greater than 8% up to 8.5%  18
27     Greater than 8.5% up to 9%  19
28     Greater than 9%  20
29     …."
30SECTION 11.6.(c) Subsections (a) and (b) apply to claims for benefits filed on or
31 after July 1, 2026.
32
33 PART XII. ENVIRONMENTAL QUALITY
34
35 ESTABLISH NON-TITLE V FEES IN STATUTE
36SECTION 12.1. G.S. 143-215.3(a)(1b) reads as rewritten:
37 "§ 143-215.3. General powers of Commission and Department; auxiliary powers.
38     (a)     Additional Powers. – In addition to the specific powers prescribed elsewhere in this
39 Article, and for the purpose of carrying out its duties, the Commission shall have the power:
40…
41(1b) The fee to be charged pursuant to G.S. 143-215.3(a)(1a) for processing an
42application for a permit under G.S. 143-215.108 and G.S. 143-215.109 of
43Article 21B of this Chapter may not exceed five hundred dollars ($500.00).
44The Department shall charge permit fees pursuant to G.S. 143-215.3(a)(1a) to
45non-Title V facilities subject to permitting under G.S. 143-215.108 and
46G.S. 143-215.109 of Article 21B according to the following schedule:
47(a)     For facilities seeking federally enforceable limits to avoid Title V
48permitting, application fees of eight hundred dollars ($800.00) and
49annual fees of three thousand seventy dollars ($3,070.00).
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 General Assembly Of North Carolina  Session 2025
1(b)      For facilities with a potential to emit below Title V thresholds, except
2for general permits, application fees of one hundred dollars ($100.00)
3and annual fees of four hundred dollars ($400.00).
4(c)      The fee for an ownership change shall be fifty dollars ($50).
5(d)      The Department may provide a discount of up to twenty-five percent
6on annual fees authorized by subparagraphs (a) and (b) of this
7subsection.
8The fee to be charged pursuant to G.S. 143-215.3(a)(1a) for processing a
9registration under Part 2A of this Article or Article 38 of this Chapter may not
10exceed fifty dollars ($50.00) for any single registration. An additional fee of
11twenty percent (20%) of the registration processing fee may be assessed for a
12late registration under Article 38 of this Chapter. The fee for administering
13and compliance monitoring under Article 21, other than Parts 1 and 1A, and
14G.S. 143-215.108 and G.S. 143-215.109 of Article 21B shall be charged on
15an annual basis for each year of the permit term and may not exceed one
16thousand five hundred dollars ($1,500) per year. Fees for processing all
17permits under Article 21A and all other sections of Article 21B shall not
18exceed one hundred dollars ($100.00) for any single permit. The total payment
19for fees that are set by the Commission under this subsection for all permits
20for any single facility shall not exceed seven thousand five hundred dollars
21($7,500) per year, which amount shall include all application fees and fees for
22administration and compliance monitoring. A single facility is defined to be
23any contiguous area under one ownership and in which permitted activities
24occur. For all permits issued under these Articles where a fee schedule is not
25specified in the statutes, the Commission, or other commission specified by
26statute shall adopt a fee schedule in a rule following the procedures established
27by the Administrative Procedure Act. Fee schedules shall be established to
28reflect the size of the emission or discharge, the potential impact on the
29environment, the staff costs involved, relative costs of the issuance of new
30permits and the reissuance of existing permits, and shall include adequate
31safeguards to prevent unusual fee assessments which would result in serious
32economic burden on an individual applicant. A system shall be considered to
33allow consolidated annual payments for persons with multiple permits. In its
34rulemaking to establish fee schedules, the Commission is also directed to
35consider a method of rewarding facilities which achieve full compliance with
36administrative and self-monitoring reporting requirements, and to consider, in
37those cases where the cost of renewal or amendment of a permit is less than
38for the original permit, a lower fee for the renewal or amendment."
39
40 QUADRENNIAL FEE ADJUSTMENT REQUIREMENTS
41SECTION 12.2. G.S. 143B-279.19 reads as rewritten:
42 "§ 143B-279.19. Quadrennial adjustment of certain fees and rates.
43     (a)     Adjustment for Legislatively Mandated Salaries and Benefits. – Beginning July 1,
44 2025, and every four years thereafter, the Department shall adjust the fees and rates imposed
45 pursuant to the statutes listed in this subsection in accordance with the Consumer Price Index
46 computed by the Bureau of Labor Statistics during the prior two bienniums. The adjustment for
47 per transaction rates shall be rounded to the nearest dollar ($1.00):
48…
49(21) G.S. 143-215.3(1b).
50     …."
51
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1 MAKING INUNDATION MAPS PUBLICLY AVAILABLE
2SECTION 12.3.(a) G.S. 143-215.31 reads as rewritten:
3 "§ 143-215.31. Supervision over maintenance and operation of dams.
4     …
5     (a1) The owner of a dam classified by the Department as a high-hazard dam or an
6 intermediate-hazard dam shall develop an Emergency Action Plan for the dam as provided in this
7 subsection:
8…
9(6)    Information included in an Emergency Action Plan that constitutes sensitive
10public security information, as provided in G.S. 132-1.7, shall be maintained
11as confidential information and shall not be subject to disclosure under the
12Public Records Act. For purposes of this section, "sensitive public security
13information" shall include Critical Energy Infrastructure Information
14protected from disclosure under rules adopted by the Federal Energy
15Regulatory Commission in 18 C.F.R. § 388.112. § 388.112, but shall not
16include Emergency Action Plans or inundation maps for any impoundments
17or dams not regulated by the Federal Energy Regulatory Commission.
18     …."
19SECTION 12.3.(b) G.S. 66-58 is amended to read:
20 "§ 66‑58. Sale of merchandise or services by governmental units.
21     …
22     (b)     Subsection (a) of this section does not apply to any of the following:
23…
24(29) The Department of Environmental Quality in the provision of inundation
25maps for the preparation of Emergency Action Plans to owners or operators
26of high hazard potential dams.
27     …."
28
29 SOLID WASTE BENEFICIAL REUSE CLARIFICATION
30SECTION 12.4.(a) G.S. 130A-309.05 reads as rewritten:
31 "§ 130A-309.05. Regulated wastes; certain exclusions.
32     (a)     Certain Wastes Regulated as Nonhazardous. – Notwithstanding other provisions of
33 this Article, the following waste shall be regulated pursuant to this Part:
34…
35     (b)     Management of Ash Generated From Burning of Solid Waste. – Ash generated by a
36 solid waste management facility from the burning of solid waste shall be disposed of in a properly
37 designed solid waste disposal area that complies with standards developed by the Department for
38 the disposal of the ash. The Department shall work with solid waste management facilities that
39 burn solid waste to identify and develop methods for recycling and reusing incinerator ash or
40 treated ash.
41     (c)     Recovered Material. – Recovered material is not subject to regulation as permitting
42 requirements for solid waste under this Article. In order for a material that would otherwise be
43 regulated as solid waste to qualify as a recovered material, the The Department may require any
44 person who owns or has control over the material to demonstrate that the material meets the
45 requirements of this subsection. In order to protect public health and the environment, the
46 Commission subsection or may require the person to obtain a beneficial use determination from
47 the Department in accordance with subsection (d) of this section. The Department may adopt
48 rules to implement this subsection. Materials that are accumulated speculatively, as that term is
49 defined under 40 Code of Federal Regulations § 261 (July 1, 2014 Edition), shall not qualify as
50 a recovered material, and shall be subject to regulation as solid waste. In order to qualify as a
51 recovered material, thematerial. The material shall be managed as a valuable commodity in a
 Page 104  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 manner consistent with the desired use or end use, and all of the following conditions shall be
2 met:
3…
4     (d)      Beneficial Use Determination. – For the purposes of preservation of landfill capacity,
5 economic development, energy savings, and reduction of greenhouse emissions, the Department
6 may determine whether nonhazardous solid waste may be used or reused for a particular site or
7 application as an alternative to disposal at a permitted solid waste management facility as set
8 forth in this subsection.
9(1)    A person seeking a beneficial use determination shall submit an application to
10the Department. The Department, after a review of an application submitted
11under this subsection, may take any of the following actions:
12a.      Authorize management of a specified type of nonhazardous solid
13waste at a site other than a permitted solid waste management facility.
14b.      Issue a beneficial use determination with appropriate conditions for
15use of specific types of solid waste in construction, land application,
16or other projects and applications.
17(2)    An applicant for a determination under this subsection shall submit
18information on forms prescribed by the Department and any additional
19information required by the Department necessary for a determination under
20this subsection. In its review of the application and additional information, the
21Department shall also consider internal research or information submitted by
22any person or entity concerning the potential hazard to public health or the
23environment of any type of solid waste.
24(3)    The Department may require submittal of a demonstration that the solid waste
25is being managed in a manner to protect public health or the environment and
26may include any of the following as a part of an authorization under
27subdivision (1) of this subsection:
28a.      Requirements for periodic testing of solid wastes; and
29b.      Conditions to ensure that the product or by-products of a material
30recovered or diverted for beneficial use shall not be discharged,
31deposited, injected, dumped, spilled, leaked, or placed into or upon
32any land or water so that the products or by-products or any
33constituents thereof may enter other lands or be emitted into the air, or
34discharged into any waters, including groundwaters, or otherwise enter
35the environment or pose a threat to public health and safety.
36(4)    Approvals granted under this subsection are valid for no longer than five
37years. Requests for renewal shall be made at least 60 days in advance of the
38expiration date of the approval.
39(5)    The applicant for a determination under this subdivision shall submit to the
40Department on an annual basis a report detailing the usage of material under
41the approval and certifying compliance with this Article and any applicable
42rules adopted under this Article.
43(6)    The Department may suspend or revoke an authorization and may modify an
44authorization if it is determined that the activity is not in compliance with the
45requirements of applicable laws or rules or if new information is provided to
46the Department that impacts the determination of protection of public health
47or the environment.
48(7)    The Department shall provide notice on its website of approved beneficial use
49determinations.
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1(8)  Facilities that manage source-separated materials for the purpose of recycling
2as defined in G.S. 130A-290 are not subject to the provisions of this
3subsection.
4(9)  The Department may adopt rules to implement this subsection and establish
5application fees for a reuse determination under this subsection. All fees
6collected under this subdivision shall be credited to the Solid Waste
7Management Account established under G.S. 130A-295.8(a). In determining
8the amount of the total application fee in rule, the Department shall have the
9authority to establish separate fee amounts for annual fees for each year based
10on the length of time for which the approval will be valid as requested by the
11applicant."
12SECTION 12.4.(b) This section becomes effective January 1, 2027.
13
14 EXPAND ELIGIBILITY FOR TARGETED INTEREST RATES
15SECTION 12.5. G.S. 159G-20(21) reads as rewritten:
16 "§ 159G-20. Definitions.
17     …
18(21) Targeted interest rate project. – Either one of the following types of projects:
19a. A project that is awarded a loan from the Drinking Water Reserve or the
20Wastewater Reserve based on affordability.
21b. A project that is awarded a loan from the CWSRF or the DWSRF and is
22in a category for which federal law or the Department encourages a special
23focus.
24…."
25
26 RAISE LIMITS FOR MRF AND AIA GRANT FUNDING
27SECTION 12.6. G.S. 159G-36(c) is amended to read:
28 "§ 159G-36. Limits on loans and grants.
29     …
30     (c)   Certain Reserve Recipient Limit. – The following limits apply to the loan or grant
31 types made from the Wastewater Reserve or the Drinking Water Reserve to the same local
32 government unit or nonprofit water corporation:
33…
34(4)     The amount of merger/regionalization feasibility grants awarded for three
35consecutive fiscal years for a fiscal year may not exceed fifty thousand dollars
36($50,000) seventy-five thousand dollars ($75,000).
37(5)     The amount of asset inventory and assessment grants awarded for three
38consecutive fiscal years may not exceed one hundred fifty thousand dollars
39($150,000)two hundred twenty-five thousand dollars ($225,000).
40     …."
41
42 PART XIII. LABOR [RESERVED]
43
44 PART XIV. NATURAL AND CULTURAL RESOURCES
45
46 JOHNSTON COUNTY/BENTONVILLE BATTLEFIELD GRANT EXTENSION
47SECTION 14.1. Notwithstanding any provision of law to the contrary, the funds
48 appropriated in S.L. 2023-134, Sec. 2.2 to be allocated as a directed grant to Johnston County to
49 be used for the Bentonville Battlefield State Historic Site shall not revert until June 30, 2028.
50
51 FRIENDS OF NC MARITIME MUSEUM AT SOUTHPORT GRANT EXTENSION
 Page 106  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1SECTION 14.2. Notwithstanding any provision of law to the contrary, the funds
2 appropriated in S.L. 2023-134, Sec. 2.2 to be allocated as a directed grant to the Friends of the
3 North Carolina Maritime Museum at Southport to be used for fire suppression system and related
4 costs shall not revert until June 30, 2028.
5
6 CODIFY EXEMPTION FROM STATE PARKS FEES FOR ELIGIBLE DISABLED
7     VETERANS
8SECTION 14.3. Article 2 of Chapter 143B of the General Statutes is amended by
9 adding a new section to read:
10 "§ 143B-135.17. Exemption of State Parks fees for eligible disabled veterans.
11     (a)    Definitions. – As used in this section, the following words and phrases have the
12     following meanings:
13(1)     Annual Pass Program. – The North Carolina State Parks Annual Pass program
14offered by the Division that includes the following passes: (i) seasonal access
15passes, (ii) annual passes, and (iii) four-wheel-drive beach access annual
16passes.
17(2)     Disabled Veteran. – A veteran of any branch of the Armed Forces of the
18United States who character of service at separation was honorable or under
19honorable conditions and who satisfies either of the following requirements:
20a.      As of the date of application required by this section is submitted, the
21veteran has received benefits under 38 U.S.C. § 2101; or
22b.      The veteran has received a certification by the United States
23Department of Veterans Affairs or another federal agency indicating
24that, as of the date the application required by this section is submitted,
25the veteran has a service-connected disability.
26(3)     Division. – The North Carolina Division of Parks and Recreation of the North
27Carolina Department of Natural and Cultural Resources.
28(4)     Eligible Disabled Veteran. – A Disabled Veteran who (i) has submitted an
29application for a pass included within the Annual Pass Program and (ii) has
30provided the Division a copy of the veteran's disability certification or
31evidence of benefits received under 38 U.S.C. § 2101.
32     (b)    Fee Exemption. – An Eligible Disabled Veteran seeking a pass under the Annual Pass
33 Program shall apply for the pass on a forum and in a manner prescribed by the Division.
34     (c)    Application Required. – A Disabled Veteran seeking a pass under the Annual Pass
35 Program shall apply for the pass on a form and in a manner prescribed by the Division.
36     (d)    Rulemaking. – The Department of Natural and Cultural Resources shall adopt rules,
37 or amend any current rules, necessary to implement this section."
38
39 GRASSROOTS ARTS PROGRAM ADMINISTRATIVE COST ALLOWANCE
40SECTION 14.4. G.S. 143B-122 reads as rewritten:
41 "§143-122. Distribution of funds.
42     (a)     Administrative Expenses. – Of the funds appropriated to the Fund, the Trustees may
43 use no more than five percent (5%) for operating expenses associated with programs and
44 activities authorized by this Section.
45     (b)     After administrative expenses are deducted from Of the funds available under
46     Grassroots Arts Program, 20% total shall be distributed among counties equally, and the
47     remaining eighty percent (80%) shall be distributed among the counties on a per capita basis."
48
49 AUTHORIZE PARTF MATCH FOR SHALLOWDRAFT NAVIGATION CHANNEL
50   DREDGING AND AQUATIC WEED FUND
51SECTION 14.5. G.S. 143-215.73F reads as rewritten:
 House Bill 1146-First Edition  Page 107
 General Assembly Of North Carolina  Session 2025
1 "§143-215.73F. Shallow Draft Navigation Channel Dredging and Aquatic Weed Fund.
2    …
3    (c)     Cost-Share. – Any project funded by revenue from the Fund must be cost-shared with
4 non-State dollars as follow:
5…
6(3)     The cost-share for an aquatic weed control or navigation channel dredging
7project shall be at least one non-State dollar for every dollar from the Fund.
8The cost-share for an aquatic weed control or navigation channel dredging
9project located within a component of the State Parks System shall be
10provided by the Division of Parks and Recreation of the Department of
11Natural and Cultural Resources. The Division of Parks and Recreation may
12use funds allocated to the State parks System for capital projects under
13G.S. 143B-135.56 for the cost share.
14…."
15
16 AMEND CONTINUING RESOLUTIONS TO ALLOW ACTING PAY
17SECTION 14.6. G.S. 143-5-4 reads as rewritten:
18 "§ 143-5-4. Enactment deadline; procedures to be followed when the Current Operations
19Appropriations Act does not become law prior to the end of certain fiscal years.
20     (a)     Procedure for Budget Continuation. – If a fiscal year begins for which no Current
21 Operations Appropriation Act providing for current operations of State government during that
22 fiscal year has become law, then the following procedures shall be followed and the following
23 limitations shall apply;
24…
25(5)     State employee salaries. – The salary schedules and specific salaries
26established for the prior fiscal year and in effect on June 30 of the prior fiscal
27year for offices and positions shall remain in effect until the Current
28Operations Appropriations Act for the fiscal year becomes law. State
29employees subject to G.S. 7A-102(c), 7A-171.1, 143B-1715, or any other
30statutory salary schedule, shall not move up on salary schedules or receive
31automatic increases including automatic step increases, until authorized by the
32General Assembly. State employees, including those exempt from the
33classification and compensation rules established by the State Human
34Resources Commission, shall not receive any automatic step increases,
35annual, performance, merit, bonuses, or other increments until authorized by
36the General Assembly. Notwithstanding these restrictions, acting pay may still
37be offered when an employee has a temporary assignment in which he or she
38remains in the same position, but assumes a higher-level duties or when an
39employee has a temporary assignment with a change in the variety and scope
40of duties.
41…."
42
43 SALUDA GRADE TRAILS CONSERVATORY
44SECTION 14.7. The funds allocated by Section 2H.7(1) of S.L. 2024-57 of the
45 Department of Natural and Cultural Resources to provide a directed grant to the Saluda Grade
46 Trails Conservancy, a nonprofit corporation, may, notwithstanding that provision, also be used
47 for the purposes of designing, planning, and developing a recreational trail along the Saluda
48 Grade, including but not limited to the provision of matching funds for grants related to
49 recreational trail development along the Saluda Grade. For purposes of this subsection, "Saluda
50 Grade" means that portion of the Norfolk Southern W-Line railroad between milepost 26 in the
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 General Assembly Of North Carolina  Session 2025
1 unincorporated community of Zirconia in Henderson County and the boundary between North
2 Carolina and South Carolina.
3
4 PART XV. WILDLIFE RESOURCES COMMISSION [RESERVED]
5
6 PART XVI. ADMINISTRATIVE OFFICE OF THE COURTS
7
8 IOLTA FUNDS TRANSFER
9SECTION 16.1. Section 25 of Session Law 2025-70 is repealed.
10
11 CRIMINAL JUSTICE INFORMATION NETWORK TRANSFER
12SECTION 16.2. G.S. 143B-1203 reads as re-written:
13 "§ 143B-1203. Transfer; definitions.
14     (a)   The statutory authority, powers, duties, functions, records, personnel, property, and
15 unexpended balances of appropriations, allocations, or other funds of the Criminal Justice
16 Information Network Governing Board are transferred to the Department of Public Safety
17 Administrative Office of the Courts as a Type II transfer as defined in G.S. 143A-6.
18     (b)   As used in this Part:
19(1)     "Board" means the Criminal Justice Information Network Governing Board
20established by G.S. 143B-1204.
21(2)     "Department" means the Department of Public Safety. Administrative Office
22of the Courts.
23(3)     "Local government user" means a unit of local government of this State having
24authorized access to the Network.
25(4)     "Network" means the Criminal Justice Information Network established by
26the Board pursuant to this Part.
27(5)     "Network user" or "user" means any person having authorized access to the
28Network.
29(6)     "State agency" means any State department, agency, institution, board,
30commission, or other unit of State government."
31
32 PART XVII. INDIGENT DEFENSE SERVICES [RESERVED]
33
34 PART XVIII. JUSTICE
35
36 STATE CRIME LABORATORY FEASIBILITY STUDY
37SECTION 18.1. Of the funds appropriated in Section 18.9 of S.L. 2021-180 to the
38 Department of Justice (Department) for the 2021-2022 fiscal year to conduct a study on the siting
39 of an Eastern Regional Laboratory to be located on the campus of Elizabeth City State University,
40 the remainder shall be used to conduct a study for a permanent laboratory facility for the Triad
41 Laboratory to replace the current location, which the Department is currently leasing, and to do
42 a feasibility and advanced planning study for a new Raleigh laboratory due to the age of the
43 building. The Department shall report on the study outlined in this section to the Chairs of the
44 House Justice and Public Safety Appropriations Committee, the Chairs of the Senate
45 Appropriations on Justice and Public Safety Committee, and the Fiscal Research Division on or
46 before June 30, 2027. The report shall include (i) the estimated cost of completing the laboratory,
47 (ii) the estimated cost of operating the laboratory during its first five years of operation, (iii) an
48 estimated time line for completion of the laboratory, and (iv) any other relevant information.
49
50 PART XIX. ADULT CORRECTION
51
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 General Assembly Of North Carolina  Session 2025
1 PART XIX-A. DEPARTMENT OF ADULT CORRECTION ADMINISTRATION
2
3 STATEWIDE MISDEMEANANT CONFINEMENT PROGRAM FUNDING TRANSFER
4SECTION 19A.1. Of the funds appropriated in this act for the Statewide
5 Misdemeanant Confinement Program:
6(1)   The sum of one million dollars ($1,000,000) shall be transferred each fiscal
7year to the North Carolina Sheriffs' Association, Inc., a nonprofit corporation,
8to support the Program and for administrative and operating expenses of the
9Association and its staff.
10(2)   The sum of two hundred twenty-five thousand dollars ($225,000) shall be
11allocated each fiscal year to the Department of Adult Correction for its
12administrative and operating expenses for the Program.
13(3)   Up to the sum of five hundred thousand dollars ($500,000) may be used in
14each fiscal year of the 2025-2027 fiscal biennium to reimburse sheriffs
15utilizing inmate labor pursuant to the provisions of Section 19C.10 of S.L.
162021-180.
17
18 INMATE MEDICAL REPORTING
19SECTION 19A.2. G.S. 143B-1470 reads as rewritten:
20 "§ 143B-1470. Medical costs for inmates.
21     …
22     (c)     The Department of Adult Correction shall report quarterly annually by September 1
23 of each year to the Joint Legislative Oversight Committee on Justice and Public Safety and the
24 chairs of the Justice and Public Safety Appropriations Committees on:
25(1)     The percentage of the total inmates requiring hospitalization or hospital
26services who receive that treatment at each hospital.
27…
28(10) The reimbursement rate for contracted providers. The Department shall
29randomly audit high-volume contracted providers to ensure adherence to
30billing at the contracted rate.
31     Reports submitted on August 1 shall include totals for the previous fiscal year for all the
32 information requested."
33
34 REIMBURSE COUNTIES FOR HOUSING AND EXTRAORDINARY MEDICAL
35     EXPENSES
36SECTION 19A.3. Notwithstanding G.S. 143C-6-9, the Department of Adult
37 Correction may use funds available to the Department for the 2025-27 fiscal biennium to
38 reimburse counties for the cost of housing convicted inmates, parolees, and post-release
39 supervisees awaiting transfer to the State prison system, as provided in G.S. 148-29. The
40 reimbursement may not exceed forty dollars ($40.00) per day per prisoner awaiting transfer.
41 The Department shall report annually by February 1 of each year to the chairs of the Joint
42 Legislative Oversight Committee on Justice and Public Safety and the chairs of the House of
43 Representatives Appropriations Committee on Justice and Public Safety and the Senate
44 Appropriations Committee on Justice and Public Safety on the expenditure of funds to
45 reimburse counties for prisoners awaiting transfer.
46
47 PART XIX-B. PRISONS
48
49 CENTER FOR COMMUNITY TRANSITIONS/CONTRACT AND REPORT
50SECTION 19B.1. The Department of Adult Correction may continue to contract
51 with The Center for Community Transitions, Inc., a nonprofit corporation, for the purchase of
 Page 110  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 prison beds for minimum security female inmates during the 2025-27 fiscal biennium. The
2 Center for Community Transitions, Inc., shall report by February 1 of each year to the chairs of
3 the House of Representatives Appropriations Committee on Justice and Public Safety and the
4 Senate Appropriations Committee on Justice and Public Safety on the annual cost per inmate and
5 the average daily inmate population compared to bed capacity using the same methodology as
6 that used by the Department of Adult Correction.
7
8 NURSE STAFFING AT STATE PRISONS
9SECTION 19B.2. Notwithstanding any other provision of law, the Department of
10 Adult Correction may, in its discretion and subject to the approval of the Office of State Budget
11 and Management, convert funds appropriated for contractual nursing services to permanent
12 nursing positions when it is determined to promote security, generate cost savings, and improve
13 health care quality. The Department shall report on any such conversions to the Fiscal Research
14 Division.
15
16 DOT CONTRACT OF INMATE LITTER CREW
17SECTION 19B.3.(a) After the issuance of a request for information (RFI) and
18 receipt of bids by the Department of Transportation for litter pickup on State highways and roads,
19 the Department of Transportation shall first offer the contract to the Department of Adult
20 Correction upon the same terms and conditions as the most favorable bid received by the
21 Department of Transportation from a suitable contractor. The Department of Adult Correction
22 shall have 30 days to accept or decline the offered contract.
23SECTION 19B.3.(b) It is the policy of the General Assembly that the Department
24 of Transportation shall utilize inmate litter crews for litter pickup on State highways and roads
25 as often as is necessary and practicable.
26
27 PART XIX-C. COMMUNITY SUPERVISION
28
29 INTERSTATE COMPACT FEES TO SUPPORT TRAINING PROGRAMS AND
30     EQUIPMENT PURCHASES SECTIONS
31SECTION 19C.1. Notwithstanding the provisions of G.S. 148-65.7, fees collected
32 for the Interstate Compact Fund during the 2025-27 fiscal biennium may be used by the
33 Department of Adult Correction during the 2025-27 fiscal biennium to provide training programs
34 and equipment purchases for the Division of Community Supervision, but only to the extent
35 sufficient funds remain available in the Fund to support the mission of the Interstate Compact
36 Program.
37
38 PART XIX-D. REHABILITATION AND REENTRY [RESERVED]
39
40 PART XIX-E. PUBLIC SAFETY [RESERVED]
41
42 PART      XIX-F. DEPARTMENT  OF    PUBLIC       SAFETY       ADMINISTRATION
43[RESERVED]
44
45 PART XIX-G. LAW ENFORCEMENT [RESERVED]
46
47 PART XIX-H. JUVENILE JUSTICE [RESERVED]
48
49 PART XIX-I. EMERGENCY MANAGEMENT AND NATIONAL GUARD [RESERVED]
50
51 PART XIX-J. STATE BUREAU OF INVESTIGATION
 House Bill 1146-First Edition  Page 111
 General Assembly Of North Carolina  Session 2025
1
2 CODIFY USE OF SEIZED AND FORFEITED PROPERTY
3SECTION 19J.1. G.S. 14-2.3 reads as re-written:
4 "§ 14-2.3. Forfeiture of gain acquired through criminal activity.
5     …
6     (d)     Seized and forfeited assets transferred to the Department of Justice, Department of
7 Adult Correction, the State Bureau of Investigation, the State Highway Patrol, and the
8 Department of Public Safety, pursuant to applicable federal law shall be credited to the budget
9 of the recipient department and shall result in an increase of law enforcement resources for that
10 department. The Department of Justice, Department of Adult Correction, State Bureau of
11 Investigation, State Highway Patrol, and the Department of Public Safety shall each make the
12 following reports to the chairs of House of Representatives Appropriations Committee on Justice
13 and Public Safety and the Senate Appropriations Committee on Justice and Public Safety:
14(1)    A report upon receipt of any assets.
15(2)    A report that shall be made prior to the use of the assets on their intended use
16and the departmental priorities on which the assets may be expended.
17(3)    A report on receipts, expenditures, encumbrances, and availability of these
18assets for the previous fiscal year, which shall be
19     (e)     The General Assembly finds that the use of seized and forfeited assets transferred
20 pursuant to federal law for new personnel positions, new projects, acquisition of real property,
21 repair of buildings where the repair includes structural change, and construction of or additions
22 to buildings may result in additional expenses for the State in future fiscal periods. Therefore, the
23 Department of Justice, Department of Adult Correction, State Bureau of Investigation, State
24 Highway Patrol, and the Department of Public Safety are prohibited from using these assets for
25 such purposes without the prior approval of the General Assembly.
26     (f)     Nothing in this section prohibits State law enforcement agencies from receiving funds
27 from the United States Department of Justice, the United States Department of the Treasury, and
28 the United States Department of Health and Human Services."
29
30 CONTINUED EXEMPTION FROM IT CONSOLIDATION
31SECTION 19J.2. G.S. 143B-1320 reads as rewritten:
32 "§ 143B-1320. Definitions; scope; exemptions.
33     …
34     (b)     Exemptions. – Except as otherwise specifically provided by law, this Article does not
35 apply to the following entities: the General Assembly, the Judicial Department, the Community
36 Colleges System Office, The University of North Carolina and its constituent institutions, the
37 Office of the State Auditor, the State Board of Elections, the State Highway Patrol, and the
38 Department of State Treasurer. Treasurer, and the State Bureau of Investigation. These entities
39 may elect to participate in the information technology programs, services, or contracts offered
40 by the Department, including information technology procurement, in accordance with the
41 statutes, policies, and rules of the Department. The election shall be made in writing, as follows:
42(1)      For the General Assembly, by the Legislative Services Commission.
43…
44(9)      For the Investment Authority under Part I of Article 6 of Chapter 147 of the
45General Statutes, by the Board of Directors of the Authority.
46(10) For the State Bureau of Investigation, by the Director.
47     …."
48
49 ADD OFFENSES FOR WHICH ORDERS FOR ELECTRONIC SURVEILLANCE MAY
50   BE GRANTED
51SECTION 19J.3. G.S. 15A-290 reads as rewritten:
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1 "§ 15A-290. Offenses for which orders for electronic surveillance may be granted.
2     (a)     Orders authorizing or approving the interception of wire, oral, or electronic
3 communications may be granted, subject to the provisions of this Article and Chapter 19 of Title
4 18 of the United States Code, when the interception does any of the following:
5(1)     May provide or has provided evidence of the commission of, or any
6conspiracy to commit, any of the following:
7a.      Any of the drug-trafficking violations listed in G.S. 90-95(h).
8b.      A continuing criminal enterprise in violation of G.S. 90-95.1.
9c.      The offense of money laundering in violation of G.S. 14-118.8.
10…
11     (c)     Orders authorizing or approving the interception of wire, oral, or electronic
12 communications may be granted, subject to the provisions of this Article and Chapter 119 of
13 Title 18 of the United States Code, when the interception may provide, or has provided, evidence
14 of any of the following offenses, or any conspiracy to commit these offenses, or when the
15 interception may expedite the apprehension of persons indicted for the commission of these
16 offenses:
17(1)     Any felony offense against a minor, including any violation of G.S. 14-27.31
18(Sexual activity by a substitute parent or custodian), G.S. 14-27.32 (Sexual
19activity with a student), G.S. 14-41 (Abduction of children), G.S. 14-43.11
20(Human trafficking), G.S. 14-43.12 (Involuntary servitude), G.S. 14-43.13
21"(Sexual servitude), G.S. 14-190.16 (First degree sexual exploitation of a
22minor), G.S. 14-190.17 (Second degree sexual exploitation of a minor),
23G.S. 14-202.1 (Taking indecent liberties with children), G.S. 14-205.2(c) or
24(d) (Patronizing a prostitute who is a minor or has a mental disability), or
25G.S. 14-205.3(b) (Promoting prostitution of a minor or a person who has a 1
26mental disability).
27…
28(5)     Any offense involving the manufacture, assembly, possession, storage,
29transportation, sale, purchase, delivery, or acquisition of weapons of mass
30death or destruction in violation of G.S. 14-288.8 or the adulteration or
31misbranding of food, drugs, cosmetics, etc., with the intent to cause serious
32injury in violation of G.S. 14-34.4.
33(6)     Any felony offense involving human trafficking of an adult, including but not
34limited to violation of G.S. 14-43.11 (Human trafficking), G.S. 14-43.12
35(Involuntary servitude), or G.S. 14-43.13 (Sexual servitude).
36     …."
37
38 TECHNICAL CORRECTIONS RELATED TO MAKING THE STATE BUREAU OF
39     INVESTIGATION AN INDEPENDENT DEPARTMENT
40SECTION 19J.4. The Revisor of Statutes shall replace a reference to the Department
41 of Public Safety with a reference to the State Bureau of Investigation in the following statutes:
42(1)    Article 27A of Chapter 14.
43(2)    G.S. 18B-902.
44(3)    G.S. 74C-8.1.
45(4)    G.S. 74D-2.1.
46(5)    G.S. 84-24.
47(6)    G.S. 90D-7.
48(7)    G.S. 90-11.
49(8)    G.S. 90-30.
50(9)    G.S. 90-102.1.
51(10) G.S. 90-210.25.
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1(11)    G.S. 90-224.
2(12)    G.S. 93A-4.
3(13)    G.S. 95-47.2.
4(14)    G.S. 110-90.2.
5(15)    G.S. 143B-901.
6(16)    G.S. 143B-902.
7(17)    G.S. 143B-903.
8(18)    G.S. 143B-904.
9(19)    G.S. 160A-304.
10
11 CONTINUE POLICE AUTHORITY
12SECTION 19J.5. G.S. 20-49 reads as rewritten:
13 "§ 20-49. Police authority of Division.
14     All members of the Highway Patrol and law enforcement officers of the Department of Public
15 Safety and the State Bureau of Investigation shall have the power:
16…."
17
18 CONTINUE EXPANDED SCOPE OF CONCEALED HANDGUN PERMITS
19SECTION 19J.6. G.S. 14-415.27 reads as rewritten:
20 "§ 14-415.27. Expanded permit scope for certain persons.
21     Notwithstanding G.S. 14-415.11(c), any of the following persons who has a concealed
22 handgun permit issued pursuant to this Article or that is considered valid under G.S. 14-415.24
23 is not subject to the area prohibitions set out in G.S. 14-415.11(c) and may carry a concealed
24 handgun in the areas listed in G.S. 14-415.11(c) unless otherwise prohibited by federal law:
25…
26(8)      A person employed by the Department of Public Safety who has been 8
27designated in writing by the Secretary of the Department and who has in the
289 person's possession written proof of the designation.
29(8a) A person employed by the State Bureau of Investigation who has been
30designated in writing by the Director of the Bureau and who has in the
31person’s possession written proof of the designation.
32…."
33
34 DIVISION OF CRIMINAL INFORMATION UPDATES
35SECTION 19J.7.  G.S. 143B-905 is recodified as G.S. 143B-208.19.
36 G.S. 143B-208.19 reads as rewritten:
37 "§ 143B-208.19. Division of Criminal Information.
38     (a)     The Department of Public SafetyState Bureau of Investigation (Bureau) is authorized
39 to establish, devise, maintain and operate a system for receiving and disseminating to
40 participating agencies information collected, maintained and correlated under authority of
41 G.S. 143B-902. The system shall be known as the Criminal Information Network. Division of
42 Criminal Information (DCI).
43     (b)     The Department of Public SafetyBureau is authorized to cooperate with the Division
44 of Motor Vehicles, Department of Administration, and other State, local and federal agencies and
45 organizations in carrying out the purpose and intent of this section, and to utilize, in cooperation
46 with other State agencies and to the extent as may be practical, computers and related equipment
47 as may be operated by other State agencies.
48     (c)     The Department of Public Safety,Bureau, after consultation with participating
49 agencies, shall adopt rules and regulations governing the organization and administration of the
50 Criminal Information Network,DCI, including rules and regulations governing the types of
51 information relating to the administration of criminal justice to be entered into the system, and
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1 who shall have access to such information. The rules and regulations governing access to the
2 Criminal Information NetworkDCI shall not prohibit an attorney who has entered a criminal
3 proceeding in accordance with G.S. 15A-141 from obtaining information relevant to that
4 criminal proceeding. The rules and regulations governing access to the Criminal Information
5 NetworkDCI shall not prohibit an attorney who represents a person in adjudicatory or
6 dispositional proceedings for an infraction from obtaining the person's driving record or criminal
7 history.
8     (d)    The Department Bureau may impose monthly fees on participating agencies. The
9 monthly fees collected under this subsection shall be used to offset the cost of operating and
10 maintaining the Criminal Information Network.DCI. The fee amount varies depending upon the
11 type of device. For a desktop device, the monthly fee is twenty-five dollars ($25) per device. For
12 a mobile device, the monthly fee is twelve dollars ($12) per device.
13(1)     The Department may impose a monthly circuit fee on agencies that access the
14Criminal Information Network through a circuit maintained and operated by
15the Department of Public Safety. The amount of the monthly fee is three
16hundred dollars ($300.00) plus an additional fee amount for each device
17linked to the Network. The additional fee amount varies depending upon the
18type of device. For a desktop device after the first seven desktop devices, the
19additional monthly fee is twentyfive dollars ($25.00) per device. For a mobile
20device, the additional monthly fee is twelve dollars ($12.00) per device.
21(2)     The Department may impose a monthly device fee on agencies that access the
22Criminal Information Network through some other approved means. The
23amount of the monthly device fee varies depending upon the type of device.
24For a desktop device, the monthly fee is twentyfive dollars ($25.00) per
25device. For a mobile device, the fee is twelve dollars ($12.00) per device."
26
27 SBI/WORKERS' COMPENSATION FOR RESERVE LAW ENFORCEMENT
28     OFFICERS
29SECTION 19J.8. G.S. 143B-1208.13 reads as rewritten:
30 "§ 143B-1208.13. Personnel of the State Bureau of Investigation.
31     The Director of the State Bureau of Investigation may appoint a sufficient number of
32 assistants who shall be competent and qualified to do the work of the Bureau. The Director shall
33 be responsible for making all hiring and personnel decisions of the Bureau. Persons serving as
34 reserve law enforcement officers of the Bureau are considered employees of the Bureau for
35 workers' compensation purposes while performing duties assigned or approved by the Director
36 of the Bureau or the Director's designee."
37
38 PART XIX-K. STATE HIGHWAY PATROL [RESERVED]
39
40 PART XX. ADMINISTRATION
41
42 SALE OF STATE PROPERTY/NEGATIVE RESERVE
43SECTION 20.1.(a) There is established a negative reserve in the amount of
44 twenty-five million dollars ($25,000,000) for the 2026-2027 fiscal year to be supported by the
45 sale of State-owned real property.
46SECTION 20.1.(b) The Department of Administration (DOA) shall identify, market,
47 and execute the sale of State property sufficient to generate proceeds to fill the negative reserve
48 established by subsection (a) of this section. DOA shall take all actions necessary to ensure the
49 timely deposit of proceeds into the appropriate budget code to offset the reserve.
50SECTION 20.1.(c) DOA shall report quarterly to the Office of State Budget and
51 Management (OSBM) and the Joint Legislative Commission on Governmental Operations on the
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1 status of property sales and the amount of proceeds collected toward satisfying the negative
2 reserve.
3
4 PROCUREMENT SAVINGS/NEGATIVE RESERVE
5SECTION 20.2.(a) The Department of Administration (DOA) and the Department
6 of Information Technology (DIT) shall jointly develop and implement procurement strategies,
7 including strategic sourcing, consolidated procurement, enterprise contracts, and improved
8 demand management, to achieve statewide savings of at least forty million dollars ($40,000,000),
9 of which no less than ten million dollars ($10,000,000) shall be recurring savings, with the
10 remainder being nonrecurring.
11SECTION 20.2.(b) A negative reserve in the amount of thirty million dollars
12 ($30,000,000), of which at least ten million dollars ($10,000,000) shall be recurring, is
13 established for the 2026-2027 fiscal year to be supported by procurement savings achieved
14 pursuant to subsection (a) of this section.
15SECTION 20.2.(c) State agencies that generate procurement savings pursuant to
16 subsection (a) of this section may retain twenty-five percent (25%) of the savings realized. The
17 remaining seventy-five percent (75%) of savings, including no less than ten million dollars
18 ($10,000,000) in recurring savings, shall be transferred and credited toward filling the negative
19 reserve established by subsection (b) of this section.
20SECTION 20.2.(d) The Office of State Budget and Management (OSBM) shall
21 work jointly with DOA and DIT to (i) verify procurement savings, (ii) administer the retention
22 of savings by agencies, (iii) ensure the transfer of savings necessary to fill the negative reserve,
23 and (iv) reconcile savings across the fiscal year.
24SECTION 20.2.(e) DOA, DIT, and OSBM shall provide quarterly reports to the
25 Joint Legislative Commission on Governmental Operations on procurement savings achieved,
26 agency savings retained, and progress toward filling the negative reserve.
27
28 PART XXI. ADMINISTRATIVE HEARINGS [RESERVED]
29
30 PART XXII. OFFICE OF THE STATE AUDITOR
31
32 DIRECTED GRANTS REVIEW BY THE OFFICE OF THE STATE AUDITOR
33SECTION 22.1. G.S. 143C-6-23 is amended by adding a new subsection to read:
34 "§ 143C-6-23. State grant funds: administration; oversight and reporting requirements.
35     …
36     (g1) Enhanced Audit Review of Directed Grants. – The following applies to directed
37 grants to non-State entities:
38(1)    Definitions. – For purposes of this subsection, the following definitions apply:
39a.       Directed grant. – Nonrecurring funds allocated by a State agency to a
40non-State entity as directed by an act of the General Assembly.
41(2)    Review required. – Beginning with the 2026-2027 fiscal year and each fiscal
42year thereafter, the Office of the State Auditor shall conduct direct review of
43directed grants to non-State entities. In carrying out this subsection, the Office
44of the State Auditor shall conduct audits, investigations, verification audits, or
45other examinations authorized by Article 5A of Chapter 147 of the General
46Statutes sufficient to determine whether directed grant funds were used for
47authorized purposes and in accordance with applicable law and grant terms.
48(3)    Scope of review. – Reviews conducted under this subsection shall extend
49beyond confirmation that a recipient or administering State agency has
50submitted required certifications, reports, or policies and shall include testing,
51as the State Auditor deems appropriate, of all the following:
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1a.      Whether directed grant funds were used only for the purposes for
2which they were appropriated or otherwise authorized by law.
3b.      Whether expenditures were supported by adequate documentation and
4were properly charged to the directed grant.
5c.      Whether transactions involving officers, directors, employees, family
6members, affiliated entities, or related parties present actual or
7apparent conflicts of interest, self-dealing, or other misuse of public
8funds.
9d.      Whether funds were transferred, subgranted, retained, or commingled
10in a manner inconsistent with law, grant terms, or the purposes of the
11appropriation.
12e.      Whether there is evidence of fraud, misrepresentation, waste, abuse,
13or other improper governmental activity involving directed grant
14funds.
15f.      Whether the recipient maintained adequate internal controls to
16safeguard directed grant funds and prevent or detect unauthorized
17transactions.
18(4)     Selection of recipients. – Each fiscal year, the Office of the State Auditor shall
19select directed grant recipients for review as follows:
20a.      The Office of the State Auditor shall review not less than five percent
21(5%) of directed grant recipients with active directed grants during that
22fiscal year. In selecting recipients for review, the Office of the State
23Auditor shall include recipients from multiple administering State
24agencies and multiple grant-size tiers.
25b.      The Office of the State Auditor shall review not less than five percent
26(5%) of recently closed directed grants selected from grants that
27remained active or were closed out during the preceding 24 months.
28c.      The Office of the State Auditor shall employ an appropriate sampling
29or selection methodology that is reasonable and consistent with
30accepted auditing practices and the requirements of (4a) and (4b) of
31this subsection.
32d.      The Office of the State Auditor shall review each directed grant
33recipient identified in writing by an administering State agency or the
34Director of the Budget upon identification of potential risks or
35indications of improper management of funds.
36e.      Nothing in this subsection shall limit the authority of the State Auditor
37to conduct additional reviews of directed grant recipients as otherwise
38authorized by law.
39(5)     Direct access to information. – For reviews conducted under this subsection,
40the Office of the State Auditor may obtain information directly from the
41recipient or any subrecipient, contractor, affiliate, or other person or entity
42handling directed grant funds on behalf of the recipient to the full extent
43authorized by Article 5A of Chapter 147 of the General Statutes. The
44administering State agency shall provide to the Office of the State Auditor,
45upon request, copies of grant agreements, amendments, reports, payment
46records, and other documents already in its possession relating to a selected
47directed grant.
48(6)     Agency monitoring not sufficient. – Compliance by the recipient with
49reporting requirements, the filing of a conflict-of-interest policy, the
50submission of audit reports, or monitoring by the administering State agency
51shall not satisfy or limit the review required by this subsection and shall not
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1restrict the scope of examination undertaken by the Office of the State
2Auditor.
3(7)    Annual report. – No later than October 15 of each year, the State Auditor shall
4submit a report on the reviews conducted under this subsection to the Joint
5Legislative Commission on Governmental Operations the chairs of the Senate
6Committee on Appropriations/Base Budget, the chairs of the House
7Appropriations Committee, and the Fiscal Research Division. The report shall
8include all of the following:
9a.      The number of active and closed directed grant recipients and directed
10grants eligible for review during the prior fiscal year.
11b.      The sampling and selection methodology used to select recipients and
12grants for review.
13c.      The number and type of audits, investigations, or other examinations
14performed.
15d.      A summary of findings, including questioned costs, unsupported
16expenditures, internal control weaknesses, related-party transactions,
17actual or apparent conflicts of interest, and any evidence of fraud,
18waste, abuse, or other improper governmental activity.
19e.      The number of recipients reviewed because they were on the
20Suspension of Funding List or were identified by an administering
21State agency, the Office of State Budget and Management, or the
22Director of the Budget.
23f.      Any referrals made to the Attorney General, the State Bureau of
24Investigation, the Department of Revenue, or any other agency.
25g.      Any recommendations for statutory or administrative changes to
26improve oversight of directed grants.
27(8)    Public record. Notwithstanding G.S. 147-64(d), the report required by
28subdivision (7) of this subsection is a public record pursuant to G.S. 132-1(a)."
29
30 PART XXIII. BUDGET AND MANAGEMENT
31
32 STATE FISCAL RECOVERY FUND FLEXIBILITY 2026
33SECTION 23.1. S.L. 2025-97 reads as rewritten:
34     "…
35     "SECTION 6.9.(c) To implement subsection (b) of this section, the Director of the Budget
36 shall make nonrecurring, budget-neutral adjustments as follows:
37(1)   Reduce, on a nonrecurring basis, the 2025-2026 or 2026-2027 fiscal year net
38General Fund appropriation for each agency receiving SFRF pursuant to this
39section by an amount equal to the SFRF reclassified to that agency.
40(2)   Increase, on a nonrecurring basis, the net General Fund appropriation for each
41agency from which SFRF were reclassified under this section by an amount
42equal to the SFRF removed from that agency.
43(3)   Notwithstanding G.S. 143C-1-2(b), the net General Fund appropriations made
44under subdivision (2) of this subsection shall be used only for the projects for
45which SFRF were reduced under this section and shall not revert but shall
46remain available until the earlier of project completion or June 30, 2027.
47(4)   In no event shall a project from which SFRF are reclassified receive net
48General Fund appropriations in excess of the project's unexpended SFRF
49balance as of the date of reclassification.
50     "SECTION 6.9.(d) To reconcile project-level allocations with available SFRF balances,
51 OSBM, through NCPRO, may adjust SFRF project allocations by up to ten dollars ($10.00) per
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1 project. Adjustments under this subsection are technical and shall not change project scope or
2 shift funds between projects. Nothing in this subsection limits or supersedes a reclassification
3 authorized by subsection (b) of this section.
4     "SECTION 6.9.(e) No later than April 15, 2026 December 15, 2026, OSBM and NCPRO
5 shall jointly report to the Joint Legislative Commission on Governmental Operations and the
6 Fiscal Research Division on all actions taken under this section, including:
7(1)     For each agency and project meeting the revenue-loss criteria in subsection
8(a) of this section, the project name and the amount of remaining unexpended
9SFRF as of December 31, 2025 June 30, 2026. The report shall also identify
10which projects are complete and have excess SFRF funds and which SFRF
11projects need additional funds for completion.
12(2)     For each agency and project from which unexpended SFRF were reclassified,
13the project name and the amount of the corresponding nonrecurring net
14General Fund appropriation provided in lieu of SFRF. (3) For each agency
15and project receiving SFRF pursuant to the reclassification, the project name
16and the amount of SFRF provided. The report shall also certify that all SFRF
17were obligated on or before December 31, 2024, and that expenditures are
18being made consistent with 31 C.F.R. Part 35 and related United States
19Department of the Treasury guidance.
20     "SECTION 6.9.(f) The Director of the Budget shall ensure that implementation of this
21 section results in no change to the net General Fund appropriations in the 2025-2026 or
22 2026-2027 fiscal year."
23
24 ADDITIONAL STATE FISCAL RECOVERY FUND FLEXIBILITY
25SECTION 23.2.(a) Notwithstanding any provision of law to the contrary, and
26 subject to the conditions set out in part (b) of this section, below, the North Carolina Pandemic
27 Recovery Office (NCPRO), in consultation with the Director of the Budget, may reallocate State
28 Fiscal Recovery Funds (SFRF) appropriated by this act or any act of the General Assembly,
29 including but not limited to:
30     (a)     S.L. 2021-180.
31     (b)     S.L. 2021-189.
32     (c)     S.L. 2022-6.
33     (d)     S.L. 2022-74.
34     (e)     S.L. 2023-134.
35     (f)     S.L. 2024-1.
36     (g)     S.L. 2024-40.
37     (h)     S.L. 2024-53.
38     (i)     S.L. 2024-55.
39SECTION 23.2.(b) The funds set out in part (a) of this section may be reallocated
40 only when all of the following conditions are met:
41     (a)     The appropriated funds have not been expended by September 30, 2026.
42     (b)     There is a reasonable expectation that the funds will not be expended before the
43 deadline established by applicable federal law or guidance.
44     (c)     The reallocation is made to support SFRF related activities authorized and receiving
45 appropriations under this act or one of the acts listed above in part (a) of this Section, and adhering
46 to Federal SFRF Expenditure Category 5 (Water, Sewer, or Broadband Infrastructure) guidance.
47 Reallocated funds shall not be used for any new activity, purpose, or program.
48SECTION 23.2.(c) Any funds remain after the reallocation process authorized in
49 subsection (b) shall be allocated to the State Treasurer up to an amount equal to the remaining
50 unreimbursed COVID-19 related expenses incurred by the North Carolina State Health Plan for
51 Teachers and State Employees between March 3, 2021 and December 31, 2024.
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1SECTION 23.2.(d) To the extent that funds reallocated pursuant to this section are
2 unappropriated, including interest accrual exceeding that which is anticipated in this act, those
3 funds are hereby appropriated and available for use pursuant to this section.
4SECTION 23.2.(e) Reporting. – Beginning September 30, 2026, the Office of State
5 Budget and Management (OSBM) shall report to the Fiscal Research Division quarterly on the
6 reallocations made pursuant to this section in the same manner as required in S.L. 2025-97,
7 Section 6.9.(e).
8
9 INTEREST TO SUPPORT NC PANDEMIC RECOVERY EFFORTS
10SECTION 23.3. Any interest earned on the following is appropriated to the Office
11 of State Budget and Management (OSBM) for operations pertaining to pandemic recovery and
12 may be utilized in accordance with the requirements set out in Section 6.9 of S.L. 2025-97:
13     (a)     Local Fiscal Recovery Fund, Budget Code 63009, Budget Fund 610000;
14     (b)     Homeowner Assistance Fund, Budget Code 23023, Budget Fund 214150, that is
15 allowed to be retained by the State; and
16     (c)     Economic Development Assistance Strategy and Tourism grant funds, Budget Code
17 23025, Budget Funds 214250 and 214251, that is allowed to be retained by the State.
18     (d)     Project Fund, Budget Code 23022, Budget Fund 214102, that is allowed to be retained
19 by the state.
20
21 REMOVE DIRECTOR OF THE BUDGET FROM APPROVAL OF RIF SEVERANCE
22      WAGES AND RIF DISCONTINUED SERVICE RETIREMENT ALLOWANCES
23SECTION 23.4.(a) G.S. 126-8.5(a) reads as rewritten:
24 "§ 126-8.5. Discontinued service retirement allowance and severance wages for certain
25State employees.
26      (a)     When the Director of the Budget determines that the closing of a State institution or
27 a reduction in force will accomplish economies in the State Budget, the State employees who
28 were separated from employment as a result of the closure or reduction in force shall receive
29 from the last employing agency either a discontinued service retirement allowance or severance
30 wages, wages to any affected State employee, provided reemployment is not available. As used
31 in this section, "economies in the State Budget" means economies resulting from elimination of
32 a job and its responsibilities or from a lack of funds to support the job. The agency head shall
33 determine, in his or her discretion, In determining whether to pay a discontinued service
34 retirement allowance or severance wages, the Director of the Budget shall consider the
35 recommendation of the department head involved and any recommendation of after the
36 opportunity for consultation with the Director of the Office of State Budget and Management and
37 the Director of the Office of State Human Resources. Severance wages shall not be paid to an
38 employee who chooses a discontinued service retirement. Severance wages shall not be subject
39 to employer or employee retirement contributions. Severance wages shall be paid according to
40 the policies adopted by the State Human Resources Commission.
41      …."
42SECTION 23.4.(b) This section is effective when it becomes law and applies to all
43 discontinued service retirement allowances and severance wages paid on or after that date.
44
45 ADDRESS       RESPONSIBILITIES  FOR       QUALIFIED  EXCESS        BENEFIT
46    ARRANGEMENT WHEN THE FINAL EMPLOYER OF A MEMBER IS NOT THE
47    MEMBER'S EMPLOYER FOR AVERAGE FINAL COMPENSATION
48    CALCULATIONS
49SECTION 23.5.(a) G.S. 135-151(d1) reads as rewritten:
50    "(d1) The last employer of a payee who retires on or after August 1, 2016, and who receives
51 any supplemental benefit payment under this section shall be required to reimburse the QEBA in
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1 the amount of any supplemental benefit payment made to that payee. If the employer associated
2 with the payee member's last month of membership service did not report to the Retirement
3 System any compensation paid to the payee member during the period used to compute the payee
4 member's average final compensation, then that last employer of the payee shall not reimburse
5 the QEBA as described in this subsection, but instead the employer or employers who reported
6 compensation during the payee member's average final compensation period shall each reimburse
7 the QEBA in an amount equal to the employer's share of the total reimbursement required under
8 this subsection, allocated proportionally to each employer based on the total amount of
9 compensation to the payee member that each employer reported during the period used to
10 compute the payee member's average final compensation. The reimbursement amount shall be
11 calculated on an annual basis every calendar year. For purposes of calculating the reimbursement
12 amount, the Board of Trustees may include a pro rata share of direct costs attributable to
13 administration of the QEBA. The total amount of reimbursement owed by The University of
14 North Carolina and UNC Health Care shall not exceed five hundred thousand dollars ($500,000)
15 annually. The Fiscal Research Division of the General Assembly shall be required to review all
16 reimbursement amounts prior to notifying an employer of the reimbursement amount owed.
17      The employer shall have 60 calendar days from the date of notification of the reimbursement
18 amount owed to pay the amount in full or the employer shall be assessed a penalty, in lieu of
19 interest, of one percent (1%) per month, or fraction thereof, that the payment is made beyond the
20 due date."
21SECTION 23.5.(b) G.S. 128-38.10(d1) reads as rewritten:
22      "(d1) The last employer of a payee who retires on or after August 1, 2016, and who receives
23 any supplemental benefit payment under this section shall be required to reimburse the QEBA in
24 the amount of any supplemental benefit payment made to that payee. The reimbursement amount
25 shall be calculated on an annual basis every calendar year. For purposes of calculating the
26 reimbursement amount, the Board of Trustees may include a pro rata share of direct costs
27 attributable to administration of the QEBA. If the employer associated with the payee member's
28 last month of membership service did not report to the Retirement System any compensation
29 paid to the payee member during the period used to compute the payee member's average final
30 compensation, then that last employer of the payee shall not reimburse the QEBA as described
31 in this subsection, but instead the employer or employers who reported compensation during the
32 payee member's average final compensation period shall each reimburse the QEBA in an amount
33 equal to the employer's share of the total reimbursement required under this subsection, allocated
34 proportionally to each employer based on the total amount of compensation to the payee member
35 that each employer reported during the period used to compute the payee member's average final
36 compensation. The Fiscal Research Division of the General Assembly shall be required to review
37 all reimbursement amounts prior to notifying an employer of the reimbursement amount owed.
38      The employer shall have 60 calendar days from the date of notification of the reimbursement
39 amount owed to pay the amount in full or the employer shall be assessed a penalty, in lieu of
40 interest, of one percent (1%) per month, or fraction thereof, that the payment is made beyond the
41 due date."
42SECTION 23.5.(c) This section becomes effective January 1, 2026 and applies to
43 all reimbursements assessed on or after that date under G.S. 135-151(d1) or 128-38.10(d1) for
44 past, existing, and future retirements.
45
46 MITIGATE FEDERAL FUNDING ACTIONS
47SECTION 23.6.(a) For the 2026-2027 fiscal year, the Office of State Budget and
48 Management (OSBM) may use funds available in the Federal Infrastructure Match Reserve to
49 assist state agencies in mitigating the fiscal impacts of federal spending freezes, federal
50 government shutdowns, or federal spending reductions. This assistance includes, but is not
51 limited to, providing legally required personnel-related or contractual expenses resulting from
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1 the discontinuation or delay of federal funds that an agency cannot otherwise support within
2 existing resources.
3SECTION 23.6.(b) Agencies shall submit documentation of the shortfall resulting
4 from the discontinuation or delay of federal funds to the Director of the Budget. The Office of
5 State Budget and Management (OSBM) may, at the discretion of the Director, allocate funds
6 available to the state agency to meet current liabilities. The funds are appropriated from the
7 Federal Infrastructure Match Reserve for the purposes set out in this section, at the time the
8 Director deems such a transfer necessary.
9SECTION 23.6.(c) To the extent possible, state agencies shall reimburse these funds
10 to OSBM. OSBM shall revert all reimbursed funds to the Federal Infrastructure Match Reserve
11 by June 30, 2027.
12SECTION 23.6.(d) Not later than September 1, 2027, OSBM shall submit a written
13 report to the Senate Appropriations Committee on General Government and Information
14 Technology, the House of Representatives Appropriations Committee on General Government,
15 the Joint Legislative Oversight Committee on General Government, the Joint Legislative
16 Commission on Governmental Operations, and the Fiscal Research Division which shall include
17 all of the following for each recipient of funds from OSBM:
18      (a)     The name of any state agency receiving funds pursuant to in subsection (a) of this
19 section.
20      (b)     The reason for the request for funds, including name of each federal program that was
21 impacted by a funding spending freeze, a federal government shutdown, or a federal spending
22 reduction, and a brief description of the impact.
23      (c)     The amount of funds provided from the Federal Infrastructure Match Reserve.
24      (d)     The amount of funds reimbursed to the Federal Infrastructure Match Reserve.
25
26 PAYROLL MODERNIZATION RESERVE AND OVERSIGHT BOARD
27SECTION 23.7.(a) There is established in the General Fund a Payroll Modernization
28 Reserve (Reserve) to provide funds for the replacement of the State’s payroll and Core HR
29 systems. The State Budget Director shall reserve to the Payroll Modernization Reserve from
30 funds available in the IT Reserve the sum of twenty-five million dollars ($25,000,000) in
31 nonrecurring funds for the 2026-2027 fiscal year. Funds in the Reserve shall not revert and shall
32 remain available until expended for the purposes set forth in this section.
33SECTION 23.7.(b) There is established the Payroll Modernization Oversight Board
34 (Board) to oversee the planning, procurement, and implementation of the replacement payroll
35 system. The Board shall consist of the following five members:
36(1)    The State Chief Information Officer, who will serve as chair.
37(2)    The State Controller.
38(3)    The State Budget Director.
39(4)    The State Treasurer.
40(5)    The Director of the Office of State Human Resources.
41SECTION 23.7.(c) The Board shall:
42(1)    Determine the payroll functions and requirements necessary for the State’s
43payroll system.
44(2)    Develop and issue a request for proposals (RFP) for the replacement payroll
45system.
46(3)    Evaluate proposals and select the vendor or solution that best meets the State's
47needs no later than July 1, 2027.
48(4)    Make all decisions by majority vote.
49SECTION 23.7.(d) Beginning January 30, 2027, and semiannually thereafter on
50 January 30 and June 30 of each year, the Board shall report on its progress to the Joint Legislative
51 Oversight Committee on General Government. The report shall include, at a minimum, updates
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1 on planning, procurement, implementation milestones, expenditures from the Reserve, and any
2 recommendations for legislative action.
3
4 REMOVING OBSOLETE REPORTING REQUIREMENTS TO STREAMLINE
5     GOVERNMENT
6SECTION 23.8.(a) The following statutes related to reporting requirements are
7 repealed:
8     (a)     G.S. 150B-21.28.
9     (b)     S.L. 2023-134-5.6.(j).
10     (c)     G.S. 166A-19.42.(c).
11SECTION 23.8.(b) G.S. 143C-4-6(c) reads as rewritten:
12     "(c) Fiscal Reports. – In years when the most recent enacted budget exceeds six percent
13 (6%) of State personal income, theThe Office of State Budget and Management and the Fiscal
14 Research Division of the General Assembly shall each submit an a tentative estimate of total
15 State personal income for the upcoming fiscal year to the General Assembly alongside each
16 issuance of a joint General Fund revenue forecastno later than February 1 of each year. The
17 Office and the Fiscal Research Division shall each submit a final projection of total State personal
18 income for the upcoming fiscal year to the General Assembly no later than May 1 of each year.
19 The General Assembly shall use the lower of the two final projections to calculate the limitation
20 on the size of the General Fund operating budget provided in this section."
21SECTION 23.8.(c) G.S. 20-7.(i1) reads as rewritten:
22     "(i1) Restoration Fee. – Any person whose drivers license has been revoked pursuant to
23 the provisions of this Chapter, other than G.S. 20-17(a)(2) shall pay a restoration fee of
24 eighty-three dollars and 50 cents ($83.50). A person whose drivers license has been revoked
25 under G.S. 20-17(a)(2) shall pay a restoration fee of one hundred sixty-seven dollars and
26 twenty-five cents ($167.25). The fee shall be paid to the Division prior to the issuance to such
27 person of a new drivers license or the restoration of the drivers license. The restoration fee shall
28 be paid to the Division in addition to any and all fees which may be provided by law. This
29 restoration fee shall not be required from any licensee whose license was revoked or voluntarily
30 surrendered for medical or health reasons whether or not a medical evaluation was conducted
31 pursuant to this Chapter. The eighty-three dollars and 50 cents ($83.50) fee, and the first one
32 hundred five dollars ($105.00) of the one hundred sixty-seven dollars and twenty-five cents
33 ($167.25) fee, shall be deposited in the Highway Fund. Twenty-five dollars ($25.00) of the one
34 hundred sixty-seven dollars and twenty-five cents ($167.25) fee shall be used to fund a statewide
35 chemical alcohol testing program administered by the Forensic Tests for Alcohol Branch of the
36 Chronic Disease and Injury Section of the Department of Health and Human Services.
37 Notwithstanding any other provision of law, a restoration fee assessed pursuant to this subsection
38 may be waived by the Division when (i) the restoration fee remains unpaid for more than 10
39 years from the date of assessment and (ii) the person responsible for payment of the restoration
40 fee has been issued a drivers license by the Division after the effective date of the revocation for
41 which the restoration fee is owed. The Office of State Budget and Management shall annually
42 report to the General Assembly the amount of fees deposited in the General Fund and transferred
43 to the Forensic Tests for Alcohol Branch of the Chronic Disease and Injury Section of the
44 Department of Health and Human Services under this subsection."
45
46 PART XXIV. BUDGET AND MANAGEMENT – SPECIAL APPROPRIATIONS
47[RESERVED]
48
49 PART XXV. OFFICE OF STATE CONTROLLER
50
51 OVERPAYMENTS AUDITS
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1SECTION 25. G.S. 147-86.22(c) reads as rewritten:
2     "(c) Collection Techniques. – The State Controller, in conjunction with the Office of the
3 Attorney General, shall establish policies and procedures to govern techniques for collection of
4 accounts receivable. These techniques may include use of credit reporting bureaus, judicial
5 remedies authorized by law, and administrative setoff by a reduction of a tax refund pursuant to
6 the Setoff Debt Collection Act, Chapter 105A of the General Statutes, or a reduction of another
7 payment, other than payroll, due from the State to a person to reduce or eliminate an account
8 receivable that the person owes the State.
9     The State Controller shall negotiate a contract with a third party to perform an audit and
10 collection process of inadvertent overpayments by State agencies to vendors as a result of pricing
11 errors, neglected rebates and discounts, miscalculated freight charges, unclaimed refunds,
12 erroneously paid excise taxes, and related errors. The third party shall be compensated only from
13 funds recovered as a result of the audit. Of the recovered funds and subject to availability, the
14 State Controller may use up to three hundred thousand dollars ($300,000) to develop and provide
15 governmental accounting education for state agency fiscal staff. Savings realized in excess of
16 costs and any funds used by the State Controller for the aforementioned purpose shall be
17 transferred from the agency to the Office of State Budget and Management and placed in a special
18 reserve account for future direction by the General Assembly. Any disputed savings shall be
19 settled by the State Controller. This paragraph does not apply to the purchase of medical services
20 by State agencies or payments used to reimburse or otherwise pay for health care services."
21
22 ELECTRONIC PAYMENT PROCESSING
23SECTION 25.2. G.S. 147-86.22 reads as rewritten:
24 "§ 147-86.22. Statewide accounts receivable program.
25     …
26     (b)      Electronic Payment. – Notwithstanding the provisions of G.S. 147-86.20 and
27 G.S. 147-86.21, this subsection applies to debts owed a community college, a local school
28 administrative unit, an area mental health, developmental disabilities, and substance abuse
29 authority, and the Administrative Office of the Courts, and to debts payable to or through the
30 office of a clerk of superior court or a magistrate, as well as to debts owed to other State agencies
31 as defined in G.S. 147-86.20.
32     The State Controller shall establish policies that allow accounts receivable to be payable
33 under certain conditions by electronic payment. These policies shall be established with the
34 concurrence of the State Treasurer. In addition, any policies that apply to debts payable to or
35 through the office of a clerk of superior court or a magistrate shall be established with the
36 concurrence of the Administrative Officer of the Courts. The Administrative Officer of the Courts
37 may also establish policies otherwise authorized by law that apply to these debts as long as those
38 policies are not inconsistent with the Controller's policies.
39     A condition of payment by electronic payment is receipt by the appropriate State agency of
40 the full amount of the account receivable owed to the State agency. A Notwithstanding the
41 provisions of this section or any other provision of law, a State agency may enter into a contract
42 with a payment processor that authorizes the processor to retain their fee for providing the
43 processing service at the time each transaction is made. The terms of any contract executed under
44 this subsection shall be approved by the State Controller with the concurrence of the State
45 Treasurer and the Administrative Office of the Courts, as applicable. In the absence of a contract
46 with a processor to retain service fees, the State agency may charge a debtor who pays by
47 electronic payment may be required to pay any fee or charge associated with the use of electronic
48 payment. Fees fees to cover the costs incurred in accepting the payment electronically, but in no
49 event shall the debtor be required to pay a fee that is greater than four percent (4%) of the
50 electronic payment. If the State agency does not require the debtor to pay a fee associated with
51 processing electronic paymentspayments, the fee may be paid out of the General Fund and
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1 Highway Fund if the payment of the fee by the State is economically beneficial to the State and
2 the payment of the fee by the State has been approved by the State Controller and State Treasurer.
3     The State Controller and State Treasurer shall consult with the Joint Legislative Commission
4 on Governmental Operations before establishing policies that allow accounts receivable to be
5 payable by electronic payment and before authorizing fees associated with electronic payment to
6 be paid out of the General Fund and Highway Fund. A payment of an account receivable that is
7 made by electronic payment and is not honored by the issuer of the card or the financial institution
8 offering electronic funds transfer does not relieve the debtor of the obligation to pay the account
9 receivable.
10     …
11     (d)     Annual Report. – The State Controller shall report annually to the Joint Legislative
12 Commission on Governmental Operations and the Fiscal Research Division on the revenue
13 deposited into Special Reserve Account 24172 and the disbursement of that revenue."
14
15 PART XXVI. ELECTIONS [RESERVED]
16
17 PART XXVII. GENERAL ASSEMBLY [RESERVED]
18
19 PART XXVIII. GOVERNOR [RESERVED]
20
21 PART XXIX. HOUSING FINANCE AGENCY [RESERVED]
22
23 PART XXIXA. OFFICE OF STATE HUMAN RESOURCES
24
25 HUMAN CAPITAL MANAGEMENT PROJECT PHASE I IMPLEMENTATION
26SECTION 29A.1.(a) Section 6.8(b) of S.L. 2025-97 is repealed.
27SECTION 29A.1.(b) Section 6.8(c) of S.L. 2025-97 is repealed.
28     "…
29     "SECTION 6.8.(c) OSHR may establish one or time limited permanent positions funded by
30 this section to support the implementation and operation of the HCM system.system; any such
31 positions may begin in the 2025-2026 fiscal year and may continue into the 2026-2027 fiscal
32 year, but shall expire no later than June 30, 2027, and shall not be continued or converted to
33 permanent positions without further legislative authorization."
34
35 HCM PHASE I ENHANCEMENTS
36SECTION 29A.2.(a) In implementing enhancements to Phase I of the new Human
37 Capital Management project, in order to reduce duplication of effort and increase accuracy, OSC
38 shall work with OSHR to automate a bidirectional (two-way) integration, ensuring employee data
39 is synchronized between the Workday HCM and the current Integrated HR/Payroll system.
40
41 PART XXX. DEPARTMENT OF INSURANCE
42
43 DEPARTMENT OF INSURANCE LEASE EXPENSES
44SECTION 30.1. Section 7(a) of S.L. 2023-114 reads as rewritten:
45     "SECTION 7.(a) The General Assembly authorizes the Department of Insurance to fund,
46 with receipts or from other non-General Fund and non-State Capital and Infrastructure Fund
47 sources available to the Department, a sum not to exceed eighteen million dollars ($18,000,000)
48 to enter into a lease agreement for the temporary relocation of the Department's offices and a sum
49 not to exceed one million dollars ($1,000,000) for costs associated with the temporary relocation.
50 The lease agreement funded by the sum authorized in this subsection shall be for a term not to
51 exceed five years, with the option to renew for two additional five-year consecutive periods. and
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1 shall not be renewed without prior approval from the General Assembly. The Department shall
2 complete the relocation process no later than October 15, 2023."
3
4 PART XXXI. DEPARTMENT OF INSURANCE – INDUSTRIAL COMMISSION
5[RESERVED]
6
7 PART XXXII. LIEUTENANT GOVERNOR [RESERVED]
8
9 PART XXXIII. MILITARY AND VETERANS AFFAIRS
10
11 CLARIFICATION OF VETERANS DEFINITIONS
12SECTION 33.1. G.S. 143B-1213 reads as rewritten:
13 "§ 143B-1213. Definitions.
14     Except where provided otherwise, the following definitions apply in this Chapter:
15(1)    Department. – The Department of Military and Veterans Affairs.
16(2)    Secretary. – The Secretary of Military and Veterans Affairs.
17(3)    Veteran. – One of the following, as applicable.
18a.     For qualifying as a voting member of the State Board of Veterans
19served honorably during a period of war as defined in Title 38, United
20States Code.
21b.     For entitlement to the services of the Department of Military and
22Veterans Affairs, a person who may be entitled to any benefits or rights
23under the laws of the United States by reason of service in the Armed
24Forces of the United States. under the U.S. Department of Defense
25(Army, Marine Corps, Navy, Air Force, Space Force, National Guard)
26and the U.S. Department of Homeland Security (Coast Guard), and the
27reserve components thereof.
28c.     For this Chapter, unless otherwise stated "Armed Forces of the United
29States" means the Armed Forces of the United States under the United
30States Department of Defense (Army, Marine Corps, Navy, Air Force,
31Space Force, National Guard) and the United States Department of
32Homeland Security (Coast Guard), the reserve components thereof."
33
34 UPDATE NORTH CAROLINA VETERANS HOME TRUST FUND TO REFLECT
35     GENERAL ASSEMBLY APPROPRIATION
36SECTION 33.2. G.S. 143B-1293 reads as rewritten:
37 "§ 143B-1293. North Carolina Veterans Home Trust Fund.
38     (a)    Establishment. – A trust fund shall be established in the State treasury, for the
39 Department of Military and Veterans Affairs, to be known as the North Carolina Veterans Home
40 Trust Fund.
41     (b)    Composition. – The trust fund shall consist of all funds and monies received by the
42 Veterans' Affairs Commission or the Department of Military and Veterans Affairs from the
43 United States, any federal agency or institution, and any other source, whether as a grant,
44 appropriation, gift, contribution, devise, or individual reimbursement, for the care and support of
45 veterans who have been admitted to a State veterans home.
46     (c)    Use of Fund. – The trust fund created in subsection (a) of this section shall be used
47 by the Department of Military and Veterans Affairs to do the following:
48(1)      To pay for the care of veterans in said State veterans homes;
49(2)      To pay the general operating expenses of the State veterans homes,
50including the payment of salaries and wages of officials and employees of
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1said homes; the Department to the extent such personnel support the
2operations, administration, and oversight of said homes;
3(3)     To remodel, repair, construct, modernize or add improvement to buildings
4and facilities at the homes."
5
6 AUTHORITY TO APPROVE CAPITAL PROJECTS FUNDED BY THE STATE
7     VETERANS HOME TRUST FUND
8SECTION 33.3. G.S. 143C-8-12 reads as rewritten:
9 "§ 143C-8-12. Capital improvement projects from sources other than the General Fund.
10     …
11     (c)    National Guard Projects. – Notwithstanding any other provision of this Chapter, the
12 North Carolina National Guard may approve expenditures for a capital project of the North
13 Carolina National Guard if (i) the project will be funded entirely with federal funds and (iii) any
14 operating costs associated with the project will be paid entirely with federal funds.
15     (c1) The Department of Military and Veterans Affairs – Notwithstanding any other
16 provisions of this chapter, the Department may approve State Veterans Homes capital projects
17 funded by non-general Fund monies.
18     (d)    Reporting. – The Board of Governors, and the National Guard, and Department of
19 Military and Veterans Affairs shall report any expenditure made pursuant to this section to the
20 Office of State Budget and Management and to the Joint Legislative Commission on
21 Governmental Operations."
22
23 NORTH CAROLINA VETERANS CEMETERY TRUST FUND
24SECTION 33.4. Article 14 of Chapter 143B of the General Statute is amended by
25 adding a new Section to read:
26 "§ 143B-1219. North Carolina Veterans Cemeteries Trust Fund.
27     (a)     There is established the North Carolina Veterans Cemetery Trust Fund (hereinafter
28 "Fund"), a special fund within the Department of Military and Veterans Affairs. The Fund shall
29 be maintained as a special fund and shall be administered by the Department to carry out the
30 provisions of this section for the operations and maintenance of State veterans' cemeteries. Fund
31 resources may also be used to cover the projected cashflow needs of cemetery expansion projects
32 funded by grants from the U.S. Department of Veterans Affairs. Interest accruing from the
33 monies in the Fund shall be credited to the Fund. The Fund shall consist of the following sources
34 of funding:
35(1)     All interest and investment earnings received on monies in the Fund.
36(2)     Funds or monies received by the Department, the receipt of which does not
37exclude any other source of revenue, from the United States, any federal
38agency or institution, or individual reimbursement, for the support of veterans
39cemeteries.
40(3)     Any other funds, as directed by the General Assembly.
41     (b)     The Department is authorized to use up to seven hundred seventy-five thousand
42dollars ($775,000) of the interest earned on the Fund to create up to ten positions to
43maintain and operate the existing state veterans cemeteries. The amount allowed to
44the Department for costs under this section may be increased as needed to reflect
45legislatively mandated salaryor benefit increases.
46     (c)     The Department is authorized to use an additional twenty-three thousand dollars
47 ($23,000) in the 2026-27 fiscal year to pay for nonrecurring costs associated with these positions
48 and maintenance costs.
49     (d)     In the event annual earned interest in the Fund is insufficient to cover seven hundred
50 seventy-five thousand dollars ($775,000), the Department may withdraw additional funds from
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1 the balance of the Fund so the total amount withdrawn from the balance and interest are equal to
2 seven hundred and seventy-five thousand dollars ($775,000)."
3
4 PART XXXIV. DEPARTMENT OF REVENUE
5
6 SCRAP TIRE DISPOSAL TAX
7SECTION 34.1. G.S. 105-187.19(a) reads as rewritten:
8 "§ 105-187.19. Use of tax proceeds.
9     (a)    The Secretary shall distribute the taxes collected under this Article, less the allowance
10 to the Department of Revenue for administrative expenses, in accordance with this section. The
11 Secretary may retain the cost of collection by the Department, not to exceed four hundred twenty-
12 five thousand dollars ($425,000)six hundred seventy-five thousand dollars ($675,000) a year as
13 reimbursed to the Department."
14
15 WHITE GOODS DISPOSAL TAX
16SECTION 34.2. G.S. 105-187.24 reads as rewritten:
17 "§ 105-187.24. Use of tax proceeds.
18     The Secretary shall distribute the taxes collected under this Article, less the Department of
19 Revenue's allowance for administrative expenses, in accordance with this section. The Secretary
20 may retain the Department's cost of collection, not to exceed four hundred twenty-five thousand
21 dollars ($425,000)six hundred seventy-five thousand dollars ($675,000) a year, as reimbursement
22 to the Department.
23     …."
24
25 PART XXXV. SECRETARY OF STATE [RESERVED]
26
27 PART XXXVI. TREASURER [RESERVED]
28
29 PART XXXVII. GENERAL GOVERNMENT – MISCELLANEOUS [RESERVED]
30
31 PART XXXVIII. INFORMATION TECHNOLOGY [RESERVED]
32
33 PART XXXIX. SALARIES AND BENEFITS
34
35 ELIGIBLE STATE-FUNDED EMPLOYEES AWARDED COST-OF-LIVING
36     ADJUSTMENT/LEGISLATIVE SALARY INCREASES
37SECTION 39.1.(a) Effective July 1, 2025, except as provided by subsection (c) of
38 this section, a person (i) whose salary is set by this Part, pursuant to the North Carolina Human
39 Resources Act or as otherwise authorized in this act and (ii) who was employed in a State-funded
40 position on June 30, 2024, is awarded a compensation adjustment as follows:
41(1)     Two percent and one-half (2.5%) effective July 1, 2025.
42(2)     As otherwise allowed or provided by law.
43SECTION 39.1.(a1) Effective July 1, 2026, except as provided by subsection (c) of
44 this section, a person (i) whose salary is set by this Part, pursuant to the North Carolina Human
45 Resources Act or as otherwise authorized in this act and (ii) who is employed in a State-funded
46 position on June 30, 2025, is awarded a compensation adjustment as follows:
47(1)     Two percent and one-half (2.5%) effective July 1, 2026.
48(2)     As otherwise allowed or provided by law.
49SECTION 39.1.(b) For the 2025-27 fiscal biennium, the following persons are not
50 eligible to receive the legislative salary increases provided by subsections (a) and (a1) of this
51 section:
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 General Assembly Of North Carolina  Session 2025
1(1)      Employees of local boards of education.
2(2)      Local community college employees.
3(3)      Employees of The University of North Carolina
4(4)      Clerks of superior court compensated under G.S. 7A-101.
5(5)      Correctional employees to which Section 39.18 of this Part applies.
6(6)      Law enforcement officers to which Section 39.19.(a) of this Part applies.
7(7)      Probation and parole officers to which Section 39.20.(a) of this Part applies.
8(8)      Employees of schools operated by the Department of Health and Human
9Services, the Department of Public Safety, and the State Board of Education
10who are paid based on the Teacher Salary Schedule.
11SECTION 39.1.(c) Permanent part-time employees shall receive the increase
12 authorized by this section on a prorated and equitable basis.
13SECTION 39.1.(d) No eligible State-funded employee shall be prohibited from
14 receiving the full salary increase provided in this section solely because the employee's salary
15 after applying the legislative increase is above the maximum of the salary range prescribed by
16 the State Human Resources Commission.
17
18 STATE EMPLOYEE BONUS
19SECTION 39.2.(a) Notwithstanding G.S. 143C-6-4, any person (i) whose salary is
20 set by Section 7A.(5), Section 7A.(8), Section 7A.(9) or by this Part, pursuant to the North
21 Carolina Human Resources Act, who is employed on September 30th, 2026, shall be awarded a
22 bonus for the 2026-27 fiscal year in the amount of one thousand dollars ($1,000.00), payable
23 during the month of October 2026.
24SECTION 39.2.(b) Employers of State employees and local education employees
25 shall provide an additional bonus of five hundred dollars ($500.00), payable during the month
26 of October 2026, to all permanent full-time State employees and local education employees who
27 are employed on September 30th, 2026, and who earn an annual salary that does not exceed
28 seventy-five thousand dollars ($75,000).
29SECTION 39.2.(c) Notwithstanding Subsection (d) of Section 39.33, any funds
30 appropriated for bonuses in excess of the amounts required to implement the bonuses shall revert
31 and not be credited to the Pay Plan Reserve.
32SECTION 39.2.(d) Notwithstanding G.S. 135-1(7a), the compensation bonuses
33 awarded by this section are not compensation under Article 1 of Chapter 135 of the General
34 Statutes, the Teachers' and State Employees' Retirement System.
35SECTION 39.2.(e) The compensation bonuses awarded by this section are not part
36 of annual salary and shall be paid out separately. The compensation bonus shall be awarded to
37 eligible permanent employees without regard to an employee's placement within the salary range,
38 including employees at the top of the salary range. The compensation bonus shall be adjusted pro
39 rata for permanent part-time employees.
40
41 GOVERNOR AND COUNCIL OF STATE
42SECTION 39.3.(a) The salary of the Governor, as provided by G.S. 147-11(a), shall
43 remain unchanged.
44SECTION 39.3.(b) The annual salaries for members of the Council of State, payable
45 monthly, for the 2025-27 fiscal biennium are as follows:
46
47 Council of State  FY 2025-26  FY 2026-27
48 Lieutenant Governor  $172,594  $176,909
49 Attorney General  172,594  176,909
50 Secretary of State  172,594  176,909
51 State Treasurer  172,594  176,909
 House Bill 1146-First Edition  Page 129
 General Assembly Of North Carolina  Session 2025
1 State Auditor  172,594  176,909
2 Superintendent of Public Instruction  172,594  176,909
3 Agriculture Commissioner  172,594  176,909
4 Insurance Commissioner  172,594  176,909
5 Labor Commissioner  172,594  176,909
6
7 CERTAIN EXECUTIVE BRANCH OFFICIALS
8SECTION 39.4.(a) The annual salaries, payable monthly, for the following
9 executive branch officials for the 2025-27 fiscal biennium are as follows:
10
11 Executive Branch Officials  FY 2025-26  FY 2026-27
12 Chairman, Alcoholic Beverage
13    Control Commission  $144,365  $147,974
14 State Controller  201,022  206,048
15 Commissioner of Banks  162,028  166,079
16 Chair, Board of Review, Division
17    of Employment Security  158,931  162,904
18 Members, Board of Review,
19    Division of Employment Security  156,989  160,914
20 Chairman, Parole Commission  158,931  162,904
21 Full-Time Members of the Parole Commission  146,948  150,622
22 Chairman, Utilities Commission  180,159  184,663
23 Members of the Utilities Commission  162,028  166,079
24 Executive Director, North Carolina
25    Agricultural Finance Authority  140,590  144,105
26 State Fire Marshall  142,526  146,089
27
28 JUDICIAL BRANCH
29SECTION 39.5.(a) The annual salaries, payable monthly, for the following judicial
30 branch officials for the 2025-27 fiscal biennium are as follows:
31
32 Judicial Branch Officials  FY 2025-26  FY 2026-27
33 Chief Justice, Supreme Court  $208,150  $213,354
34 Associate Justice, Supreme Court  202,747  207,816
35 Chief Judge, Court of Appeals  199,541  204,530
36 Judge, Court of Appeals  194,362  199,221
37 Judge, Senior Regular Resident Superior Court  178,606  183,071
38 Judge, Superior Court  173,353  177,687
39 Chief Judge, District Court  171,737  176,030
40 Judge, District Court  166,686  170,853
41 Chief Administrative Law Judge  148,354  152,063
42 District Attorney  171,520  175,808
43 Assistant Administrative Officer of the Courts  155,610  159,500
44 Public Defender  171,520  175,808
45 Director of Indigent Defense Services  172,779  177,098
46SECTION 39.5.(b) The district attorney or public defender of a judicial district, with
47 the approval of the Administrative Officer of the Courts or the Commission on Indigent Defense
48 Services, respectively, shall set the salaries of assistant district attorneys or assistant public
49 defenders, respectively, in that district such that the average salaries of assistant district attorneys
50 or assistant public defenders in that district, for the 2025-27 biennium, do not exceed one hundred
51 and three thousand eight hundred thirty-one dollars ($103,831) and the minimum salary of any
 Page 130  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 assistant district attorney or assistant public defender is at least fifty-five thousand seven hundred
2 forty-nine dollars ($55,749), effective July 1, 2025.
3SECTION 39.5.(b1) The district attorney or public defender of a judicial district,
4 with the approval of the Administrative Officer of the Courts or the Commission on Indigent
5 Defense Services, respectively, shall set the salaries of assistant district attorneys or assistant
6 public defenders, respectively, in that district such that the average salaries of assistant district
7 attorneys or assistant public defenders in that district, for the 2025-27 biennium, do not exceed
8 one hundred and six thousand four hundred twenty-seven dollars ($106,427) and the minimum
9 salary of any assistant district attorney or assistant public defender is at least fifty-seven thousand
10 twenty-one dollars ($57,143), effective July 1, 2026.
11
12 CLERKS OF SUPERIOR COURT
13SECTION 39.6.(a) Effective July 1, 2025, G.S. 7A-101(a) reads as rewritten:
14     "(a) The clerk of superior court is a full-time employee of the State and shall receive an
15 annual salary, payable in equal monthly installments, based on the number of State-funded
16 assistant and deputy clerks of court as determined by the Administrative Office of Court's
17 workload formula, according to the following schedule:
18Assistants and Deputies  Annual Salary
190-19  $111,726$114,519
2020-29  123,488126,575
2130-49  135,248138,629
2250-99  147,010150,685
23100+  149,949153,698."
24SECTION 39.6.(a1) Effective July 1, 2026, G.S. 7A-101(a) reads as rewritten:
25     "(a) The clerk of superior court is a full-time employee of the State and shall receive an
26 annual salary, payable in equal monthly installments, based on the number of State-funded
27 assistant and deputy clerks of court as determined by the Administrative Office of Court's
28 workload formula, according to the following schedule:
29Assistants and Deputies  Annual Salary
300-19  $114,519$117,382
3120-29  126,575129,739
3230-49  138,629142,095
3350-99  150,685154,452
34100+  153,698.157,540."
35
36 ASSISTANT AND DEPUTY CLERKS OF SUPERIOR COURT
37SECTION 39.7.(a) Effective July 1, 2025, G.S. 7A-102(c1) reads as rewritten:
38     "(c1) A full-time assistant clerk or a full-time deputy clerk, and up to one full-time deputy
39 clerk serving as head bookkeeper per county, shall be paid an annual salary subject to the
40 following minimum and maximum rates:
41     Assistant Clerks and      Annual Salary
42     Head Bookkeeper
43Minimum  $40,482$41,494
44Maximum  74,79276,662
45
46     Deputy Clerks        Annual Salary
47Minimum  $36,315$37,223
48Maximum  58,740.60,209."
49SECTION 39.7.(a1) Effective July 1, 2026, G.S. 7A-102(c1) reads as rewritten:
 House Bill 1146-First Edition  Page 131
 General Assembly Of North Carolina  Session 2025
1     "(c1) A full-time assistant clerk or a full-time deputy clerk, and up to one full-time deputy
2 clerk serving as head bookkeeper per county, shall be paid an annual salary subject to the
3 following minimum and maximum rates:
4     Assistant Clerks and      Annual Salary
5     Head Bookkeeper
6Minimum  $41,494$42,531
7Maximum  76,66278,579
8
9    Deputy Clerks  Annual Salary
10Minimum  $37,22338,154
11Maximum  60,209.61,714."
12
13 MAGISTRATES
14SECTION 39.8.(a) Effective July 1, 2025, G.S. 7A-171.1 reads as rewritten:
15 "§ 7A-171.1. Duty hours, salary, and travel expenses within county.
16     (a)    The Administrative Officer of the Courts, after consultation with the chief district
17 judge and pursuant to the following provisions, shall set an annual salary for each magistrate:
18(1)    A full-time magistrate shall be paid the annual salary indicated in the table set
19out in this subdivision. A full-time magistrate is a magistrate who is assigned
20to work an average of not less than 40 hours a week during the term of office.
21The Administrative Officer of the Courts shall designate whether a magistrate
22is full-time. Initial appointment shall be at the entry rate. A magistrate's salary
23shall increase to the next step every two years on the anniversary of the date
24the magistrate was originally appointed for increases to Steps 1 through 3, and
25every four years on the anniversary of the date the magistrate was originally
26appointed for increases to Steps 4 through 6.
27Table of Salaries of Full-Time Magistrates
28Step Level  Annual Salary
29Entry Rate  $47,228$48,409
30Step 1  50,71451,982
31Step 2  54,47555,837
32Step 3  58,45759,918
33Step 4  63,22864,809
34Step 5  68,97370,697
35Step 6  75,415.77,300."
36SECTION 39.8.(a1) Effective July 1, 2026, G.S. 7A-171.1 reads as rewritten:
37 "§ 7A-171.1. Duty hours, salary, and travel expenses within county.
38     (a)    The Administrative Officer of the Courts, after consultation with the chief district
39 judge and pursuant to the following provisions, shall set an annual salary for each magistrate:
40(1)    A full-time magistrate shall be paid the annual salary indicated in the table set
41out in this subdivision. A full-time magistrate is a magistrate who is assigned
42to work an average of not less than 40 hours a week during the term of office.
43The Administrative Officer of the Courts shall designate whether a magistrate
44is full-time. Initial appointment shall be at the entry rate. A magistrate's salary
45shall increase to the next step every two years on the anniversary of the date
46the magistrate was originally appointed for increases to Steps 1 through 3, and
47every four years on the anniversary of the date the magistrate was originally
48appointed for increases to Steps 4 through 6.
49Table of Salaries of Full-Time Magistrates
50Step Level  Annual Salary
51Entry Rate  $48,409$49,619
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 General Assembly Of North Carolina  Session 2025
1Step 1  51,98253,282
2Step 2  55,83757,233
3Step 3  59,91861,416
4Step 4  64,80966,429
5Step 5  70,69772,464
6Step 6  77,300.79,233."
7
8 LEGISLATIVE EMPLOYEES
9SECTION 39.9.(a) Effective July 1, 2025, the annual salaries of the Legislative
10 Services Officer and of nonelected employees of the General Assembly in effect on June 30,
11 2025, shall be legislatively increased by two and one-half percent (2.5%).
12SECTION 39.9.(a1) Effective July 1, 2026, the annual salaries of the Legislative
13 Services Officer and of nonelected employees of the General Assembly in effect on June 30,
14 2025, shall be legislatively increased by two and one-half percent (2.5%).
15SECTION 39.9.(b) Nothing in this act limits any of the provisions of G.S. 120-32.
16
17 GENERAL ASSEMBLY PRINCIPAL CLERKS
18SECTION 39.10.(a) Effective July 1, 2025, G.S. 120-37(c) reads as rewritten:
19     "(c) The principal clerks shall be full-time officers. Each principal clerk shall be entitled
20 to other benefits available to permanent legislative employees and shall be paid an annual salary
21 of one hundred thirty-three thousand nine hundred thirty-six dollars ($133,936), one hundred
22 thirty-seven two hundred eighty-four ($137,284), payable monthly. Each principal clerk shall
23 also receive such additional compensation as approved by the Speaker of the House of
24 Representatives or the President Pro Tempore of the Senate, respectively, for additional
25 employment duties beyond those provided by the rules of their House. The Legislative Services
26 Commission shall review the salary of the principal clerks prior to submission of the proposed
27 operating budget of the General Assembly to the Governor and shall make appropriate
28 recommendations for changes in those salaries. Any changes enacted by the General Assembly
29 shall be by amendment to this paragraph."
30SECTION 39.10.(a1) Effective July 1, 2026, G.S. 120-37(c) reads as rewritten:
31     "(c) The principal clerks shall be full-time officers. Each principal clerk shall be entitled
32 to other benefits available to permanent legislative employees and shall be paid an annual salary
33 of one hundred thirty seven thousand two hundred eighty-four dollars ($137,284), one hundred
34 forty thousand seven hundred sixteen dollars ($140,716), payable monthly. Each principal clerk
35 shall also receive such additional compensation as approved by the Speaker of the House of
36 Representatives or the President Pro Tempore of the Senate, respectively, for additional
37 employment duties beyond those provided by the rules of their House. The Legislative Services
38 Commission shall review the salary of the principal clerks prior to submission of the proposed
39 operating budget of the General Assembly to the Governor and shall make appropriate
40 recommendations for changes in those salaries. Any changes enacted by the General Assembly
41 shall be by amendment to this paragraph."
42
43 SERGEANTS-AT-ARMS AND READING CLERKS
44SECTION 39.11.(a) Effective July 1, 2025, G.S. 120-37(b) reads as rewritten:
45     "(b) The sergeant-at-arms and the reading clerk in each house shall be paid a salary of five
46 hundred twenty-eight dollars ($528) five hundred forty-one dollars ($541) per week plus
47 subsistence at the same daily rate provided for members of the General Assembly, plus mileage
48 at the rate provided for members of the General Assembly for one round trip only from their
49 homes to Raleigh and return. The sergeants-at-arms shall serve during sessions of the General
50 Assembly and at such time prior to the convening of, and subsequent to adjournment or recess
 House Bill 1146-First Edition  Page 133
 General Assembly Of North Carolina  Session 2025
1 of, sessions as may be authorized by the Legislative Services Commission. The reading clerks
2 shall serve during sessions only."
3SECTION 39.11.(a) Effective July 1, 2026, G.S. 120-37(b) reads as rewritten:
4     "(b) The sergeant-at-arms and the reading clerk in each house shall be paid a salary of five
5 hundred forty-one dollars ($541) five hundred fifty-five dollars ($555) per week plus subsistence
6 at the same daily rate provided for members of the General Assembly, plus mileage at the rate
7 provided for members of the General Assembly for one round trip only from their homes to
8 Raleigh and return. The sergeants-at-arms shall serve during sessions of the General Assembly
9 and at such time prior to the convening of, and subsequent to adjournment or recess of, sessions
10 as may be authorized by the Legislative Services Commission. The reading clerks shall serve
11 during sessions only."
12
13 COMMUNITY COLLEGES
14SECTION 39.12.(a) Community college personnel shall receive the following
15 cost-of-living adjustments:
16(1)    Effective July 1, 2025, the State Board of Community Colleges shall provide
17community college faculty and non-faculty personnel with an
18across-the-board salary increase in the amount of two and one-half percent
19(2.5%).
20(2)    Effective July 1, 2026, the State Board of Community Colleges shall provide
21community college faculty and non-faculty personnel with an
22across-the-board salary increase in the amount of two and one-half percent
23(2.5%).
24SECTION 39.12.(b) The minimum salaries for nine-month, full-time curriculum
25 community college faculty for the 2025-2027 fiscal biennium are as follows:
26Education Level  FY 2025-26  FY 2026-27
27     Vocational Diploma/Certificate or Less  $44,198  $45,303
28     Associate Degree or Equivalent  44,813  45,933
29     Bachelor's Degree  47,479  48,666
30     Master's Degree or Education Specialist  49,845  51,091
31     Doctoral Degree  53,255  54,586
32SECTION 39.12.(c) No full-time faculty member shall earn less than the minimum
33 salary for his or her education level. The pro rata hourly rate of the minimum salary for each
34 education level shall be used to determine the minimum salary for part-time faculty members.
35
36 UNIVERSITY OF NORTH CAROLINA SYSTEM
37SECTION 39.13.(a) Effective for the 2025-27 fiscal biennium, the annual salaries
38 of University of North Carolina SHRA employees shall be increased as provided by Section 39.1
39 of this act.
40SECTION 39.13.(b) For the 2025-27 fiscal biennium, the Board of Governors of
41 The University of North Carolina may provide EHRA employees a salary increase pursuant to
42 the policies adopted by the Board. Funds for EHRA compensation increases may be used for any
43 one or more of the following purposes: (i) merit pay, (ii) across the board increases, (iii)
44 recruitment bonuses, (iv) retention increases, and (v) any other compensation increase pursuant
45 to those policies.
46SECTION 39.13.(c) The Board of Governors of The University of North Carolina
47 shall make a report on the use of compensation increase and bonus funds to the General Assembly
48 by no later than March 1 of each year of the biennium.
49
50 CORRECTIONAL OFFICERS/YOUTH COUNSELOR TECHNICIANS/YOUTH
51   SERVICES BEHAVIORAL SPECIALISTS – SALARY SCHEDULE
 Page 134  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1SECTION 39.14.(a) State employees serving as correctional officers in the
2 Department of Adult Correction shall be compensated at a specific pay rate on the basis of a
3 salary schedule determined according to the duration of the employee's correctional officer work
4 experience.
5SECTION 39.14.(a1) State employees serving in the Department of Public Safety,
6 Division of Juvenile Justice and Delinquency Prevention, shall be compensated at a specific pay
7 rate set on the basis of a salary schedule determined according to the duration of the employee's
8 work experience, as follows:
9(1)     Youth Counselor Technicians shall be paid under the Correctional Officer I
10salary schedule.
11(2)     Youth Behavioral Specialists shall be paid under the Correctional Officer
12salary schedule.
13(3)     Youth Counselors shall be paid under the Correctional Officer III salary
14schedule.
15SECTION 39.14.(b) The following annual salary schedule applies under subsections
16 (a) and (a1) of this section for the 2025-2027 fiscal biennium, effective for on July 1, 2025:
17
18FY 2025-26  FY 2026-27
19 Experience      COI  COII  COIII  COI  COII  COIII
20    0  $41,383      $42,745       $45,714  $43,452        $44,882  $48,000
21    1  $44,278      $45,736       $48,915  $46,492        $48,023  $51,361
22    2  $46,937      $48,529       $51,851  $49,284        $50,955  $54,444
23    3  $49,283      $50,905       $54,443  $51,747        $53,450  $57,165
24    4  $51,253      $52,941       $56,620  $53,816        $55,588  $59,451
25    5  $52,792      $54,528       $58,319  $55,432        $57,254  $61,235
26    6+  $53,848      $55,619       $59,486  $56,540        $58,400  $62,460
27
28 STATE LAW ENFORCEMENT OFFICER SALARY SCHEDULE
29SECTION 39.15.(a) Law enforcement officers of the State Bureau of Investigation,
30 Alcohol Law Enforcement, and State Capitol Police shall be compensated pursuant to an
31 experience-based salary schedule and shall be compensated based on the officer's respective
32 work experience pursuant to the salary schedule in subsection (b) of this section.
33SECTION 39.15.(b) The following annual salary schedule applies under subsection
34 (a) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 2026, for
35 each respective fiscal year:
36
37      Years of Experience  FY 2025-26  FY 2026-27
380  58,825  61,766
391  62,649  65,781
402  66,722  70,058
413  71,059  74,612
424  75,678  79,462
435  80,597  84,627
446+  85,836  90,128
45
46 STATE HIGHWAY PATROL/SALARY SCHEDULE/INCREASE
47SECTION 39.16.(a) Law enforcement officers of the State Highway Patrol
48 compensated pursuant to an experience-based salary schedule shall be compensated based on the
49 officer's respective work experience pursuant to the salary schedule in subsection (b) of this
50 section.
 House Bill 1146-First Edition  Page 135
 General Assembly Of North Carolina  Session 2025
1SECTION 39.16.(b) The following annual salary schedule applies under subsection
2 (a) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 2026, for
3 each respective fiscal year:
4
5      Years of Experience  FY 2025-26  FY 2026-27
60  60,500  63,525
71  64,433  67,655
82  68,620  72,051
93  73,081  76,735
104  77,831  81,723
115  82,889  87,033
126+  88,277  92,691
13
14 PROBATION AND PAROLE OFFICERS/JUVENILE COURT COUNSELORS –
15     SALARY SCHEDULE
16SECTION 39.17.(a) Probation and parole officers shall be compensated pursuant to
17 the experience-based salary schedule based on the officer's respective work experience, as
18 established in subsection (b) of this section.
19SECTION 39.17.(a1) State employees serving in the Department of Public Safety,
20 Division of Juvenile Justice and Delinquency Prevention, as Juvenile Court Counselors shall be
21 compensated under the probation and parole officer salary schedule.
22SECTION 39.17.(b) The following annual salary schedule applies under subsection
23 (a) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 2026, for
24 each respective fiscal year:
25
26      Years of Experience  FY 2025-26  FY 2026-27
270  48,374  49,946
281  51,518  53,192
292  54,869  56,652
303  58,434  60,333
314  62,233  64,256
325  66,278  68,432
336+  70,586  72,880
34
35 STATE AGENCY TEACHERS
36SECTION 39.18.(a) Employees of schools operated by the Department of Health
37 and Human Services, the Department of Public Safety, and the State Board of Education who are
38 paid on the Teacher Salary Schedule shall be paid as authorized by Section 8.1 of this act.
39SECTION 39.18.(b) Employees of the School of Science and Mathematics of The
40 University of North Carolina who are paid pursuant to a salary schedule adopted by the North
41 Carolina School of Science and Math Board of Trustees shall be paid in accordance with the
42 schedule adopted by the Board.
43
44 ALL STATE-SUPPORTED PERSONNEL/FLEXIBLE ADMINISTRATION OF
45   COST-OF-LIVING ADJUSTMENTS
46SECTION 39.19.(a) The cost-of-living adjustments authorized by this act:
47(1)  For the 2025-2026 fiscal year, shall be paid effective on July 1, 2025, and do
48not apply to persons separated from service due to resignation, dismissal,
49reduction in force, death, or retirement or whose last workday is prior to June
5030, 2025.
 Page 136  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1(2)     For the 2026-2027 fiscal year, shall be paid effective on July 1, 2026, and do
2not apply to persons separated from service due to resignation, dismissal,
3reduction in force, death, or retirement or whose last workday is prior to June
430, 2026.
5SECTION 39.19.(b) The Director of the Budget is granted flexibility to administer
6 the compensation increases enacted by this act.
7SECTION 39.19.(c) The State employer contribution rates enacted by this act for
8 retirement and related benefits may be deemed by the Director of the Budget for administrative
9 purposes to become effective after July 1 of the applicable fiscal year to provide flexibility in the
10 collection and reconciliation of salary-related contributions as required by law, provided the
11 estimated amount contributed to any affected employee benefit trust equals the amount that
12 would have been contributed to the employee benefit trust if the enacted employer contribution
13 rates had been effective on July 1 of the applicable fiscal year.
14SECTION 39.19.(d) This section applies to all employees paid from State funds,
15 whether or not subject to or exempt from the North Carolina Human Resources Act, including
16 employees of public schools, community colleges, and The University of North Carolina.
17SECTION 39.19.(e) Notwithstanding any provision of this Part governing
18 cost‑of‑living adjustments, the salary increases and salary schedule adjustments authorized for
19 law enforcement officers, correctional officers, probation and parole officers, youth counselors,
20 juvenile court counselors, healthcare techs, and nurses may be applied to both filled and vacant
21 positions. These increases shall not be limited to employees employed on a specific date.
22
23 MOST STATE EMPLOYEES
24SECTION 39.20.(a) Unless otherwise expressly provided by this part, the annual
25 salaries in effect for the following persons on June 30, 2025, and June 30, 2026, shall be
26 legislatively increased as provided by Section 39.1 of this act:
27(1)     Permanent, full-time State officials and persons whose salaries are set in
28accordance with the State Human Resources Act.
29(2)     Permanent, full-time State officials and persons in positions exempt from the
30State Human Resources Act.
31(3)     Permanent, part-time State employees.
32(4)     Temporary and permanent hourly State employees.
33
34 USE OF FUNDS APPROPRIATED FOR COST-OF-LIVING ADJUSTMENT/BENEFIT
35     INCREASES
36SECTION 39.21.(a) The Office of State Budget and Management shall ensure that
37 the appropriations made in this act for cost-of-living adjustments and employee benefits are used
38 only for these purposes.
39SECTION 39.21.(b) If the Director of the Budget determines that funds appropriated
40 to a State agency for mandated salary increases and employee benefits exceed the amount
41 required by that agency for those purposes, the Director may reallocate those funds to other State
42 agencies that received insufficient funds for required cost-of-living and benefit increases.
43SECTION 39.21.(c) Funds appropriated for cost-of-living adjustments and
44 employee benefit increases may not be used to adjust the budgeted salaries of vacant positions,
45 or to provide salary increases in excess of those required by the General Assembly except to
46 increase the budgeted salary of any position to the minimum of the position's salary range.
47SECTION 39.21.(d) Any funds appropriated for cost-of-living adjustment and
48 employee benefit increases or minimum of salary range adjustments in excess of the amounts
49 required to implement the increases shall be credited to the Pay Plan Reserve.
50SECTION 39.21.(e) No later than March 1 of each year of the biennium, the Office
51 of State Budget and Management shall report to the Joint Legislative Commission on
 House Bill 1146-First Edition  Page 137
 General Assembly Of North Carolina  Session 2025
1 Governmental Operations on the expenditure of funds for legislatively mandated salary increases
2 and employee benefits. This report shall include at least the following information for each State
3 agency:
4(1)    The total amount of funds that the agency received for legislatively mandated
5salary increases and employee benefits.
6(2)    The total amount of funds transferred from the agency to other State agencies
7pursuant to subsection (b) of this section. This section of the report shall
8identify the amounts transferred to each recipient State agency.
9(3)    The total amount of funds used by the agency for legislatively mandated salary
10increases and employee benefits.
11(4)    The amount of funds used pursuant so subsection (c) of this section.
12
13 SALARY-RELATED CONTRIBUTIONS
14SECTION 39.22.(a) Section 3.6.(b) of Session Law 2025-89 reads a rewritten:
15     "SECTION 3.6.(b) Effective July 1, 2025, May 1, 2026 the State's employer contribution
16 rates budgeted for retirement, health, and related benefits as a percentage of covered salaries for
17 the 2025-2026 fiscal year for teachers and State employees, State law enforcement officers
18 (LEOs), the University and Community Colleges Optional Retirement Programs (ORPs), the
19 Consolidated Judicial Retirement System (CJRS), and the Legislative Retirement System (LRS)
20 are as set forth below:
21Teachers       State  ORPs  CJRS  LRS
22and State      LEOs
23Employees
24 Retirement  17.14%21.52%17.14%21.52% 6.84%  37.73%49.23% 18.26%27.02%
25 Health  7.33%  7.33%  7.33%  7.33%  7.33%
26 Disability  0.07%  0.07%  0.07%  0.00%  0.00%
27 Death  0.13%  0.13%  0.00%  0.00%  0.00%
28 NC 401(k)  0.00%  5.00%  0.00%  0.00%  0.00%
29
30 Total Contribution
31 Rate  24.67%29.41%29.67%34.41%14.24% 45.06%56.92% 25.59%34.71%
32     The rate for health includes two and four-tenths percent (2.40%) for the Public Employee
33 Health Benefit Fund and four and ninety-three hundredths percent (4.93%) for the Retiree Health
34 Benefit Fund."
35SECTION 39.22.(b) Notwithstanding G.S. 135-8(d)(3a), effective July 1, 2026, the
36 State's employer contribution rates budgeted for retirement and related benefits as a percentage
37 of covered salaries for the 2025-26 fiscal year for teachers and State employees, State law
38 enforcement officers (LEOs), the University and Community Colleges Optional Retirement
39 Programs (ORPs), the Consolidated Judicial Retirement System (CJRS), and the Legislative
40 Retirement System (LRS) are as set forth below:
41Teachers
42and State  State
43Employees  LEOs  ORPs  CJRS  LRS
44     Retirement  17.87%  17.87%  6.84%  42.11%  19.40%
45     Disability  0.07%  0.07%  0.07%  0.00%  0.00%
46     Death  0.13%  0.13%  0.00%  0.00%  0.00%
47     Retiree Health      7.69%  7.69%  7.69%  7.69%  7.69%
48     NC 401(k)  0.00%  5.00%  0.00%  0.00%  0.00%
49
50 Total Contribution
51    Rate  25.76%  30.76%  14.60%  49.80%        27.09%
 Page 138  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1     The rate for health includes two and two-tenths percent (2.20%) for the Public Employee
2 Health Benefit Fund and five and forty-nine hundredths percent (5.49%) for the Retiree Health
3 Benefit Fund.
4SECTION 39.22.(c) Effective July 1, 2026, the annual employer contributions for
5 the 2026-2027 fiscal year, payable monthly, by the State to the North Carolina State Health Plan
6 for Teachers and State Employees for each covered employee is a maximum of eight thousand
7 nine hundred twenty-five dollars ($8,925).
8
9 PROVIDE SUPPLEMENT FOR RETIREES OF THE TEACHERS' AND STATE
10     EMPLOYEES' RETIREMENT SYSTEM, THE CONSOLIDATED JUDICIAL
11     RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT SYSTEM
12SECTION 39.23.(a) G.S. 135-5 is amended by adding new subsections to read:
13     "…
14     (aaaa) After May 1, 2026, but on or before June 30, 2026, a onetime cost of living
15 supplement payment shall be made to or on account of beneficiaries who are living as of May 1,
16 2026, and whose retirement commenced on or before May 1, 2026. The payment shall be two
17 and one-half percent (2.5%) of the beneficiary's annual retirement allowance payable as of May
18 1, 2026, and shall not be prorated for date of retirement commencement. If the beneficiary dies
19 before the payment is made, then the payment shall be payable to the member's legal
20 representative. No beneficiary shall be deemed to have acquired a vested right to any future
21 supplemental payments.
22     (bbbb) After September 1, 2026, but on or before October 31, 2026, a onetime cost of living
23 supplement payment shall be made to or on account of beneficiaries who are living as of
24 September 1, 2025, and whose retirement commenced on or before September 1, 2025. The
25 payment shall be two and one-half percent (2.5%) of the beneficiary's annual retirement
26 allowance payable as of September 1, 2025, and shall not be prorated for date of retirement
27 commencement. If the beneficiary dies before the payment is made, then the payment shall be
28 payable to the member's legal representative. No beneficiary shall be deemed to have acquired a
29 vested right to any future supplemental payments.
30     …."
31SECTION 39.23.(b) G.S. 135-65 is amended by adding a new subsection to read:
32     "…
33     (ll)   After May 1, 2026, but on or before June 30, 2026, a onetime cost of living
34 supplement payment shall be made to or on account of beneficiaries who are living as of May 1,
35 2026, and whose retirement commenced on or before May 1, 2026. The payment shall be two
36 and one-half percent (2.5%) of the beneficiary's annual retirement allowance payable as of May
37 1, 2026, and shall not be prorated for date of retirement commencement. If the beneficiary dies
38 before the payment is made, then the payment shall be payable to the member's legal
39 representative. No beneficiary shall be deemed to have acquired a vested right to any future
40 supplemental payments.
41     (mm) After September 1, 2026, but on or before October 31, 2026, a onetime cost of living
42 supplement payment shall be made to or on account of beneficiaries who are living as of
43 September 1, 2025, and whose retirement commenced on or before September 1, 2025. The
44 payment shall be two and one-half percent (2.5%) of the beneficiary's annual retirement
45 allowance payable as of September 1, 2025, and shall not be prorated for date of retirement
46 commencement. If the beneficiary dies before the payment is made, then the payment shall be
47 payable to the member's legal representative. No beneficiary shall be deemed to have acquired a
48 vested right to any future supplemental payments."
49SECTION 39.23.(c) G.S. 120-4.22A is amended by adding a new subsection to read:
50     "…
 House Bill 1146-First Edition  Page 139
 General Assembly Of North Carolina  Session 2025
1      (ff)   In accordance with subsection (a) of this section, after May 1, 2026, but on or before
2 June 30, 2026, a onetime cost of living supplement payment shall be made to or on account of
3 beneficiaries who are living as of May 1, 2026, and whose retirement commenced on or before
4 May 1, 2026. The payment shall be two and one-helf percent (2.5%) of the beneficiary's annual
5 retirement allowance payable as of May 1, 2026, and shall not be prorated for date of retirement
6 commencement. If the beneficiary dies before the payment is made, then the payment shall be
7 payable to the member's legal representative. No beneficiary shall be deemed to have acquired a
8 vested right to any future supplemental payments.
9      (gg) In accordance with subsection (a) of this section, after September 1, 2026, but on or
10 before October 31, 2026, a onetime cost of living supplement payment shall be made to or on
11 account of beneficiaries who are living as of September 1, 2025, and whose retirement
12 commenced on or before September 1, 2025. The payment shall be two and one-half percent
13 (2.5%) of the beneficiary's annual retirement allowance payable as of September 1, 2025, and
14 shall not be prorated for date of retirement commencement. If the beneficiary dies before the
15 payment is made, then the payment shall be payable to the member's legal representative. No
16 beneficiary shall be deemed to have acquired a vested right to any future supplemental
17 payments."
18
19 PART XL. CAPITAL
20
21 GENERAL FUND CAPITAL APPROPRIATIONS/INTRODUCTION
22SECTION 40.1. The appropriations made by the 2026 General Assembly for capital
23 improvements are for constructing, repairing, or renovating State buildings, utilities, and other
24 capital facilities, for acquiring sites for them where necessary, and for acquiring buildings and
25 land for State government purposes.
26
27 ADJUSTMENTS TO THE STATE CAPITAL AND INFRASTRUCTURE FUND
28SECTION 40.2.(a) G.S. 143C-3-5(b) reads as rewritten:
29 "§ 143C-3-5. Budget recommendations and budget message.
30     …
31     (b)    Odd-Numbered Years. – In odd-numbered years the budget recommendations shall
32 include the following components:
33(1)     A Recommended State Budget setting forth goals for improving the State with
34recommended expenditure requirements, funding sources, and performance
35information for each State government program and for each proposed capital
36improvement. The Recommended State Budget may be presented in a format
37chosen by the Director, except that the Recommended State Budget shall
38clearly distinguish program base budget requirements, program reductions,
39program eliminations, changes in program fund sources, program expansions,
40and new programs, and shall explain all proposed capital improvements in the
41context of the Six-Year Capital Improvements Plan and as required by
42G.S. 143C-8-6.
43(1a) The Governor's Recommended State Budget shall include a base budget,
44which shall be presented pursuant to subdivision (2) of this subsection.
45(2)     A Recommended Base Budget showing, for each budget code and purpose or
46program in State government, accounting detail corresponding to the
47Recommended State Budget.
48a.      The Recommended Base Budget shall employ the North Carolina
49Accounting System Uniform Chart of Accounts adopted by the State
50Controller to show both uses and sources of funds and shall display in
51separate parallel columns all of the following: (i) actual expenditures
 Page 140  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1and receipts for the most recent fiscal year for which actual
2information is available, (ii) the certified budget for the preceding
3fiscal year, (iii) the currently authorized budget for the preceding fiscal
4year, (iv) program base budget requirements for each fiscal year of the
5biennium, (v) proposed expenditures and receipts for each fiscal year
6of the biennium, and (vi) proposed increases and decreases.
7b.       The Recommended Base Budget shall include detailed information on
8recommended expenditures for capital improvements as required by
9G.S. 143C-8-6.
10c.       The Recommended Base Budget shall include accurate projections of
11receipts, expenditures, and fund balances. Estimated receipts,
12including tuition collected by university or community college
13institutions, shall be adjusted to reflect actual collections from the
14previous fiscal year, unless the Director recommends a change that
15will result in collections in the budget year that differ from prior year
16actuals, or the Director otherwise determines there is a more
17reasonable basis upon which to accurately project receipts. If receipts
18are projected to decrease, the corresponding expenditure shall be
19decreased in a like amount. Revenue and expenditure detail provided
20in the Budget Support Document shall be no less detailed than the two-
21digit level in the North Carolina Accounting System Uniform Chart of
22Accounts as prescribed by the State Controller.
23d.       The Recommended Base Budget shall clearly identify all proposed
24expenditures supported by existing or proposed appropriations,
25including statutory appropriations.
26(3)     A recommended Current Operations Appropriations Act that makes
27appropriations for each fiscal year of the upcoming biennium for the operating
28and capital expenses of all State agencies as contained in the Recommended
29State Budget.
30(4)     The biennial State Information Technology Plan as outlined in Part 2 of
31Article 15 of Chapter 143B of the General Statutes to be consistent in
32facilitating the goals outlined in the Recommended State Budget.
33(5)     A list of budget adjustments made during the prior fiscal year pursuant to
34G.S. 143C-6-4 that are included in the proposed base budget for the upcoming
35fiscal year. The list of budget adjustments shall identify the revision number,
36revision type, revision title, the purpose or programs affected, and the amount
37of funds moving between the purpose or programs.
38(6)     The Governor's Recommended State Budget shall include a transfer to the
39Savings Reserve of fifteen percent (15%) of the estimated growth in State tax
40revenues that are deposited in the General Fund for each fiscal year of the
41upcoming biennium. This subdivision applies only if, and to the extent that,
42the balance of the Savings Reserve remains below the recommended Savings
43Reserve balance developed pursuant to G.S. 143C-4-2(f).
44(7)     The Governor's Recommended State Budget shall include a transfer to the
45State Capital and Infrastructure Fund of four percent (4%) of the estimated net
46State tax revenues that are deposited in the General Fund for each fiscal year
47of the upcoming biennium.
48    …."
49SECTION 40.2.(b) G.S. 143C-4-3.1(b) reads as rewritten:
50 "§ 143C-4-3.1. State Capital and Infrastructure Fund.
51     …
 House Bill 1146-First Edition  Page 141
 General Assembly Of North Carolina  Session 2025
1     (b)     Creation and Source of Funds. – The State Capital and Infrastructure Fund (the Fund)
2 is established as a special fund in the General Fund to be administered by the Office of State
3 Budget and Management to carry out the provisions of this section. With the exception of debt
4 service obligations, appropriations from the Fund may be administered by other State agencies
5 as deemed necessary by the Office of State Budget and Management. Interest and investment
6 earnings received on monies in the Fund shall be credited to the Fund. The Fund shall consist of
7 the following additional sources:
8(1)    The following amounts transferred from the General Fund at the beginning of
9the applicable fiscal year:
10a.      For the 2021-2022 fiscal year, the sum of one billion three hundred
11million dollars ($1,300,000,000).
12b.      For the 2022-2023 fiscal year, the sum of one billion three hundred
13sixty-five million five hundred thousand dollars ($1,365,500,000).
14c.      For the 2023-2024 fiscal year, the sum of one billion four hundred
15twelve million five hundred ninety-two thousand five hundred dollars
16($1,412,592,500).
17d.      For the 2024-2025 fiscal year, the sum of one billion four hundred
18sixty-one million three hundred thirty-three thousand two hundred
19thirty-eight dollars ($1,461,333,238).
20e.      For the 2025-2026 fiscal year, the sum of one billion one hundred
21twenty million dollars ($1,120,000,000).
22f.      For each fiscal year after the 2025‑2026 fiscal year, the transfer shall
23be increased three and one‑half percent (3.5%) over the amount
24required under this subdivision for the preceding fiscal year. For each
25fiscal year after the 2025-2026 fiscal year, the transfer shall be equal
26to the greater of the sum sufficient amount needed for annual debt
27service, ongoing projects, and personnel costs funded by the Fund less
28the cash balance in the Fund and anticipated interest earnings, or zero.
29…."
30
31 CAPITAL APPROPRIATIONS/STATE CAPITAL AND INFRASTRUCTURE FUND
32SECTION 40.3. This subsection authorizes the capital projects listed in the
33 Committee Report, and appropriates funding from the State Capital and Infrastructure Fund to
34 the Office of State Budget and Management for the 2026-27 fiscal year based upon projected
35 cash flow needs for the authorized projects. The amounts authorized in this subsection represent
36 the maximum amounts of funding from the State Capital and Infrastructure Fund that may be
37 expended on each project. An additional action by the General Assembly is required to increase
38 the maximum authorization for any of the projects listed.
39
40 CAPITAL IMPROVEMENT & REPAIRS AND RENOVATIONS APPROPRIATIONS
41SECTION 40.3.(a) The following agency capital improvement projects have been
42 assigned a project code for reference to allocations in this Part, past allocations, and for intended
43 project support by the General Assembly for future fiscal years:
44
45 Agency Capital Improvement Project  Project Code
46 Department of Agriculture and Consumer Services
47 Raleigh State Farmers Market–Improvements  DACS23-3
48    D-6 HQ (Cumberland Co.)–Maintenance Shop Replacement  DACS23-7
49    Research Stations–New Maintenance Shop Facilities  DACS23-8
50    Piedmont Research Station–Bridge  DACS23-9
51    Research Stations–Multipurpose Facilities  DACS23-10
 Page 142  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1     NCFS–New County Offices, Region 3  DACS23-11
2
3 Department of Natural and Cultural Resources
4     Fort Fisher Aquarium–Aquarium Expansion  DNCR21-5
5     NC Museum of History–Expansion  DNCR21-13
6     NC Museum of Art at Winston-Salem/SECCA  DNCR23-2
7     Zoo–
8New Aviary  DNCR23-1
9Modular Staff Offices  DNCR26-1
10Park Security and Safety  DNCR26-2
11     State Parks–
12Access Areas  DNCR26-3
13Stone Mountain New Visitor Center  DNCR26-4
14 State Historic Sites–
15Maintenance and Service Facilities  DNCR26-5
16African American Monument at the State Capitol        DNCR26-6
17
18 Department of Health and Human Services
19    Walter B. Jones–New Medical Office Bldg.  DHHS23-1
20    Broughton Hospital–New Maintenance & Warehouse Facility    DHHS23-2
21    Cherry Hospital–New Maintenance Bldg.  DHHS23-3
22    O'Berry Neuro-Medical Treatment Center  DHHS26-1
23    NC State Laboratory  DHHS26-2
24    Raleigh Medical Examiner's Office Expansion  DHHS26-3
25
26 Department of Environmental Quality
27    Water Resource Development Grant–
28Tar-Pamlico Flood Mitigation  DEQ26-1
29Carolina Beach Storm Mitigation  DEQ26-2
30Kure Beach Storm Mitigation  DEQ26-3
31Wrightsville Beach Storm Mitigation  DEQ26-4
32Ocean Isle Storm Mitigation  DEQ26-5
33Holden Beach Storm Mitigation  DEQ26-6
34Oak Island Storm Mitigation  DEQ26-7
35B. Everette Jordan Reservoir  DEQ26-8
36State and Local Projects  DEQ26-9
37    Environmental Quality Program  DEQ26-10
38
39 Department of Administration
40    State Government Executive Headquarters  DOA22-1
41    Department of Instruction Building Renovation  DOA22-3
42    Service Campus  DOA23-1
43    State Agency Lease  DOA23-2
44    Archdale Building Demolition  DOA23-3
45    Caswell Square Demolition  DOA23-4
46    Parking Deck–Wilmington Street  DOA23-5
47
48 Department of Adult Correction
49    Institution  Roof  Systems
50DAC26-
51 1
 House Bill 1146-First Edition  Page 143
 General Assembly Of North Carolina  Session 2025
1     Institution     Interior       Life       Safety        Fire  Alarm        Systems
2DAC26-
3 2
4     HVAC  Enhancements
5DAC26-
6 3
7
8 Department of Public InstructionNorth Carolina School for the Deaf
9    NC School for the Deaf
10Superintendent's House  DPI25-1
11    McCord Student Union Building Renovation  NCSD26-1
12
13 Eastern North Carolina School for the Deaf
14    Eagles Hall Renovation  ENCSD26-1
15    Vestal Hall and McAdams Hall Life Safety Upgrades  ENCSD26-2
16
17 Governor Morehead School
18    Boiler Plant Replacement  GMS26-1
19
20 Department of Public Instruction
21    Center for the Advancement of Teaching–
22Ocracoke Building Expansion  DPI26-1
23Cullowhee Residence Halls Renovation  DPI26-2
24
25 Department of Insurance
26    Office of State Fire Marshal
27    Land Development & Training Center  DOI21-1
28
29 Department of Public Safety
30    Samarcand–
31Live Fire Training Building  DPS21-2
32Safer Schools Training Academy  DPS21-5
33    State Highway Patrol–
34Viper Building  DPS21-6
35Auditorium  DPS23-3
36Training Academy Facilities Enhancement–Phases 3-6  DPS23-4
37Cadet Dormitory 1  DPS23-7
38    Juvenile Justice–
39Richmond YDC  DPS21-1
40New Youth Detention Center  DPS23-1
41Cabarrus–New Modular Office  DPS23-6
42    National Guard–
43NCNG Matching Fund  NG23-1
44Ballentine Building  NG23-2
45Constable Building  NG23-3
46Rocky Mount Complex/MILCON  NG23-4
47Special Forces Complex  NG23-5
48Louisburg Readiness Center  NG23-9
49Statewide Standby Generators  NG26-1
50Kinston Readiness Center  NG26-2
51Morganton Readiness Center  NG26-3
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 General Assembly Of North Carolina  Session 2025
1
2 State Bureau of Investigation
3     Logistics Building–Phase 2  SBI26-1
4     Data Center Security Improvements  SBI26-2
5
6 Department of Military and Veterans Affairs
7    Fayetteville State Veterans Home  DMVA26-1
8
9 General Assembly
10    Education  Campus  Project
11NCGA21-
12 3
13     Education  Campus  Parking  Deck
14NCGA23-
15 1
16
17 Department of Transportation
18    North Carolina Global TransPark Authority–
19Aircraft Maintenance Repair & Overhaul Facility  TRAN23-1
20
21 The University of North Carolina
22    Appalachian State University–
23Peacock  Hall/Business
24UNC/ASU21-
25 1
26Innovation  Campus
27UNC/ASU21-
28 2
29Hickory  Campus
30UNC/ASU22-
31 1
32Walker  Hall–Interior  Renovation
33UNC/ASU23-
34 1
35     University of North Carolina at Charlotte–
36Smith Hall–Comprehensive Renovation  UNC/CLT23-1
37Colvard Hall–Comprehensive Renovation  UNC/CLT23-2
38     University of North Carolina at Chapel Hill–
39Gardner Hall–Comprehensive Renovation  UNC/CH23-1
40     Elizabeth City State University–
41Sky Bridge  UNC/ECS21-2
42Infrastructure Repairs–Phase 3  UNC/ECS23-1
43Jenkins Hall/Dixon Hall–Labs/Classroom/Bldg. Renovation        UNC/ECS23-2
44Safety & Security  UNC/ECS25-1
45     East Carolina University–
46Brody School of Medicine  UNC/ECU21-1
47Howell Science Building North–Comprehensive Renovation  UNC/ECU23-1
48Leo Jenkins Building/Health Sciences–Comprehensive Renovation   UNC/ECU23-2
49Medical Examiner Office  UNC/ECU23-3
50     Fayetteville State University–
51Butler Targeted Renovation  UNC/FSU23-1
 House Bill 1146-First Edition  Page 145
 General Assembly Of North Carolina  Session 2025
1H.L. Cook Building Renovation  UNC/FSU23-2
2     North Carolina Agricultural & Technical State University–
3Marteena Hall–Renovation, Phase 2  UNC/A&T23-1
4Health and Human Sciences Bldg.  UNC/A&T23-2
5     North Carolina Central University–
6Dent Building–Comprehensive Renovation  UNC/NCC23-1
7Edmonds Classroom Building–Comprehensive Renovation  UNC/NCC23-2
8University Theater Renovation  UNC/NCC23-3
9     North Carolina State University–
10Mann Hall–Renovation, Phase 2  UNC/NCS23-1
11Dabney Hall–Renovation, Phase 2  UNC/NCS23-2
12Polk Hall–Renovation, Phase 2  UNC/NCS23-3
13Veterinary School–Large Animal Hospital  UNC/NCS23-4
14Engineering Classroom Building  UNC/NCS23-5
15Advanced Research & Test Reactor  UNC/NCS23-6
16Poe Hall  UNC/NCS25-1UNC/NCS24-1
17     North Carolina School of Science and Math–
18Durham Campus
19Renovation of Residence Halls  UNC/SSM23-2
20Academic Commons Addition  UNC/SSM23-4
21Temporary Housing  UNC/SSM25-1
22     University of North Carolina at Asheville–
23Lipinsky Hall–Comp. Modernization/Addition  UNC/AVL23-1
24Carol Belk Theatre  UNC/AVL25-1
25     University of North Carolina at Charlotte
26Smith Hall–Comprehensive Renovation  UNC/CLT23-1
27     University of North Carolina at Greensboro–
28Moore Building–Renovation  UNC/GBO23-1
29     University of North Carolina at Pembroke–
30Health Sciences Center  UNC/PEM21-1
31Givens Performing Arts Center  UNC/PEM23-1
32     University of North Carolina School of the Arts–
33Stevens Center Renovation–Phase 2  UNC/SA23-1
34New High School Residence Hall  UNC/SA23-2
35     University of North Carolina at Wilmington–
36Cameron Hall–Comprehensive Renovation/Expansion  UNC/WIL23-1
37Kenan Auditorium–Comprehensive Renovation/Expansion  UNC/WIL23-2
38DeLoach Hall–Modernization  UNC/WIL23-3
39Health Education/I.S.A.T. Building  UNC/WIL23-4
40     Western Carolina University–
41Replacement  Engineering  Building
42UNC/WCU23-
43 1
44     Winston-Salem State University–
45K.R. Williams Auditorium  UNC/WSS21-1
46Eller Hall–Renovation & Elevator Addition  UNC/WSS23-1
47Pegram Hall–Renovation & Elevator Addition  UNC/WSS23-2
48     PBS North Carolina      UNC/PBS23-1
49     UNC Board of Governors–
50UNC Lease Funds  UNC/BOG21-1
51NC Care Health Clinics  UNC/BOG23-1
 Page 146  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1NC Care Hospital Investment  UNC/BOG23-2
2Children's Hospital  UNC/BOG23-3
3Systems Office–Project Management Personnel  UNC/BOG25-1
4
5 Repairs and Renovations–The University of North Carolina  UNC/R&R21
6 Repairs and Renovations–State Agencies (non-UNC)  R&R21
7 SCIF-Related  Personnel
8PERS2
9 1
10 Wildlife Resources Commission–Setzer Hatchery Revision  WRC23-1
11SECTION 40.3.(b) This subsection authorizes the following capital projects in the
12 2025-2027 fiscal biennium based upon projected cash flow needs for the authorized projects. The
13 authorizations provided in this subsection represent the maximum amount of funding from the
14 State Capital and Infrastructure Fund that may be expended on each project and do not reflect
15 authorizations from other non-State Capital and Infrastructure Fund sources. An additional action
16 by the General Assembly is required to increase the maximum authorization for any of the
17 projects listed:
18 Capital Improvements–
19 State Capital and  Previous  New/Updated
20 Infrastructure Fund  Project Authorization  Project Authorization
21 DEQ26-1  N/A  $8,000,000
22 DEQ26-2  N/A  3,320,250
23 DEQ26-3  N/A  6,257,230
24 DEQ26-4  N/A  1,889,462
25 DEQ26-5  N/A  1,976,154
26 DEQ26-6  N/A  125,000
27 DEQ26-7  N/A  400,000
28 DEQ26-8  N/A  437,994
29 DEQ26-9  N/A  6,000,000
30 DEQ26-10  N/A  4,000,000
31 DHHS23-1  1,352,000  2,652,000
32 DHHS23-2  5,983,000  17,519,339
33 DHHS23-3  5,405,000  18,803,000
34 DHHS26-1  N/A  24,848,348
35 DHHS26-2  N/A  6,000,000
36 DHHS26-3  N/A  41,128,337
37 DNCR21-5  45,000,000  52,000,00
38 DNCR23-2  15,000,000  19,400,000
39 DNCR26-1  N/A  5,800,000
40 DNCR26-2  N/A  5,300,000
41 DNCR26-3  N/A  8,082,500
42 DNCR26-4  N/A  10,662,000
43 DNCR26-5  N/A  11,500,000
44 DNCR26-6  N/A  5,000,000
45 DAC26-1  N/A  49,321,016
46 DAC26-2  N/A  60,464,040
47 DAC26-3  N/A  12,480,000
48 NCSD26-1  N/A  7,500,000
49 ENCSD26-1  N/A  21,500,000
50 ENCSD26-2  N/A  9,700,000
51 GMS26-1  N/A  8,405,180
 House Bill 1146-First Edition  Page 147
 General Assembly Of North Carolina  Session 2025
1 NCGA21-3  $320,000,000  $331,300,000341,400,00
2 DPI25-1  N/A  2,500,000
3 DPI26-1  N/A  13,905,882
4 DPI26-2  N/A  10,000,000
5 DPS21-1  10,702,952  14,168,707
6 DPS21-2  1,831,000  4,265,320
7 DPS21-5  4,170,000  40,390,000
8 DPS21-6  7,139,374  12,741,749
9 DPS23-3  35,000,000  63,785,000
10 DPS23-6  690,000  1,349,000
11 DPS23-7  43,336,785  84,103,000
12 DPS23-3  35,000,000  53,466,000
13 DPS23-7  43,336,785  72,572,000
14 NG23-1  24,000,000  28,000,000
15 NG23-2  12,500,000  13,300,000
16 NG23-3  16,428,582  18,678,582
17 NG26-1  N/A  5,000,000
18 NG26-2  N/A  8,800,000
19 NG26-3  N/A  6,600,000
20 SBI26-1  N/A  33,459,000
21 SBI26-2  N/A  3,318,000
22 DMVA26-1  N/A  10,000,000
23 DOA22-1  88,000,000  01,400,000
24 DOA23-1  33,744,000  33,171,600
25 DOA23-5  45,000,000  57,200,000
26 UNC/ASU21-1  40,000,000  45,000,000
27 UNC/ASU21-2  54,000,000  74,000,000
28 UNC/ECS21-2  2,500,000  7,500,000
29 UNC/ECS25-1  N/A  12,000,000
30 UNC/NCC23-2  12,999,424  19,499,424
31 UNC/NCS23-1  30,000,000  40,000,000
32 UNC/NCS23-6  3,000,000  16,000,000
33 UNC/NCS24-1  5,000,000  185,000,000
34 UNC/AVL23-1  26,150,000  30,150,000N/A
35 UNC/AVL25-1  N/A  3,000,000
36 UNC/SSM23-2  28,988,042  43,988,042
37 UNC/SSM25-1  N/A  2,180,000
38 UNC/PEM23-1  61,000,000  131,004,985
39 UNC/WIL24-123-4  8,000,000  83,000,000
40 UNC/WCU23-1  95,300,000  157,900,000
41 UNC/BOG23-2  150,000,000  0
42 UNC/BOG23-3  319,746,392  216,246,392
43 UNC/BOG25-1  N/A  4,000,000
44
45 SIX-YEAR INTENDED PROJECT ALLOCATION SCHEDULE
46SECTION 40.4. It is the intent of the General Assembly to fund capital improvement
47 projects on a cash flow basis and to plan for future project funding based upon projected
48 availability in the State Capital and Infrastructure Fund. Nothing in this section shall be construed
49 (i) to appropriate funds or (ii) as an obligation by the General Assembly to appropriate funds for
50 the projects listed in future years. The following schedule lists capital improvement projects that
 Page 148  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 will begin or be completed in fiscal years outside of the 2025-2027 fiscal biennium and estimated
2 amounts (in thousands) needed for completion of those projects:
3
4 Project Code FY25-26       FY26-27      FY27-28       FY28-29       FY29-30  FY30-31
5
6 PERS21  3,154.9    3,154.9      3,154.9      3,154.9        3,154.9  3,154.9
7 UNC/R&R21        200,000    300,000      200,000      200,000        200,000  200,000
8 R&R21  200,000    300,000      200,000      200,000        200,000  200,000
9 DACS23-3  N/A        2,000        4,000        4,000  N/A  N/A
10 DACS23-7  N/A        4,000        N/A  N/A  N/A  N/A
11 DACS23-8  N/A        2,000        1,000        1,000  1,000  N/A
12 DACS23-9  N/A        750  N/A  N/A  N/A  N/A
13 DACS23-10        N/A        2,000        2,000        2,200  N/A  N/A
14 DACS23-11        N/A        1,500        1,500        N/A  N/A  N/A
15 DEQ26-1  N/A        4,000        4,000        N/A  N/A  N/A
16 DEQ26-2  N/A        3,320.25     N/A  N/A  N/A  N/A
17 DEQ26-3  N/A        3,128.62     3,128.62     N/A  N/A  N/A
18 DEQ26-4  N/A        1,889.46     N/A  N/A  N/A  N/A
19 DEQ26-5  N/A        1,976.15     N/A  N/A  N/A  N/A
20 DEQ26-6  N/A        125  N/A  N/A  N/A  N/A
21 DEQ26-7  N/A        400  N/A  N/A  N/A  N/A
22 DEQ26-8  N/A        437.99       N/A  N/A  N/A  N/A
23 DEQ26-9  N/A        3,000        3,000        N/A  N/A  N/A
24 DEQ26-10  N/A        2,000        2,000        N/A  N/A  N/A
25 DNCR21-5  N/A        20,000       20,000       N/A  N/A  N/A
26 DNCR21-13        86,800     30,950       N/A  N/A  N/A  N/A
27 DNCR23-1  N/A        30,000       24,000       N/A  N/A  N/A
28 DNCR23-2  N/A        4,400        N/A  N/A  N/A  N/A
29 DNCR26-1  N/A        1,000        4,800        N/A  N/A  N/A
30 DNCR26-2  N/A        5,300        N/A  N/A  N/A  N/A
31 DNCR26-3  N/A        8,082.5      N/A  N/A  N/A  N/A
32 DNCR26-4  N/A        1,000        9,662        N/A  N/A  N/A
33 DNCR26-5  N/A        2,000        9,500        N/A  N/A  N/A
34 DNCR26-6  N/A        5,000        N/A  N/A  N/A  N/A
35 DHHS23-1  N/A        1,300        N/A  N/A  N/A  N/A
36 DHHS23-2  N/A        5,768.17     5,768.17     N/A  N/A  N/A
37 DHHS23-3  N/A        13,398       N/A  N/A  N/A  N/A
38 DHHS26-1  N/A        12,424.17    12,424.17    N/A  N/A  N/A
39 DHHS26-2  N/A        6,000        N/A  N/A  N/A  N/A
40 DHHS26-3  N/A        13,709.45    13,709.45    13,709.45      N/A  N/A
41 DOA22-1  N/A        1,400        N/A  N/A  N/A  N/A
42 DOA22-3  N/A        N/A  21,000       N/A  24,000  N/A
43 DOA23-1  N/A        3,000        15,000       15,171.6       N/A  N/A
44 DOA23-2  N/A        800  N/A  N/A  N/A  N/A
45 DOA23-3  N/A        N/A  N/A  11,000  N/A  N/A
46 DOA23-4  N/A        N/A  15,000       N/A  N/A  N/A
47 DOA23-5  N/A        5,000        23,000       23,000  6,200  N/A
48 DOI21-1  N/A        13,750       N/A  N/A  N/A  N/A
49 DAC26-1  N/A        10,000       10,000       29,321.02      N/A  N/A
50 DAC26-2  N/A        30,000       30,464.04    N/A  N/A  N/A
51 DAC26-3  N/A        12,480       N/A  N/A  N/A  N/A
 House Bill 1146-First Edition  Page 149
 General Assembly Of North Carolina  Session 2025
1 DPS21-1     N/A        3,465.76      N/A  N/A  N/A  N/A
2 DPS21-2     N/A        2,434.32      N/A  N/A  N/A  N/A
3 DPS21-5     N/A        27,100        9,120       N/A  N/A  N/A
4 DPS21-6     N/A        5,602.38      N/A  N/A  N/A  N/A
5 DPS23-1     N/A        10,000        29,850      N/A  N/A  N/A
6 DPS23-3     N/A        28,785        28,785      1,815  N/A  N/A
7 DPS23-4     N/A        N/A  N/A  19,000        48,500  77,600
8 DPS23-6     N/A        659  N/A  N/A  N/A  N/A
9 DPS23-7     N/A        40,766.22     18,501.55   18,501.55     N/A  N/A
10 NG23-1      N/A        4,000  6,000       N/A  N/A  N/A
11 NG23-4      N/A        6,500  N/A  N/A  N/A  N/A
12 NG23-5      N/A        N/A  800  4,000  3,200  N/A
13 NG23-9      N/A        3,000  N/A  N/A  N/A  N/A
14 NG26-1      N/A        3,000  2,000       N/A  N/A  N/A
15 NG26-2      N/A        800  8,000       N/A  N/A  N/A
16 NG26-3      N/A        600  6,000       N/A  N/A  N/A
17 SBI26-1     N/A        6,234  13,612.5    13,612.5      N/A  N/A
18 SBI26-2     N/A        472  2,846       N/A  N/A  N/A
19 DMVA26-1    N/A        10,000        N/A  N/A  N/A  N/A
20 NCSD26-1    N/A        7,500  N/A  N/A  N/A  N/A
21 ENCSD26-1   N/A        2,150  9,675       9,675  N/A  N/A
22 ENCSD26-2   N/A        970  4,365       4,365  N/A  N/A
23 GMS26-1     N/A        8,405.18      N/A  N/A  N/A  N/A
24 DPI26-1     N/A        1,905.88      2,000       5,000  5,000  N/A
25 DPI26-2     N/A        250  500  1,250  8,000  N/A
26 TRAN23-1    125,000    50,000        N/A  N/A  N/A  N/A
27 NCGA21-3    65,250     5,050  5,050       N/A  N/A  N/A
28 NCGA23-1    26,000     16,250        N/A  N/A  N/A  N/A
29 UNC/ASU21-2 N/A        10,000        10,000      N/A  N/A  N/A
30 UNC/ASU22-1 N/A        11,350        13,050      N/A  N/A  N/A
31 UNC/ASU23-1 N/A        11,700        4,500       N/A  N/A  N/A
32 UNC/CLT23-1 N/A        12,600        9,900       9,900  N/A  N/A
33 UNC/CLT23-2 N/A        N/A  4,500       N/A  15,000  25,500
34 UNC/CH23-1 N/A  N/A  2,500       10,000        N/A  10,000
35 UNC/ECU21-1 60,000     85,742.7      12,003.64   12,003.64     N/A  N/A
36 UNC/ECU23-1 N/A        13,800        13,800      13,800        N/A  N/A
37 UNC/ECU23-2 N/A        N/A  1,890       N/A  10,000  7,010
38 UNC/ECU23-3 N/A        8,750  N/A  N/A  N/A  N/A
39 UNC/PEM21-1 30,500     24,400        4,250       N/A  N/A  N/A
40 UNC/PEM23-1 N/A        N/A  32,150      22,750        30,000  40,005
41 UNC/ECS21-2 N/A        5,000  N/A  N/A  N/A  N/A
42 UNC/ECS23-1 N/A        827  N/A  N/A  N/A  N/A
43 UNC/ECS23-2 N/A        N/A  1,250       N/A  11,250  N/A
44 UNC/FSU23-1 N/A        N/A  2,075       N/A  12,000  6,675
45 UNC/FSU23-2 N/A        5,500  N/A  N/A  N/A  N/A
46 UNC/A&T23-1 N/A        N/A  N/A  N/A  5,335  N/A
47 UNC/A&T23-2 N/A        5,335  30,041.25   30,041.25     30,041.25       30,041.25
48 UNC/NCC23-1 N/A        2,000.42      8,866       N/A  N/A  N/A
49 UNC/NCC23-2 N/A        650  8,774.74    8,774.74      N/A  N/A
50 UNC/NCC23-3 N/A        2,975  4,675       N/A  N/A  N/A
51 UNC/NCS23-1 N/A        10,000        N/A  N/A  N/A  N/A
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 General Assembly Of North Carolina  Session 2025
1 UNC/NCS23-2 24,000  28,000       20,000       N/A  N/A  N/A
2 UNC/NCS23-3 N/A  18,900       12,600       12,600        12,600  N/A
3 UNC/NCS23-4 N/A  35,000       21,250       21,250        21,250  21,250
4 UNC/NCS23-5 5,000  N/A  35,000       67,000        80,000  13,000
5 UNC/NCS24-1 N/A  25,048.75    38,737.81    38,737.81     38,737.81        38,737.81
6 UNC/SSM23-2 3,000  4,800        11,719.02    11,719.02     N/A  N/A
7 UNC/SSM23-4 1,000  N/A  9,000        N/A  N/A  N/A
8 UNC/AVL23-1 N/A  11,767.5     5,230        N/A  N/A  N/A
9 UNC/CLT23-1 N/A  12,600       9,900        9,900  N/A  N/A
10 UNC/GBO23-1 N/A  8,470        13,310       N/A  N/A  N/A
11 UNC/SA23-1 22,950  10,200       N/A  N/A  N/A  N/A
12 UNC/SA23-2 N/A  N/A  2,450        8,575  N/A  13,475
13 UNC/WIL23-1 N/A  7,725        14,160       14,160        N/A  N/A
14 UNC/WIL23-2 N/A  5,200        14,240       N/A  N/A  N/A
15 UNC/WIL23-3 N/A  N/A  3,000        4,860  N/A  N/A
16 UNC/WIL23-4 N/A  7,500        16,875       16,875        16,875  16,875
17 UNC/WIL24-1 N/A  N/A  29,644       23,723        21,633  N/A
18 UNC/WCU23-1 N/A  6,260        37,410       37,410        37,410  37,410
19 UNC/WSS21-1 N/A  14,650       N/A  N/A  N/A  N/A
20 UNC/WSS23-1 N/A  N/A  N/A  N/A  1,080  5,140
21 UNC/WSS23-2 N/A  N/A  N/A  N/A  1,600  8,000
22 UNC/PBS23-1 N/A  17,325       9,075        9,075  9,075  N/A
23 UNC/BOG21-1 3,750  3,750        N/A  N/A  N/A  N/A
24 UNC/BOG23-1 N/A  105,000      N/A  N/A  N/A  N/A
25 UNC/BOG23-3 N/A  103,500      N/A  N/A  N/A  N/A
26 UNC/BOG25-1 1,000  1,000        1,000        1,000  N/A  N/A
27 WRC23-1     N/A  6,000        N/A  N/A  N/A  N/A
28
29 NON-GENERAL FUND/NON-SCIF CAPITAL PROJECT AUTHORIZATIONS
30SECTION 40.5. The General Assembly authorizes the following capital projects to
31 be funded with receipts or from other non-General Fund and non-State Capital and Infrastructure
32 Fund sources available to the appropriate department:
33Amount of Non-General Fund/Non-SCIF
34 Name of Project  Funding Authorized
35FY 2026-2027
36 Department of Natural and Cultural Resources
37     Jennette's Pier Aquarium–
38Solar Covered Walkway  $450,000
39     Roanoke Island Aquarium–
40Invertebrate Tank  $500,000
41     Pine Knoll Shores Aquarium–
42Invertebrate Tank  $2,000,000
43     NC Zoo–
44Elephant Shelters & Barn Bollard Repair  $2,500,000
45     State Historic Sites–
46House in the Horseshoe–
47Alston House Rehabilitation  $445,000
48 Department of Agriculture and Consumer Services
49     Umstead Research Station Beef Program Buildout  $2,500,000
50 Department of Military and Veterans Affairs
51     Eastern Carolina State Veterans Cemetery Expansion  $2,138,450
 House Bill 1146-First Edition  Page 151
 General Assembly Of North Carolina  Session 2025
1    Western Carolina State Veterans Cemetery Expansion  $1,954,150
2 Department of Public Safety
3    Alcoholic Beverage Control–
4ABC Warehouse Repairs  $1,150,000
5 Wildlife Resources Commission
6    Game Land Improvements Morganton Depot Dam  $1,086,881
7    D7 Storage Building  $400,000
8    Caswell Shooting Range Renovation  $3,850,000
9    Shooting Ranges Renovations  $4,000,000
10    Ransom Road Depot  $10,000,000
11    Land Acquisition  $30,000,000
12    WRC Game Land Improvements  $6,000,000
13    McKinney Lake Hatchery Building Replacement  $1,300,00
14    Table Rock Hatchery Residence  $640,000
15    New Tillery Office Depot  $1,500,000
16    Inland Fish District 2 Storage Building  $840,000
17    Butner Lab and Office Building  $1,900,000
18    Caswell Depot Expansion  $100,000
19
20 TOTAL AMOUNT OF NON-GENERAL
21   FUND/NON-SCIF CAPITAL PROJECTS
22   AUTHORIZED  $75,254,481
23
24 INCREASE DOLLAR THRESHOLDS FOR DEFINITION OF CAPITAL
25     IMPROVEMENT
26SECTION 40.6. G.S. 143C-1-1(d) reads as rewritten:
27 "§ 143C‑1‑1. Purpose and definitions.
28     …
29     (d)   Definitions. – The following definitions apply in this Chapter:
30…
31(5)     Capital improvement. – A term that includes real property acquisition, new
32construction or rehabilitation of existing facilities, and repairs and renovations
33over one hundred fifty thousand dollars ($100,000) ($150,000) in value.
34     …."
35
36 INCREASE DOLLAR THRESHOLD FOR FORMAL BIDDING OF CAPITAL
37     PROJECTS
38SECTION 40.7.(a) G.S. 143-129 reads as rewritten:
39 "§ 143‑129. Procedure for letting of public contracts.
40     (a)    Bidding Required. No construction or repair work requiring the estimated expenditure
41 of public money in an amount equal to or more than one million five hundred thousand dollars
42 ($500,000)($1,500,000) or purchase of apparatus, supplies, materials, or equipment requiring an
43 estimated expenditure of public money in an amount equal to or more than ninety thousand
44 dollars ($90,000) may be performed, nor may any contract be awarded therefor, by any board or
45 governing body of the State, or of any institution of the State government, or of any political
46 subdivision of the State, unless the provisions of this section are complied with; provided that
47 the University of North Carolina and its constituent institutions may award contracts for
48 construction or repair work that requires an estimated expenditure of less than one million five
49 hundred thousand dollars ($500,000) ($1,500,000) without complying with the provisions of this
50 section.
51     …."
 Page 152  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1SECTION 40.7.(b) G.S. 143-64.34 reads as rewritten:
2 "§ 143-64.34. Exemption of certain projects.
3     State capital improvement projects under the jurisdiction of the State Building Commission,
4 capital improvement projects of the University of North Carolina, and community college capital
5 improvement projects, where the estimated expenditure of public money is less than one million
6 five hundred thousand dollars ($500,000) ($1,500,000) are exempt from the provisions of this
7 article."
8SECTION 40.7.(c) G.S. 143-128(g) reads as rewritten:
9 "§ 143‑128. Requirements for certain building contracts.
10     …
11     (g)     Exceptions. – This section shall not apply to:
12(1)     The purchase and erection of prefabricated or relocatable buildings or portions
13thereof, except that portion of the work which must be performed at the
14construction site.
15(2)     The erection, construction, alteration, or repair of a building when the cost
16thereof is three hundred thousand dollars ($300,000) or less.
17(3)     The erection, construction, alteration, or repair of a building by The University
18of North Carolina or its constituent institutions when the cost thereof is five
19hundred thousand dollars ($500,000) or less.
20     …."
21
22 UNC CAPITAL PROJECT MANAGEMENT FLEXIBILITY
23SECTION 40.8. G.S. 143C-4-3.1(e) reads as rewritten:
24 "§ 143C-4-3.1. State Capital and Infrastructure Fund.
25     …
26     (e)    Use of Funds. – Monies in the Fund shall first be used to meet the debt service
27 obligations supported by the General Fund. In addition to meeting the debt service obligations
28 supported by the General Fund, monies in the Fund may be used for the following purposes:
29…
30(5)    Up to 5% of the funds allocated for projects at the University of North
31Carolina authorized under subsection (1) and (2) of this section may be used
32by the University of North Carolina and its constituent institutions to provide
33time-limited support for construction management personnel.
34     …."
35
36 DEPARTMENT OF ADULT CORRECTION CAPITAL PROJECT ALLOWABLE USE
37SECTION 40.9. Notwithstanding the Committee Report referenced in Section 40.2
38 of this act or any other provision of law to the contrary, the allocation to the Department of Adult
39 Correction for project code DAC 23-1 Stun Fencing, may also be used for fire alarm and fire
40 suppression systems replacement at eight facilities.
41
42 DEPARTMENT OF MILITARY AND VETERANS AFFAIRS CAPITAL PROJECTS
43     CONSULTATION REQUIREMENT
44SECTION 40.10. G.S. 143C-8-12 reads as rewritten:
45 "§ 143C-8-12. Capital improvement projects from sources other than the General Fund.
46     (a)   University Projects. – Notwithstanding any other provision of this Chapter, the Board
47 of Governors of The University of North Carolina may approve any of the following:
48(1)     Expenditures to plan a capital improvement project of The University of North
49Carolina, the planning for which is to be funded entirely with non‑General
50Fund and non‑State Capital and Infrastructure Fund monies.
 House Bill 1146-First Edition  Page 153
 General Assembly Of North Carolina  Session 2025
1(2)       Expenditures for a capital improvement project of The University of North
2Carolina that is to be funded and operated entirely with non‑General Fund and
3non‑State Capital and Infrastructure Fund monies.
4(3)      A change in the scope of any previously approved capital improvement project
5of The University of North Carolina provided that both the project and change
6in scope are funded entirely with non‑General Fund and non‑State Capital and
7Infrastructure Fund monies.
8     Nothing in this subsection shall be construed to prohibit expenditures for planning for a
9 project that has been authorized by an act of the General Assembly and funded with an allocation
10 from the State Capital and Infrastructure Fund.
11     (b)     Carryforward Funds. – For purposes of this section, the term "non‑General Fund and
12 non‑State Capital and Infrastructure Fund monies" includes funds carried forward from one fiscal
13 year to another pursuant to G.S. 116-30.3 and G.S. 116-30.3B. These funds shall only be used
14 for projects listed in G.S. 143C-8-13(a).
15     (c)     National Guard Projects. – Notwithstanding any other provision of this Chapter, the
16 North Carolina National Guard may approve expenditures for a capital project of the North
17 Carolina National Guard if (i) the project will be funded entirely with federal funds and (ii) any
18 operating costs associated with the project will be paid entirely with federal funds.
19     (d)     Department of Military and Veterans Affairs Projects - Notwithstanding any other
20 provision in this Chapter, the Department of Military and Veterans Affairs may approve
21 expenditures for a capital project of the Department if the project will be funded entirely with
22 non-General Funds.
23     (d)(e) Reporting. – The Board of Governors, the Department of Military and Veterans
24 Affairs, and the National Guard shall report any expenditure made pursuant to this section to the
25 Office of State Budget and Management and to the Joint Legislative Commission on
26 Governmental Operations."
27
28 PART XLI. TRANSPORTATION
29
30 CASH FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND APPROPRIATIONS
31SECTION 41.1.(a) Subsections (b) and (c) of Section 41.1 of S.L. 2023-134 are
32 repealed.
33SECTION 41.1.(b) The General Assembly authorizes and certifies anticipated
34 revenues for the Highway Fund as follows:
35     For Fiscal Year 2027-2028  $ 3,495 million
36     For Fiscal Year 2028-2029  $ 3,697 million
37     For Fiscal Year 2029-2030  $ 3,750 million
38     For Fiscal Year 2030-2031  $ 3,811 million
39     For Fiscal Year 2031-2032  $ 3,878 million.
40SECTION 41.1.(c) The General Assembly authorizes and certifies anticipated
41 revenues for the Highway Trust Fund as follows:
42     For Fiscal Year 2027-2028  $ 2,648 million
43     For Fiscal Year 2028-2029  $ 2,750 million
44     For Fiscal Year 2029-2030  $ 2,815 million
45     For Fiscal Year 2030-2031  $ 2,893 million
46     For Fiscal Year 2031-2032  $ 2,973 million.
47SECTION 41.1.(d) The Department of Transportation, in collaboration with the
48 Office of State Budget and Management, shall develop a 10-year revenue forecast. The 10-year
49 revenue forecast developed under this subsection shall be used (i) to develop the five-year cash
50 flow estimates included in the biennial budgets, (ii) to develop the Strategic Transportation
 Page 154  House Bill 1146-First Edition
 General Assembly Of North Carolina  Session 2025
1 Improvement Program, and (iii) by the Department of the State Treasurer to compute
2 transportation debt capacity.
3
4 CAPITAL, REPAIRS, AND RENOVATIONS
5SECTION 41.2.(a) For the 2026-27 fiscal year, the funds appropriated in this act
6 from the Highway Fund to the Department of Transportation for capital, repairs, and renovations
7 shall be used as follows:
8
9    Capital – Highway Fund  FY 2026-27
10    Jones and Wake County Maintenance Yards Relocation  $14,100,000
11    DMV High Need Driver License Office Expansion / Replacement  $9,513,813
12
13SECTION 41.2.(b) The Governor and General Assembly anticipate appropriating
14 the following additional funds in the 2027-29 fiscal biennium to complete the projects set out in
15 subsection (a) of this section:
16
17    Capital – Highway Fund  FY 2027-28 FY 2028-29
18    Jones and Wake County Maintenance Yards Relocation $58,500,000 $19,500,000
19    DMV High Need Driver License Office
20    Expansion / Replacement  $9,513,813
21
22 TRANSPORTATION EMERGENCY RESERVE
23SECTION 41.3.(a) Section 1H.1 of S.L. 2024-57 reads as rewritten:
24     "SECTION 1H.1. Of the funds appropriated to the Department of Transportation, the sum
25 of one hundred twenty-five million dollars ($125,000,000) from the Transportation Emergency
26 Reserve shall be used for repair and reconstruction of transportation infrastructure in the affected
27 area. Notwithstanding G.S. 136-44.2E(b) and G.S. 136-44.2E(f)(1), in the discretion of the
28 Secretary of Transportation, the required transfer of funds from the Highway Fund to the
29 Transportation Reserve may be delayed or suspended until July 30, 2027December 31, 2028. No
30 other provision of G.S. 136-44.2E is affected by this section."
31SECTION 41.3.(b) Section 1B.1.(b) of S.L. 2025-92 is repealed.
32
33 AMEND SAFETY INSPECTION FEE
34SECTION 41.4. G.S. 20-183.7 reads as rewritten:
35 "§ 20-183.7. Fees for performing an inspection and issuing an electronic inspection
36authorization to a vehicle; use of civil penalties.
37     (a)     Fee Amount. – When a fee applies to an inspection of a vehicle or the issuance of an
38 electronic inspection authorization, the fee must be collected. The following fees apply to an
39 inspection of a vehicle and the issuance of an electronic inspection authorization:
40
41    Type  Inspection  Authorization
42    Safety Only  $12.75  $ .85$2.00
43    Emissions and Safety  23.75  6.25.
44
45     The fee for performing an inspection of a vehicle applies when an inspection is performed,
46 regardless of whether the vehicle passes the inspection. The fee for an electronic inspection
47 authorization applies when an electronic inspection authorization is issued to a vehicle. The fee
48 for inspecting after-factory tinted windows shall be ten dollars ($10.00), and the fee applies only
49 to an inspection performed with a light meter after a safety inspection mechanic determined that
50 the window had after-factory tint. A safety inspection mechanic shall not inspect an after-factory
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1 tinted window of a vehicle for which the Division has issued a medical exception permit pursuant
2 to G.S. 20-127(f).
3     A vehicle that is inspected at an inspection station and fails the inspection is entitled to be
4 reinspected at the same station at any time within 60 days of the failed inspection without paying
5 another inspection fee.
6     The inspection fee for an emissions and safety inspection set out in this subsection is the
7 maximum amount that an inspection station or an inspection mechanic may charge for an
8 emissions and safety inspection of a vehicle. An inspection station or an inspection mechanic
9 may charge the maximum amount or any lesser amount for an emissions and safety inspection
10 of a vehicle. The inspection fee for a safety only inspection set out in this subsection may not be
11 increased or decreased. The authorization fees set out in this subsection may not be increased or
12 decreased.
13     (b)     Self-Inspector. – The fee for an inspection does not apply to an inspection performed
14 by a self-inspector. The fee for issuing an electronic inspection authorization to a vehicle applies
15 to an inspection performed by a self-inspector.
16     (c)     Fee Distribution. – Fees collected for electronic inspection authorizations are payable
17 to the Division of Motor Vehicles. The amount of each fee listed in the table below shall be
18 credited to the Highway Fund, the Volunteer Rescue/EMS Fund established in G.S. 58-87-5, the
19 Rescue Squad Workers' Relief Fund established in G.S. 58-88-5, and the Division of Air Quality
20 of the Department of Environmental Quality:
21     Recipient  Safety Only Electronic  Emissions and Safety
22Authorization  Electronic Authorization
23     Highway Fund  .551.43  5.30
24     Volunteer Rescue/EMS Fund  .18  .18
25     Rescue Squad Workers' Relief Fund  .12  .12
26     Division of Air Quality  .00 .27  .65
27     …"
28
29 FERRY CAPITAL SPECIAL FUND
30SECTION 41.5. G.S. 136.82.(d) reads as rewritten:
31     "(d) Use of Toll Proceeds. – The Department of Transportation shall deposit the proceeds
32 from tolls collected on North Carolina Ferry System routes and route-generated receipts
33 authorized under subsection (f) of this section to fund codes within the Ferry Capital Special
34 Fund for each of the Highway Divisions in which system terminals are located and fares are
35 earned. For the purposes of this subsection, fares are earned based on the terminals from which
36 a passenger trip originates and terminates. Commuter pass receipts shall be deposited
37 proportionately to each fund code based on the distribution of trips originating and terminating
38 in each Highway Division. The proceeds deposited to each fund code shall be used exclusively
39 for prioritized North Carolina Ferry System ferry passenger vessel replacement projects in the
40 Division in which the proceeds are earned. Proceeds deposited to each fund code may be used to
41 fund ferry passenger vessel replacement projects or supplement funds allocated for ferry
42 passenger vessel replacement projects approved in the Transportation Improvement Program, to
43 fund vessel maintenance related to U.S. Coast Guard required Credit Dry Docks, and to fund
44 vessel system retrofits and upgrades to extend the serviceable life of a vessel."
45
46 AUTHORIZE CARRYFORWARD OF FERRY FUNDS
47SECTION 41.7. G.S. 136.82.(h) reads as rewritten:
48     "Transfer of Funds. – Notwithstanding G.S. 136-44.2(f), G.S. 136-44.2(f1), and any other
49 provision of law to the contrary, beginning with the 2021-2022 fiscal year, no later than 45 days
50 after the first day of the fiscal year, the Department of Transportation shall transfer from the
51 Highway Fund to the Ferry Systemwide fund code within the Ferry Capital Special Fund all
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1 unexpended and unencumbered funds appropriated to the Ferry Division's budget from the prior
2 fiscal year. Any funds categorized as unencumbered shall be deposited in the Ferry Systemwide
3 fund code. Any funds categorized as encumbered shall be deposited into a specified fund code
4 for encumbrances."
5
6 ELIGIBLE USES OF FERRY FEDERAL FORMULA FUNDS
7SECTION 41.8. G.S. 136.189.11.(c) reads as rewritten:
8     "(c) Funds With Alternate Criteria. – The following federal program activities shall be
9 included in the applicable category of the Transportation Investment Strategy Formula set forth
10 in subsection (d) of this section but shall not be subject to the prioritization criteria set forth in
11 that subsection:
12     …
13(6)     Ferry boat replacements and preservation."
14
15 AUTHORIZE ELECTRONIC PAYMENT TRANSACTION FEES FOR FERRIES
16SECTION 41.9. G.S. 136.82 is amended by adding a new subsection to read:
17     "(b3) Transaction Fee Authorized for Electronic Payment. – When the Department of
18 Transportation accepts electronic payment, as that term is defined in G.S. 147-86.20, for any toll
19 or fee authorized under this Article, thr Department may add a transaction fee to each electronic
20 payment transaction to offset the service charge the Department pays for electronic payment
21 service. The transaction fee authorized under this subsection shall not exceed two percent (2%)
22 of the electronic payment."
23
24 REALLOCATE SOUTH DOCK STACKING LANES APPROPRIATION
25SECTION 41.10 Notwithstanding the Committee Report described in Section 43.2
26 of S.L. 2023-134 or any other provision of law, the sum of one million five hundred thousand
27 dollars ($1,500,000) in nonrecurring funds for the 2023-2024 fiscal year allocated to build
28 stacking lanes and a concrete barrier on NC 12 at the South Dock Ferry Terminal on Ocracoke
29 shall instead be used for ramp rehabilitation on the South Dock Ferry Terminal to address safety
30 and reliability concerns.
31
32 PART XLII. FINANCE PROVISIONS
33
34 MAINTAIN PERSONAL INCOME TAX RATE
35SECTION 42.1.(a) G.S. 105-153.7(a) reads as rewritten:
36 "§ 105-153.7. Individual income tax imposed.
37     (a)    Tax. – A tax is imposed for each taxable year on the North Carolina taxable income
38 of every individual. The tax shall be levied, collected, and paid annually. Except as otherwise
39 provided in subsection (a1) of this section, tThe tax is a percentage of the taxpayer's North
40 Carolina taxable income computed as follows:
41Taxable Years Beginning  Tax
42In 2022  4.99%
43In 2023  4.75%
44In 2024  4.5%
45In 2025  4.25%
46After 2025  3.99%."
47SECTION 42.1.(b) G.S. 105-153.7.(a1) is repealed.
48SECTION 42.1.(c) This section is effective for taxable years beginning on or after
49 January 1, 2026.
50
51 MAINTAIN COMPETITIVE CORPORATE INCOME TAX RATE
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1SECTION 42.2.(a) G.S. 105-130.3 reads as rewritten:
2 "§ 105-130.3. Corporations
3     A tax is imposed on the State net income of every C Corporation doing business in this State.
4     An S Corporation is not subject to the tax levied in this section. The tax is a percentage of the
5 taxpayer's State net income computed as follows:
6Taxable Years Beginning  Tax
7In 2025  2.25%
8In 2026 After 2025  2%2%."
9In 2028  1%
10After 2029  0%.
11SECTION 42.2.(b) This section is effective for taxable years beginning on or after
12 January 1, 2026.
13
14 ENACT BACK TO SCHOOL SALES AND USE TAX HOLIDAY
15SECTION 42.3.(a) Part 3 of Article 5 of Chapter 105 of the General Statutes is
16 amended by adding a new section to read:
17 "§ 105-164.13G. Educational sales and use tax holiday.
18     (a)     The state and local taxes imposed by this Article do not apply to the following items
19 of tangible personal property if sold between 12:01 AM on the first Friday of August and the
20 11:59PM the following Sunday:
21(1)      Clothing with a sales price of one hundred dollars ($100.00) or less per item.
22(2)      School supplies with a sales price of one hundred dollars ($100.00) or less per
23item.
24(3)      Computers with a sales price of seven hundred and fifty dollars ($750) or less
25per item.
26(3a) Computer supplies with a sales price of two hundred fifty dollars ($250.00) or
27less per item.
28     (b)     The exemption allowed by this section does not apply to the following:
29(1)      Sales of clothing accessories or equipment.
30(2)      Sales of protective equipment.
31(3)      Sales of furniture.
32(4)      Sales of an item for use in a trade or business.
33(5)      Rentals.
34     (c)     Hold Harmless. – The purpose of this section is to hold county and municipal
35 governments harmless for the revenue losses resulting from the sales tax holiday established in
36 this section (a) of this section. The amount each county may receive is determined as follows:
37(1)      Distribution Amount. – The distribution amount is nine million three hundred
38thousand ($9,300,000) for the fiscal year beginning July 1, 2026. For fiscal
39years beginning on or after July 1, 2027, the distribution amount is equal to
40the amount for the preceding year multiplied by 3.5% and rounded to the
41nearest one hundred thousand dollars ($100,000).
42(2)      County Allocation. – The Secretary shall, in October of each fiscal year,
43allocate to each taxing county the distribution amount on a per capita basis as
44calculated in G.S. 105-486(a). For the purposes of this section, “taxing
45county” means a county that levies the first one-half cent (1/2¢) local sales
46and use tax under Article 40 of this Chapter."
47SECTION 42.3(b) This section is effective for fiscal years beginning on or after July
48 1, 2026.
49
50 ENACT WORKING FAMILIES TAX CREDIT
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1SECTION 42.4.(a) G.S. 105-151.31 is reenacted as it existed immediately before its
2 expiration and reads as rewritten:
3 "§ 105-151.31. Earned IncomeWorking Families Tax Credit
4     (a)    Credit. An individual who claims for the taxable year an earned income tax credit
5 under section 32 of the Code is allowed a credit against the tax imposed by this Part equal to a
6 percentage ten percent (10%) of the amount of credit the individual qualified for under section
7 32 of the Code. A nonresident or part-year resident who claims the credit allowed by this section
8 must reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105
9 134.5(b) or (c)G.S. 105.153.4(b) or (c), as appropriate. The percentage is as follows:
10(1)  For taxable year 2013, four and one-half percent (4.5%).
11(2)  For all other taxable years, five percent (5%).
12     (b)    Credit Refundable. If the credit allowed by this section exceeds the amount of tax
13 imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary
14 must refund the excess to the taxpayer. The refundable excess is governed by the provisions
15 governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. Section
16 3507 of the Code, Advance Payment of Earned Income Credit, does not apply to the credit
17 allowed by this section. In computing the amount of tax against which multiple credits are
18 allowed, nonrefundable credits are subtracted before refundable credits.
19     (c)    Sunset. – this section is repealed for taxable years beginning on or after January 1,
20 2014."
21SECTION 42.4.(b) This section is effective for taxable years beginning on or after
22 January 1, 2026.
23
24 REENACT MODIFIED CHILD AND DEPENDENT CARE TAX CREDIT
25SECTION 42.5.(a) G.S. 105-151.11 is reenacted as it existed immediately before its
26 expiration, is recodified as G.S. 105-153.11, and reads as rewritten:
27 "§ 105-151.11. Credit for child care and certain employment-related expenses.
28     (a)     Credit. – A person who is allowed a credit against federal income tax for a percentage
29 of employment-related expenses under section 21 of the Code shall be allowed as a credit against
30 the tax imposed by this Part an amount equal to the applicable percentage thirty percent (30%)
31 of the amount of the credit provided for in Section 21 of the Code Code, except as reduced by
32 the percentage reduction in subsection (c), which is claimed and allowed pursuant to the Internal
33 Revenue Code. To claim the credit allowed by this section, the taxpayer must provide with the
34 tax return the information required by the Secretary of Revenue.
35     (a1) Applicable Percentage. - For employment-related expenses that are incurred only with
36 respect to one or more dependents who are seven years old or older and are not physically or
37 mentally incapable of caring for themselves, the applicable percentage is the appropriate
38 percentage in the column labeled "Percentage A" in the table below, based on the taxpayer's
39 adjusted gross income determined under the Code. For employment-related expenses with
40 respect to any other qualifying individual, the applicable percentage is the appropriate percentage
41 in the column labeled "Percentage B" in the table below, based on the taxpayer's adjusted gross
42 income determined under the Code.
43     Filing Status       Adjusted Gross Income  Percentage A Percentage B
44     Head of  Up to $20,000  9%  13%
45     Household
46Over $20,000  8%  11.5%
47up to $32,000
48
49Over $32,000  7%  10%
50
51    Surviving
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1    Spouse or
2    Joint Return        Up to $25,000  9%  13%
3
4Over $25,000
5up to $40,000  8%  11.5%
6
7Over $40,000  7%  10%
8
9    Single  Up to $15,000  9%  13%
10
11Over $15,000
12up to $24,000  8%  11.5%
13
14Over $24,000  7%  10%
15
16    Married
17    Filing
18    Separately  Up to $12,500  9%  13%
19
20Over $12,500
21up to $20,000  8%  11.5%
22
23Over $20,000  7%  10%
24     (b)     Employment Related Expenses. – The amount of employment-related expenses for
25 which a credit may be claimed may not exceed three thousand dollars ($3,000) if the taxpayer's
26 household includes one qualifying individual, as defined in section 21(b)(1) of the Code, and
27 may not exceed six thousand dollars ($6,000) if the taxpayer's household includes more than one
28 qualifying individual. The amount of employment-related expenses for which a credit may be
29 claimed is reduced by the amount of employer-provided dependent care assistance excluded from
30 gross income.
31     (c)     Phaseout. – The credit allowed by this section shall be reduced by a percentage listed
32 below, rounded to the nearest percentage point, based on the taxpayer’s adjusted gross income
33 as calculated under the Code:
34
35    Filling Status  For AGI Exceeding  Percentage Reduction
36    Married, filing jointly      $150,000  The lesser of 100% or
37[(Taxpayer’s AGI - $150,000) / $50,000]
38     Head of Household  $112,500  The lesser of 100% or
39[(Taxpayer’s AGI - $112,500) / $37,500]
40     Single or Married,  The lesser of 100% or
41     Filing Separately $75,000  [(Taxpayer’s AGI - $75,000) / $25,000]
42     (c)(d) Limitations. – A nonresident or part-year resident who claims the credit allowed by
43 this section shall reduce the amount of the credit by multiplying it by the fraction calculated under
44 G.S. 105-134.5(b) or (c), G.S. 105-153.4(b) or (c), as appropriate. No credit shall be allowed
45 under this section for amounts deducted in calculating North Carolina taxable income. The credit
46 allowed by this section may not exceed the amount of tax imposed by this Part for the taxable
47 year reduced by the sum of all credits allowable, except for payments of tax made by or on behalf
48 of the taxpayer.
49     (e)     Credit Refundable. – If the credit allowed by this section exceeds the amount of tax
50 imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary
51 must refund the excess to the taxpayer. The refundable excess is governed by the provisions
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1 governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. In
2 computing the amount of tax against which multiple credits are allowed, nonrefundable credits
3 are subtracted before refundable credits."
4SECTION 42.5.(b) This section is effective for taxable years beginning on or after
5 January 1, 2026.
6
7 INCREASE THE STANDARD DEDUCTION
8SECTION 42.6.(a) G.S. 105-153.5(a)(1) reads as rewritten:
9"(1) Standard deduction amount. – The standard deduction amount is zero for a
10person who is not eligible for a standard deduction under section 63 of the
11Code. For all other taxpayers, the standard deduction amount is equal to the
12amount listed in the table below based on the taxpayer's filing status:
13Filing Status  Standard Deduction
14Married, filing jointly/surviving spouse  $25,500$26,500
15Head of Household  19,12519,875
16Single  12,75013,250
17Married, filing separately  12,750.13,250. "
18SECTION 42.6.(b) This section is effective for taxable years beginning on or after
19 January 1, 2027.
20
21 PART XLIII. MISCELLANEOUS
22
23 STATE BUDGET ACT APPLIES
24SECTION 43.1. The provisions of the State Budget Act, Chapter 143C of the
25 General Statutes, are reenacted and shall remain in full force and effect and are incorporated in
26 this act by reference.
27
28 APPROPRIATIONS LIMITATIONS AND DIRECTIONS APPLY
29SECTION 43.2. Except where expressly repealed or amended by this act, the
30 provisions of any legislation enacted during the 2025 Regular Session of the General Assembly
31 affecting the State budget shall remain in effect.
32
33 MOST TEXT APPLIES ONLY TO THE 2026-2027 FISCAL YEAR
34SECTION 43.3. Except for statutory changes or other provisions that clearly indicate
35 an intention to have effects beyond the 2026-2027 fiscal year, the textual provisions of this act
36 apply only to funds appropriated for, and activities occurring during, the 2026-2027 fiscal
37 biennium.
38
39 EFFECT OF HEADINGS
40SECTION 43.4. The headings to the Parts, Subparts, and sections of this act are a
41 convenience to the reader and are for reference only. The headings do not expand, limit, or define
42 the text of this act, except for effective dates referring to a Part or Subpart.
43
44 SEVERABILITY CLAUSE
45SECTION 43.5. If any section or provision of this act is declared unconstitutional
46 or invalid by the courts, it does not affect the validity of this act as a whole or any part other than
47 the part so declared to be unconstitutional or invalid.
48
49 EFFECTIVE DATE
50SECTION 43.6. Except as otherwise provided, this act is effective July 1, 2026.
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