Revive High-Need Retired Teachers Program.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 3
HOUSE BILL 106
Committee Substitute Favorable 4/1/25
Committee Substitute #2 Favorable 4/16/25

Short Title: Revive High-Need Retired Teachers Program. (Public)
Sponsors:
Referred to:
February 13, 2025
*H106-v-3*
A BILL TO BE ENTITLED 1
AN ACT TO REVIVE AND EXPAND THE PROGRAM ALLOWING RETIRED 2
EDUCATORS TO RETURN TO WORK IN HIGH-NEED SCHOOLS. 3
The General Assembly of North Carolina enacts: 4
SECTION 1.(a) G.S. 115C-302.4 is reenacted as it existed immediately prior to its 5
expiration. 6
SECTION 1.(b) G.S. 115C-302.4, as reenacted by this act, reads as rewritten: 7
"§ 115C-302.4. High-need retired teachers. 8
(a) Definitions. – The following definitions apply in this section: 9
(1) High-need retired teacher. – A beneficiary of the Teachers' and State 10
Employees' Retirement System of North Carolina who meets both of the 11
following requirements: 12
a. Retired on or before February 1, 2019, on or before May 1, 2025, after 13
attaining (i) the age of at least 65 with five years of creditable service, 14
(ii) the age of at least 60 with 25 years of creditable service, or (iii) 30 15
years of creditable service. 16
b. Is reemployed by a local board of education the governing body of a 17
public school unit to provide classroom instruction as a teacher, as 18
defined in G.S. 135-1(25), employed on an annual contract to provide 19
classroom instruction exclusively at a high-need school or schools. 20
(2) High-need school. – A school that, at any point on or after July 1, 2017, meets 21
one of the following criteria: 22
a. Is a Title I school. As used in this sub-subdivision, a Title I school is a 23
school identified under Part A of Title I of the Elementary and 24
Secondary Education Act of 1965, as amended. 25
b. Receives an overall school performance grade of D or F, as calculated 26
by the State Board of Education pursuant to G.S. 115C-83.15(d). 27
(3) STEM. – Science, technology, engineering, and mathematics. 28
(b) Salary Level. – A high-need retired teacher shall be compensated as follows: 29
(1) Except as provided in subdivision (2) of t his subsection, a high -need retired 30
teacher shall be paid on the first step of the teacher salary schedule. 31
(2) If a high -need retired teacher serves as a teacher in any of the following 32
licensure areas, he or she shall be paid on the sixth step of the tea cher salary 33
schedule: 34
a. STEM. 35
General Assembly Of North Carolina Session 2025
Page 2 House Bill 106-Third Edition
b. Special education. 1
(c) No State Salary Supplements or Increase in Salary. – A high-need retired teacher shall 2
not receive any State salary supplement or State bonus. A high -need retired teacher shall not 3
move beyond the salary steps prescribed by subsection (b) of this section, regardless of the length 4
of time spent as a high-need retired teacher. 5
(d) Local Salary Supplement. – A high-need retired teacher reemployed by a local board 6
of education shall receive any local salary supplements that are given to employees of the local 7
board of education. 8
(e) Term of Contract. – A contract between the local board of education governing body 9
of a public school unit and a high-need retired teacher shall be for a term of no more than o ne 10
school year. 11
(f) Identification of STEM and Special Education Licensure Areas. – The Superintendent 12
of Public Instruction shall identify and provide to each local school administrative unit public 13
school unit a list of STEM and special education licensu re areas that qualify for reemployment 14
pursuant to subdivision (b)(2) of this section. Local school administrative units shall make the 15
list of STEM and special education licensure areas available to high-need retired teachers." 16
SECTION 2.(a) G.S. 135-3(a)(8) is amended by adding a new sub -subdivision to 17
read: 18
"i. Notwithstanding sub -subdivisions c. and d. of this subdivision, the 19
computation of postretirement earnings under this subdivision shall 20
not include earnings while a beneficiary is employed as a high-need 21
retired teacher as defined under G.S. 115C-302.4(a) and the 22
beneficiary shall not be restored to service as a teacher or employee. 23
The Department of Public Instruction shall certify to the Retirement 24
System that a beneficiary is employed by the g overning body of a 25
public school unit as a high-need retired teacher . No later than 26
September 15 annually, a public school unit shall inform the 27
Retirement System if it will not employ any high-need retired teachers 28
for that school year. The retirement allowance of a beneficiary who 29
retired on an early or service retirement shall not cease due to 30
reemployment as a high-need retired teacher. A beneficiary 31
reemployed as a high-need retired teacher is not entitled to any benefits 32
otherwise provided under this Chapter as a result of this period of 33
employment." 34
SECTION 2.(b) G.S. 135-3(a)(8)c1. reads as rewritten: 35
"c1. Within 90 days of the end of each month in which a beneficiary is 36
reemployed under the provisions of sub -subdivision c. or i. of this 37
subdivision, each employer shall provide a report for that month on 38
each reemployed beneficiary, including the terms of the 39
reemployment, the date of the reemployment, and the amount of the 40
monthly compensation. If the required report is not received within the 41
required 90 days, then the Board may do any or all of the following: 42
…." 43
SECTION 2.(c) G.S. 135-3(d) reads as rewritten: 44
"(d) If a beneficiary who retired on an early or service retirement allowance under this 45
Chapter is reemployed by, or ot herwise engaged to perform services for, an employer 46
participating in the Retirement System on a part-time, temporary, interim, or on a fee for service 47
basis, whether contractual or otherwise at any time during (i) the six months immediately 48
following the effective date of retirement or (ii) if the beneficiary is a high -need retired teacher 49
as defined under G.S. 115C-302.4(a), the two months immediately following the effective date 50
General Assembly Of North Carolina Session 2025
House Bill 106-Third Edition Page 3
of retirement, then the option of the following subdivisions that has the le sser financial impact 1
on the member, as determined by the Retirement System, shall be applied: 2
…." 3
SECTION 3.(a) G.S. 135-1(10) reads as rewritten: 4
"(10) "Employee" shall mean all full-time employees, agents or officers of the State 5
of North Carolina or any of its departments, bureaus and institutions other than 6
educational, whether such employees are elected, appointed or employed: 7
Provided that the term "employee" shall not include employees of the 8
University of North Carolina Health Care System who are not eligible for 9
participation under G.S. 135-5.6, employees of the East Carolina University 10
School of Medicine or Dental School of Medicine who are not eligible for 11
participation under G.S. 135-5.7, any person who is a member of the 12
Consolidated Judicial Retirement System, any member of the General 13
Assembly or Assembly, any high-need retired teacher as defined under 14
G.S. 115C-302.4(a), or any part -time or temporary employee. 15
Notwithstanding any other provision of law, "employee" shall include all 16
employees of the General Assembly except participants in the Legislative 17
Intern Program, pages, and beneficiaries in receipt of a monthly retirement 18
allowance under this Chapter who are reemployed on a temporary basis. 19
"Employee" also includes any participant whose employment is interrupted 20
by reason of service in the Uniformed Services, as that term is defined in 21
section 4303(16) of the Uniformed Services Employment and Reemployment 22
Rights Act, Public Law 103 -353, if that participant was an employee at the 23
time of the interruption; if the participant does not return immediately after 24
that service to employment with a covered employer in this System, then the 25
participant shall be deemed "in service" until the date on which the participant 26
was first eligible to be sep arated or released from his or her involuntary 27
military service. In all cases of doubt, the Board of Trustees shall determine 28
whether any person is an employee as defined in this Chapter. "Employee" 29
shall also mean every full -time civilian employee of the North Carolina 30
National Guard who is employed pursuant to section 709 of Title 32 of the 31
United States Code and paid from federal appropriated funds, but held by the 32
federal authorities not to be a federal employee: Provided, however, that the 33
authority or agency paying the salaries of such employees shall deduct or 34
cause to be deducted from each employee's salary the employee's contribution 35
in accordance with applicable provisions of G.S. 135-8 and remit the same, 36
either directly or indirectly, to the Retirement System; coverage of employees 37
described in this sentence shall commence upon the first day of the calendar 38
year or fiscal year, whichever is earlier, next following the date of execution 39
of an agreement between the Secretary of Defense of the United States and 40
the Adjutant General of the State acting for the Governor in behalf of the State, 41
but no credit shall be allowed pursuant to this sentence for any service 42
previously rendered in the above-described capacity as a civilian employee of 43
the North C arolina National Guard: Provided, further, that the Adjutant 44
General, in the Adjutant General's discretion, may terminate the Retirement 45
System coverage of the above -described North Carolina National Guard 46
employees if a federal retirement system is establ ished for such employees 47
and the Adjutant General elects to secure coverage of such employees under 48
such federal retirement system. Any full-time civilian employee of the North 49
Carolina National Guard described above who is now or hereafter may 50
become a member of the Retirement System may secure Retirement System 51
General Assembly Of North Carolina Session 2025
Page 4 House Bill 106-Third Edition
credit for such service as a North Carolina National Guard civilian employee 1
for the period preceding the time when such employees became eligible for 2
Retirement System coverage by paying to the Re tirement System an amount 3
equal to that which would have constituted employee contributions if the 4
employee had been a member during the years of ineligibility, plus interest. 5
Employees of State agencies, departments, institutions, boards, and 6
commissions who are employed in permanent job positions on a recurring 7
basis must work at least 30 hours per week for nine or more months per 8
calendar year in order to be covered by the provisions of this subdivision. On 9
and after August 1, 2001, a person who is a non immigrant alien and who 10
otherwise meets the requirements of this subdivision shall not be excluded 11
from the definition of "employee" solely because the person holds a temporary 12
or time-limited visa." 13
SECTION 3.(b) G.S. 135-1(20) reads as rewritten: 14
"(20) "Retirement" under this Chapter, except as otherwise provided, means the 15
commencement of monthly retirement benefits along with termination of 16
employment and the complete separation from active service with no intent or 17
agreement, express or implied, to re turn to service. A retirement allowance 18
under the provisions of this Chapter may only be granted upon retirement of 19
a member. In order for a member's retirement to become effective in any 20
month, the member must perform no work for an employer, including 21
part-time, temporary, substitute, or contractor work, at any time during the six 22
months immediately following the effective date of retirement. retirement, 23
except that in the case of a high -need retired teacher, as defined under 24
G.S. 115C-302.4(a), the period of separation required is two months. A 25
member who is a full -time faculty member of The University of North 26
Carolina may effect a retirement allowance under this Chapter, 27
notwithstanding the six -month requirement above, provided the member 28
immediately enters the University's Phased Retirement Program for Tenured 29
Faculty as that program existed on May 25, 2011. For purposes of this 30
subdivision, all of the following shall not be considered service or work: 31
…." 32
SECTION 3.(c) G.S. 135-48.40(b)(1a) reads as rewritten: 33
"(1a) All retirees who (i) are meet all of the following criteria: 34
a. The retiree is employed by an employing unit that elects to be covered 35
by this subdivision, (ii) do subdivision. 36
b. The retiree does not qualify for coverage under subdivision (1) of this 37
subsection, and (iii) are subsection. 38
c. The retiree is either a high-need retired teacher under G.S. 115C-302.4 39
or is determined to be "full -time" by their employing unit in 40
accordance with section 4980H of the Internal Revenue Code and the 41
applicable regulations, as amended. 42
The employing unit shall pay the employer premiums for retirees who enroll 43
under this subdivision." 44
SECTION 3.(d) G.S. 135-106(b) reads as rewritten: 45
"(b) After the commencemen t of benefits under this section, the benefits payable under 46
the terms of this section during the first 36 months of the long -term disability period shall be 47
equal to sixty-five percent (65%) of 1/12th of the annual base rate of compensation last payable 48
to the participant or beneficiary prior to the beginning of the short-term disability period as may 49
be adjusted for percentage increases as provided under G.S. 135-108, plus sixty -five percent 50
(65%) of 1/12th of the annual longevity payment to which the par ticipant or beneficiary would 51
General Assembly Of North Carolina Session 2025
House Bill 106-Third Edition Page 5
be eligible, to a maximum of three thousand nine hundred dollars ($3,900) per month reduced by 1
any primary Social Security disability benefits to which the beneficiary may be entitled, effective 2
as of the first of the month following the month of initial entitlement, and by monthly payments 3
for Workers' Compensation to which the participant or beneficiary may be entitled. When 4
primary Social Security disability benefits are increased by cost -of-living adjustments, the 5
increased reduction shall be applied in the first month following the month in which the member 6
becomes entitled to the increased Social Security benefit. The monthly benefit shall be further 7
reduced by the amount of any monthly payments from the federal Department of Veterans 8
Affairs, any other federal agency or any payments made under the provisions of G.S. 127A-108, 9
to which the participant or beneficiary may be entitled on account of the same disability. 10
Provided, in any event, the benefit payable shall be no le ss than ten dollars ($10.00) a month. 11
However, a disabled participant may elect to receive any salary continuation as provided in 12
G.S. 135-104 in lieu of long-term disability benefits; provided such election shall not extend the 13
first 36 consecutive calend ar months of the long -term disability period. An election to receive 14
any salary continuation for any part of any given day shall be in lieu of any long -term benefit 15
payable for that day, provided further, any lump -sum payout for vacation leave shall be tre ated 16
as if the beneficiary or participant had exhausted the leave and shall be in lieu of any long -term 17
benefit otherwise payable. Provided that, in any event, a beneficiary's benefit shall be reduced 18
during the first 36 months of the long-term disability period by an amount, as determined by the 19
Board of Trustees, equal to a primary Social Security retirement benefit to which the beneficiary 20
might be entitled, effective as of the first of the month following the month of initial entitlement. 21
After 36 months of long-term disability, no further benefits are payable under the terms of 22
this section unless the member has been approved and is in receipt of primary Social Security 23
disability benefits. In that case the benefits payable shall be equal to sixty-five percent (65%) of 24
1/12th of the annual base rate of compensation last payable to the participant or beneficiary prior 25
to the beginning of the short -term disability period as may be adjusted for percentage increases 26
as provided under G.S. 135-108, plus sixty-five percent (65%) of 1/12th of the annual longevity 27
payment to which the participant or beneficiary would be eligible, to a maximum of three 28
thousand nine hundred dollars ($3,900) per month reduced by the primary Social Security 29
disability benefits to which the beneficiary may be entitled, effective as of the first of the month 30
following the month of initial entitlement, and by monthly payments for Workers' Compensation 31
to which the participant or beneficiary may be entitled. When primary Social Security disability 32
benefits are increased by cost -of-living adjustments, the increased reduction shall be applied in 33
the first month following the month in which the member becomes entitled to the increased Social 34
Security benefit. The monthly benefit shall be fur ther reduced by the amount of any monthly 35
payments from the federal Department of Veterans Affairs, for payments from any other federal 36
agency, or for any payments made under the provisions of G.S. 127A-108, to which the 37
participant or beneficiary may be e ntitled on account of the same disability. Provided, in any 38
event, the benefit payable shall be no less than ten dollars ($10.00) a month. 39
Notwithstanding the foregoing, the long -term disability benefit is payable so long as the 40
beneficiary is disabled and is in receipt of a primary Social Security disability benefit until the 41
earliest date at which the beneficiary is eligible for an unreduced service retirement allowance 42
from the Retirement System, at which time the beneficiary would receive a retirement allowance 43
calculated on the basis of the beneficiary's average final compensation at the time of disability as 44
adjusted to reflect compensation increases subsequent to the time of disability and the creditable 45
service accumulated by the beneficiary, including creditable service while in receipt of benefits 46
under the Plan. In the event the beneficiary has not been approved and is not in receipt of a 47
primary Social Security disability benefit, the long -term disability benefit shall cease after the 48
first 36 mon ths of the long -term disability period. When such a long -term disability recipient 49
begins receiving this unreduced service retirement allowance from the System, that recipient 50
shall not be subject to the six-month applicable waiting period set forth in G.S . 135-1(20). 51
General Assembly Of North Carolina Session 2025
Page 6 House Bill 106-Third Edition
However, a beneficiary shall be entitled to a restoration of the long-term disability benefit in the 1
event the Social Security Administration grants a retroactive approval for primary Social Security 2
disability benefits with a benefit effectiv e date within the first 36 months of the long -term 3
disability period. In such event, the long-term disability benefit shall be restored retroactively to 4
the date of cessation." 5
SECTION 4.(a) The State Treasurer shall seek a favorable private letter ruling from 6
the Internal Revenue Service to determine that this act does not jeopardize the status of the 7
Teachers' and State Employees' Retirement System by January 1 of the following calendar year 8
or within 120 days from this act becoming law, whichever is later. 9
SECTION 4.(b) If the State Treasurer has met the obligation under Section 4(a) of 10
this act, and the Internal Revenue Service declines to make a private letter ruling or does not 11
issue a response by January 1, 2027, then this act is repealed. The State Treasurer shall notify the 12
Revisor of Statutes that the Internal Revenue Service declines to make a private letter ruling or 13
did not issue a response. Within three business days of not notifying the Revisor of Statutes, the 14
State Treasurer shall notify al l employers of the repeal of this act and shall publicly notice the 15
receipt of this information on the Department of State Treasurer's website. 16
SECTION 4.(c) If the Internal Revenue Service fails to make a favorable 17
determination that this act does not je opardize the status of the Teachers' and State Employees' 18
Retirement System of North Carolina under the Internal Revenue Code, then this act is repealed 19
on the last day of the month following the month of receipt of that determination by the State 20
Treasurer. Upon receipt of that determination, the State Treasurer shall notify the Revisor of 21
Statutes of the determination and the date of receipt. Within three business days of not receiving 22
a determination that is favorable, the State Treasurer shall notify al l employers of the repeal of 23
this act and shall publicly notice the receipt of this information on the Department of State 24
Treasurer's website. 25
SECTION 4.(d) Notwithstanding any other provision of law to the contrary, in order 26
to pay costs associated with the administration of the provisions of this section, the Retirement 27
Systems Division of the Department of State Treasurer may increase receipts from the retirement 28
assets of the Teachers' and State Employees' Retirement System or pay costs associated with the 29
administration directly from the retirement assets. 30
SECTION 4.(e) Any beneficiary that is employed by the governing body of a public 31
school unit as a high-need retired teacher, as defined in G.S. 115C-302.4(a), shall not be eligible 32
to elect into a position that would lead the beneficiary to be eligible to accrue any additional 33
benefits under G.S. 135-3(a)(8). Any failure of the governing body of the public school unit or a 34
beneficiary to comply with the foregoing shall be corrected by the Executive Director of the 35
Retirement System as may be appropriate under State and federal law. Any costs of the 36
correction, as determined by the Executive Director of the Retirement System, shall be the sole 37
responsibility of the governing body of the public school unit and shall be transferred to the 38
Pension Accumulation Fund under G.S. 135-8 under rules adopted by the Board of Trustees. 39
SECTION 4.(f) Effective July 1, 2025, there is appropriated from the General Fund 40
to the Department of State Treasurer the sum of one hundred thousand dollars ($100,000) in 41
nonrecurring funds for the 2025 -2026 fiscal year to be used to obtain the private letter ruling 42
under subsection (a) of this section. 43
SECTION 4.(g) Effective July 1, 2025, there is appropriated from the General Fund 44
to the Department of State Treasurer the sum of ten million dollars ($10,000,000) in recurring 45
funds for each year of the 2025-2027 fiscal biennium to be used to address the increased cost to 46
the Teachers' and State Employees' Retirement System as a result of the implementation of this 47
section. 48
SECTION 5. This act is effective when it becomes law and expires June 30, 2029. 49
G.S. 115C-302.4, as reenacted by this act, applies beginning with the 2025-2026 school year. 50