2026 Governor's Budget.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1167

Short Title: 2026 Governor's Budget. (Public)
Sponsors: Representatives Lambeth, Arp, K. Hall, and Strickland (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
*H1167-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE BASE BUDGET APPROPRIATIONS FOR CURRENT OPERAT IONS 2
OF STATE DEPARTMENTS , INSTITUTIONS, AND AGENCIES, AND FOR OT HER 3
PURPOSES. 4
The General Assembly of North Carolina enacts: 5
6
PART I. TITLE AND INTRODUCTION 7
8
TITLE OF ACT 9
SECTION 1.1. This act shall be known as the "Current Operations Appropriations 10
Act of 2026." 11
12
INTRODUCTION 13
SECTION 1.2. The appropriations made in this act are for maximum amounts 14
necessary to provide the services and accomplish the purposes described in the budget in 15
accordance with the State Budget Act. Savings shall be effected where the total amounts 16
appropriated are not required to perform these services and accomplish these purposes, and the 17
savings shall revert to the appropriate fund at the end of each fiscal year, except as otherwise 18
provided by law. 19
20
PART II. CURRENT OPERATIONS AND EXPANSION/GENERAL FUND 21
22
GENERAL FUND APPROPRIATIONS 23
SECTION 2.1.(a) Notwithstanding any bill with an appropriation enacted in the 24
2025-27 biennium, appropriations fro m the General Fund for the budgets of the State 25
departments, institutions, and agencies, and for other purposes as enumerated, are made for each 26
year of the 2025-2027 fiscal biennium, according to the following schedule: 27
28
Current Operations – General Fund FY 2025-2026 FY 2026-2027 29
30
EDUCATION 31
Community College System 1,730,176,632 1,880,055,057 32
33
Public Instruction 12,386,402,718 13,604,577,403 34
35
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1167-First Edition
Governor Morehead School 10,656,568 11,500,741 1
NC School for the Deaf 12,169,049 13,085,861 2
Eastern NC School for the Deaf 10,740,596 11,534,374 3
4
Appalachian State University 209,862,595 209,862,595 5
East Carolina University 6
Academic Affairs 274,127,761 274,127,761 7
Health Affairs 107,144,915 107,144,915 8
Elizabeth City State University 48,513,547 48,513,547 9
Fayetteville State 87,586,990 87,586,990 10
NC A&T State University 162,728,474 162,743,010 11
NC Central University 98,572,636 98,572,636 12
NC State University 13
Academic Affairs 564,312,136 564,676,069 14
Agricultural Extension 46,543,237 46,543,237 15
Agricultural Research 63,465,016 63,465,016 16
UNC-Asheville 51,101,094 51,101,094 17
UNC-Chapel Hill 18
Academic Affairs 385,597,924 385,597,924 19
Health Affairs 249,399,553 249,399,553 20
AHEC 56,855,450 56,855,450 21
UNC-Charlotte 331,584,743 331,584,743 22
UNC-Greensboro 204,987,083 204,987,083 23
UNC-Pembroke 95,473,853 95,473,853 24
UNC-School of the Arts 41,972,163 41,972,163 25
UNC-Wilmington 217,239,729 217,239,729 26
Western Carolina University 164,563,738 164,589,450 27
Winston-Salem State University 68,743,773 68,743,773 28
General Administration 50,098,094 50,098,094 29
University Institutional Programs 312,000,384 620,191,944 30
Related Educational Programs 863,278,591 (114,721,409) 31
NC School of Science and Math 45,240,766 45,240,766 32
Aid to Private Institutions 1,209,300 11,209,300 33
Total University of North Carolina 4,802,203,545 4,142,799,286 34
35
HEALTH AND HUMAN SERVICES 36
Department of Health and Human Services 37
Aging and Adult Services 52,856,717 52,928,118 38
Central Management and Support 216,458,444 299,971,801 39
Child Development and Early Education 306,105,539 357,126,631 40
Child and Family Well Being 62,811,146 71,354,616 41
Health Benefits 6,844,445,224 7,627,688,832 42
Health Services Regulation 26,819,231 28,693,218 43
Mental Hlth/Dev. Disabl./Subs. Abuse Serv. 779,898,008 852,018,243 44
Public Health 133,644,399 121,290,363 45
Services for the Blind, Deaf and Hard of Hearing 9,599,492 10,504,110 46
Social Services 227,241,733 237,710,782 47
Vocational Rehabilitation 44,304,406 46,783,297 48
Total Health and Human Services 8,704,184,339 9,706,070,011 49
50
AGRICULTURE, NATURAL, AND ECONOMIC RESOURCES 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 3
Agriculture and Consumer Services 180,358,286 197,624,154 1
2
Department of Commerce 3
Commerce 15,714,916 29,698,492 4
General State Aid 19,655,810 22,155,810 5
Economic Development 158,348,245 166,348,245 6
7
Environmental Quality 110,279,177 177,714,471 8
9
Labor 27,314,942 29,571,924 10
11
Department of Natural and Cultural Resources 285,859,993 336,482,888 12
13
Wildlife Resources Commission 18,430,344 20,291,774 14
15
JUSTICE AND PUBLIC SAFETY 16
Judicial Department 824,319,035 877,409,507 17
18
Judicial Department – Indigent Defense Services 174,735,348 182,710,624 19
20
Department of Justice 69,612,137 95,498,653 21
22
Department of Public Safety 665,993,291 697,589,873 23
24
Department of Adult Correction 2,226,163,079 2,301,698,762 25
26
State Bureau of Investigation 101,498,162 74,629,912 27
28
State Highway Patrol 26,056,834 49,929,942 29
30
GENERAL GOVERNMENT 31
Department of Administration 73,131,081 76,087,478 32
33
Office of Administrative Hearings 8,485,540 10,401,718 34
35
State Board of Elections 12,755,150 13,108,296 36
37
Office of State Auditor 25,984,513 26,878,912 38
39
Office of State Controller 36,885,814 37,867,492 40
41
General Assembly 105,392,840 109,503,336 42
43
Office of the Governor 6,985,397 7,766,647 44
45
Office of State Budget and Management 46
Office of State Budget and Management 11,996,615 13,050,765 47
OSBM – Reserve for Special Appropriations 10,300,000 12,000,000 48
49
Housing Finance Agency 10,660,000 70,660,000 50
51
General Assembly Of North Carolina Session 2025
Page 4 House Bill 1167-First Edition
Office of State Human Resource 12,209,780 16,914,870 1
2
Department of Insurance 3
Insurance 61,692,190 82,365,350 4
Insurance – Industrial Commission 14,615,798 15,573,874 5
6
Office of Lieutenant Governor 1,387,170 1,429,756 7
8
Department of Military and Veterans Affairs 9,113,460 10,190,758 9
10
Department of Revenue 124,029,089 141,251,495 11
12
Department of Secretary of State 19,840,122 23,137,780 13
14
Department of State Treasurer 15
Treasurer 209,074 877,074 16
Treasurer – Retirement System 24,394,657 24,394,657 17
18
Information Technology 75,729,621 129,861,153 19
20
RESERVES, DEBT, AND OTHER BUDGETS 21
Statewide Reserves 67,206,909 (16,304,782) 22
23
Total Net Appropriation 33,273,877,866 35,435,994,393 24
25
SECTION 2.1.(b) For purposes of this act, the requirements set forth in this section 26
represent the total amount of funds, including agency receipts, appropriated to an agency, 27
department, or institution. 28
29
GENERAL FUND AVAILABILITY 30
SECTION 2.2.(a) The General Fund availability derived from State tax revenue, 31
nontax revenue, and other adjustments used in developing the budget for each year of the 32
2025-2027 fiscal biennium is as follows: 33
34
FY 2025-2026 FY 2026-2027 35
36
Unappropriated Balance from Prior Fiscal Year 48,073,341 1,137,648,682 37
Over Collections 394,728,847 369,815,741 38
Estimated Reversions 448,182,114 400,000,000 39
Total, Current Beginning Unreserved Balance 890,984,302 1,907,464,423 40
41
Statutorily Required Reservations of Revenue 42
State Capital and Infrastructure Fund (1,120,000,000) 0 43
Savings Reserve (68,642,013) (60,465,000) 44
Subtotal (1,188,642,013) (60,465,000) 45
46
Additional Investments to Reserves 47
State Capital and Infrastructure Fund 0 (1,159,200,000) 48
State Emergency Response and Disaster Relief Fund 0 (500,000,000) 49
Contingency and Emergency Reserve 0 (10,000,000) 50
Subtotal, Investments to Reserves 0 (1,669,200,000) 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 5
1
Tax Revenues 2
Individual Income 16,892,700,000 16,614,600,000 3
Sales and Use 11,492,800,000 11,784,500,000 4
Corporate Income 1,379,400,000 1,320,500,000 5
Franchise 787,800,000 792,300,000 6
Insurance 1,417,370,000 1,605,700,000 7
Alcoholic Beverage 560,600,000 554,300,000 8
Tobacco Products 240,800,000 237,500,000 9
Other Tax Revenue 228,630,000 248,500,000 10
Subtotal, Tax Revenues 33,000,190,000 33,157,900,000 11
12
Non-tax Revenues 13
Judicial Fees 202,400,000 218,000,000 14
Investment Income 702,900,000 637,200,000 15
Disproportionate Share 171,400,000 174,600,000 16
Master Settlement Agreement 97,600,000 98,000,000 17
Insurance 123,394,259 127,100,000 18
Other Non-tax Revenue 289,300,000 302,700,000 19
Subtotal, Non-tax Revenue 1,586,994,259 1,557,600,000 20
21
ARPA SFRF Interest 122,000,000 4,000,000 22
23
Total, Net Revenues 34,709,184,259 34,719,500,000 24
25
Adjustments to Revenues: 26
Maintain Individual Income Tax at 3.99% 896,000,000 27
Increase Standard Deduction from $25,500 to $26,500 (53,000,000) 28
Working Families Tax Credit – 10% of federal 29
Earned Income Tax Credit (240,000,000) 30
Refundable Child and Dependent Care Tax Credit (55,000,000) 31
Sales Tax Back-to-School Holiday (29,900,000) 32
Subtotal, Adjustments to Tax Revenues 518,100,000 33
34
Adjustments to Availability 35
NCInnovation Clawback – to be Deposited in SERDRF 500,000,000 36
Insurance Non-Tax Transfer 22,426,526 37
38
Revised Total Net General Fund Availability 34,411,526,548 35,937,825,949 39
40
Less Base Budget (31,918,784,866) (32,066,568,438) 41
42
Total Recommended Adjustments (1,355,093,000) (3,369,425,955) 43
44
Total Recommended Appropriations (33,273,877,866) (35,440,494,393) 45
46
Unappropriated Balance Remaining 1,137,648,682 501,831,556 47
48
SECTION 2.2.(b) IT Reserve – The State Controller shall transfer the sum of one 49
hundred sixty -five million six hundred sixty -seven thousand six hundred fifty -three dollars 50
($165,667,653) from the unreserved fund balance in the Information Technology Project Reserve 51
General Assembly Of North Carolina Session 2025
Page 6 House Bill 1167-First Edition
to the Office of State Budget and Management. Funds appropriated from the Information 1
Technology Project Reserve shall be allocated by the Director of the State Budget in consultation 2
with the State Chief Information Officer and the head of the department with primary ownership 3
over the information technology project based on documented project needs. Funds transferred 4
under this section are appropriated in the year in which they are transferred and shall be used for 5
the following information technology projects: 6
(1) The Department of Information Technology's project to modernize data 7
storage by switching to hybrid cloud and local storage. 8
(2) The Department of Adult Correction's OPUS system and Rounds Tracking 9
Software. 10
(3) Eastern North Carol ina's School for the Deaf’s ADA Campus Wide 11
Emergency Visual Alert System. 12
(4) The Modernizing Payroll Reserve for the replacement of the state's payroll 13
system. 14
(5) The Governor Morehead School’s Network Upgrade. 15
(6) The Department of Public Instruction's PSU school business system 16
modernization. 17
(7) The Office of State Human Resources' human capital management (HCM) 18
Phase I Enhancements. 19
(8) The Department of Revenue's DataPower and Network Files end of life 20
replacements, datacenter hardware replacement, and replacement of the RCA 21
desktop client. 22
(9) The State Board of Elections' election modernization Stage III project. 23
(10) The State Bureau of Investigation for its IT infrastructure project, Behavioral 24
Threat Assessment Management System, and Real -time Threat Alerting 25
Platform. 26
(11) The Office of Administrative Hearings’ Database Development System. 27
(12) The Department of Commerce's Modernized NCCareer Information System. 28
(13) The Department of the Secretary of State's Hardware Update program. 29
(14) The Office of Indigent Defense Services' Indigency Determination Pilot. 30
(15) The Department of Justice’s Legal Case Management System. 31
SECTION 2.2.(c) Medicaid Contingency Reserve. – The balance of the Medicaid 32
Contingency Reserve is hereby appropriated. 33
SECTION 2.2.(d) Federal Infrastructure Match Reserve. – Notwithstanding 34
subsection 2.2.(m) of S.L. 2022 -74, the State Controller shall transfer funds available in the 35
Federal Infrastructure Match Reserve to agencies and departments as needed to draw down 36
federal funds in accordance with the following schedule, and the funds transferred are 37
appropriated for the 2026-2027 fiscal year: 38
(1) Eleven million, seven hundred seventy thousand, seven hundred fifty dollars 39
($11,770,750) to the Department of Agriculture and Con sumer Services for 40
the required match to leverage two agricultural conservation easement 41
agreements; 42
(2) Eight million, six hundred thirty-two thousand, one hundred sixty-six dollars 43
($8,632,166) to the Department of Environmental Quality to meet the state's 44
required cost share for federally led cleanup activities at Superfund National 45
Priorities List sites. 46
(3) Eight hundred fifty thousand dollars ($850,000) to the Department of 47
Environmental Quality to leverage additional federal funds for the 48
Albemarle-Pamlico National Estuary Partnership. 49
(4) The Department of Environmental Quality may access any remaining funds 50
in the Federal Infrastructure Match Reserve, if interest earnings are 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 7
insufficient to meet the required State match for the federal Drinking Water 1
State Revolving Fund and Clean Water State Revolving Fund programs, for 2
the purpose of providing the required match. 3
(5) The Office of State Budget and Management may access any remaining funds 4
in the Federal Infrastructure Match Reserve to provide support to State 5
agencies in mitigating the fiscal impacts of federal spending freezes, federal 6
government shutdowns, or reductions in federal spending. 7
SECTION 2.2.(e) The State Controller shall reserve from funds available in the 8
General Fund the sum of ten million dollars ($10,000,000) in nonrecurring funds for the 2026-27 9
fiscal year to the Contingency and Emergency Fund in the General Fund. Funds under this section 10
are appropriated in the year in which they are reserved. 11
SECTION 2.2.(f) Except as otherwise specifically provided, nothing in this section 12
shall be construed as appropriating funds reserved pursuant to this section. Funds reserved 13
pursuant to this section do not constitute an "appropriation made by law," as that phrase is used 14
in Section 7(1) of Article V of the North Carolina Constitution. 15
SECTION 2.2.(g) The State Controller shall ensure that the transfers required under 16
this section are completed as soon as practicable but no later than the end of the 2026-2027 fiscal 17
year. In making the transfers required under this section, the State Controller shall prioritize 18
transfers to Reserves that support expenditures. 19
20
PART III. HIGHWAY FUND AND HIGHWAY TRUST FUND 21
22
CURRENT OPERATIONS/HIGHWAY FUND 23
SECTION 3.1. Appropriations from the State Highway Fund for the mai ntenance 24
and operation of the Department of Transportation and for other purposes as enumerated are 25
made for the fiscal year ending June 30, 2027, according to the following schedule: 26
27
Highway Fund FY 2026-2027 28
Administration 141,758,209 29
Division of Highways 30
Administration 38,287,904 31
Construction 77,543,078 32
Maintenance 2,191,689,355 33
Governor's Highway Safety Program 351,695 34
OSHA 358,030 35
36
Aid to Municipalities 37
Powell Bill 185,875,000 38
39
Intermodal Divisions 40
Ferry 93,637,728 41
Public Transportation, Bicycle and Pedestrian 90,220,554 42
Aviation 164,074,415 43
Rail 78,367,607 44
45
Division of Motor Vehicles 170,100,604 46
47
Other State Agencies, Reserves, Transfers 139,011,958 48
49
Capital Improvements 23,613,813 50
51
General Assembly Of North Carolina Session 2025
Page 8 House Bill 1167-First Edition
Total Highway Fund Appropriations $3,399,889,949 1
2
HIGHWAY FUND AVAILABILITY 3
SECTION 3.2. The Highway Fund availability for the 2026-2027 fiscal year budget 4
is shown below: 5
FY 2026-2027 6
Consensus Revenue Forecast 7
Motor Fuels Tax 1,904,200,000 8
Licenses and Fees 1,141,800,000 9
Short-Term Lease 124,500,000 10
Investment Income 24,400,000 11
Sales Tax Transfer 176,200,000 12
Jet Fuel Sales 12,600,000 13
Transportation Commerce Tax 13,800,000 14
N Dividend 4,800,000 15
Total Highway Fund Availability $3,402,300,000 16
17
HIGHWAY TRUST FUND APPROPRIATIONS 18
SECTION 3.3. Appropriations from the State Highway Trust Fund to the 19
Department of Transportation for construction and other purposes as enumerated are made for 20
the fiscal year ending June 30, 2027, according to the following schedule: 21
22
Current Operations – Highway Trust Fund FY 2026-2027 23
Program Administration 45,117,311 24
Bonds 121,436,275 25
Turnpike Authority 49,000,000 26
State Ports Authority 45,000,000 27
Strategic Prioritization Funding Plan for 28
Transportation Investments 2,306,935,414 29
Transfer to Visitor Center 640,000 30
Other State Agencies 371,000 31
32
Total Highway Trust Fund Appropriations $2,568,500,000 33
34
HIGHWAY TRUST FUND AVAILABILITY 35
SECTION 3.4. The Highway Trust Fund availability for the 2026 -2027 fiscal year 36
budget is shown below: 37
FY 2026-2027 38
Consensus Revenue Forecast 39
Highway Use Tax 1,181,500,000 40
Motor Fuels Tax 636,400,000 41
Fees 177,700,000 42
Investment Income 44,300,000 43
Sales Tax Transfer 528,600,000 44
45
Total Highway Trust Fund Availability $2,568,500,000 46
47
PART IV. OTHER AVAILABILITY AND APPROPRIATIONS 48
49
CASH BALANCES AND OTHER APPROPRIATIONS 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 9
SECTION 4.1.(a) Cash balances, federal funds, departmental receipts, grants, and 1
gifts from the General Fund, revenue funds, enterprise funds, and internal service funds are 2
appropriated for the 2026-2027 fiscal year as follows: 3
(1) For all budget codes listed in the Governor's Recommended Budget for the 4
2026-2027 fiscal year, dated April 2026, and in the Budget Support 5
Document, fund balances and receipts are appropriated up to the amounts 6
specified, as adjusted by the General Assembly, for the 2026-2027 fiscal year. 7
Funds may be expended only for the programs, purposes, objects, and line 8
items or as otherwise authorized by the General Assembly. Expansion budget 9
funds listed in those documents are appropriated only as othe rwise provided 10
in this act. 11
(2) Notwithstanding the provisions of subdivision (1) of this subsection: 12
a. Any receipts that are required to be used to pay debt service 13
requirements for various outstanding bond issues and certificates of 14
participation are appropriated up to the actual amounts received for the 15
2026-2027 fiscal year and shall be used only to pay debt service 16
requirements. 17
b. Other funds, cash balances, and receipts of funds that meet the 18
definition issued by the Governmental Accounting Standards Board of 19
a trust or agency fund are appropriated for and in the amounts required 20
to meet the legal requirements of the trust agreement for the 2026-2027 21
fiscal year. 22
SECTION 4.1.(b) Receipts collected in a fiscal year in excess of the amounts 23
appropriated by this section shall remain unexpended and unencumbered until appropriated by 24
the General Assembly, unless the expenditure of over-realized receipts in the fiscal year in which 25
the receipts were collected is authorized by the State Budget Act. Over -realized receipts are 26
appropriated in the amounts necessary to implement this subsection. 27
SECTION 4.1.(c) Notwithstanding subsections (a) and (b) of this section, there is 28
appropriated from the Reserve for Reimbursements to Local Governments and Shared Tax 29
Revenues for each fiscal year an amount equal to the amount of the distributions required by law 30
to be made from that reserve for that fiscal year. 31
32
EDUCATION LOTTERY FUNDS/CHANGES TO REVENUE ALLOCATIONS 33
SECTION 4.2. Section 2A.1.(a) of S.L. 2025-89 reads as rewritten: 34
"SECTION 2A.1.(a) The allocations made from the Education Lottery Fund for the 35
2025-2027 fiscal biennium are as follows: 36
FY 2025-2026 FY 2026-2027 37
Noninstructional Support Personnel $385,914,455 $385,914,455 38
Prekindergarten Program 78,252,110 78,252,110 39
Universal School Breakfast 56,227,388 40
Public School Building Capital Fund 100,000,000 100,000,000 41
Needs-Based Public School Capital Fund 258,252,612 258,252,612 42
Public School Repair & Renovation 50,000,000 50,000,000 43
Scholarship Reserve Fund for Public Colleges 44
and Universities 17,748,769 17,748,769 45
Children of Wartime Veterans Scholarship 11,070,964 11,070,964 46
School Transportation 182,193,702 186,033,702 47
TOTAL ALLOCATION $1,083,432,612$1,143,500,0001,087,272,612" 48
49
INDIAN GAMING EDUCATION REVENUE FUND APPROPRIATIONS 50
SECTION 4.3. Section 2A.2.(a) of S.L. 2025-89 reads as rewritten: 51
General Assembly Of North Carolina Session 2025
Page 10 House Bill 1167-First Edition
"SECTION 2A.2.(a) The allocations made from the Indian Gaming Education Revenue 1
Fund for the 2025-27 fiscal biennium are as follows: 2
FY 2026-2027 FY 2026-2027 3
Textbook and Digital Resources Allotment $10,000,000 $10,000,000 4
Classroom Materials 15,500,000 53,500,000 5
Total Appropriation $25,500,000 $153,500,000" 6
7
CIVIL PENALTY AND FORFEITURE FUND 8
SECTION 4.4. Section 2A.3.(a) of S.L. 2025-89 reads as rewritten: 9
"SECTION 2A.3.(a) The allocations made from the Civil Penalty and Forfeiture Fund for 10
the 2025-27 fiscal biennium are as follows: 11
FY 2025-2026 FY 2026-2027 12
School Technology Fund $18,000,000 $18,000,000 13
Drivers Education 31,493,768 31,493,768 14
State Public School Fund 186,041,640 166,041,640 15
Devices for Students 15,000,000 16
Universal School Breakfast 15,000,000 17
Total Appropriation $235,535,408 $24515,535,408" 18
19
PART V. GENERAL PROVISIONS 20
21
ESTABLISHING OR INCREASING FEES 22
SECTION 5.1.(a) Notwithstanding G.S. 123.1, an agency is not required to consult 23
with the Joint Legislative Commission on Governmental Operations prior to establishing or 24
increasing a fee to the level authorized or anticipated in this act. 25
SECTION 5.1.(b) Notwithstanding G.S. 150B-21.1A(a), an agency may adopt an 26
emergency rule in accordance with G.S. 150B-21.1A to establish or increase a fee as authorized 27
by this act if the adoption of a rule would otherwise be required under Article 2A of Chapter 28
150B of the General Statutes. 29
30
CAP STATE FUNDED PORTION OF NONPROFIT SALARIES 31
SECTION 5.2. No more than one hundred forty thousand dollars ($140,000) in State 32
funds, including any interest earnings accruing from those funds, may be used for the annual 33
salary of any individual employee of a nonprofit organization. 34
35
2026 DISASTER RECOVERY 36
SECTION 5.3.(a) State Emergency Response and Disaster Relief Fund. – Of the 37
nonrecurring funds appropriated in this act for the 2026 -2027 fiscal year, fifty million dollars 38
($50,000,000) shall be allocated to the Department of Public Safety, Emergency Management 39
Division, to provide disaster response and recovery assistance to households and communities in 40
response to future storms. 41
SECTION 5.3.(b) Implementation. – The following actions and p olicies shall be 42
taken to implement subsection 5.3.(a): 43
(1) If a person's home is relocated or purchased with funds allocated in this 44
subsection, the State Emergency Response and Disaster Relief Fund is 45
subrogated to the person's rights under any insurance coverage for the damage 46
to the home and any monies received from the insurance coverage shall be 47
paid to the State Emergency Response and Disaster Relief Fund. The Office 48
of State Budget and Management shall ensure that those potentially affected 49
by this section are notified of, and adhere to, its requirements. 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 11
(2) No State funds appropriated in this section may be expended for the 1
construction of any new residence within the 100 -year floodplain unless the 2
construction is in an area regulated by a unit of local government pursuant to 3
a floodplain management ordinance and the construction complies with the 4
ordinance. As used in this section, "100 -year floodplain" means any area 5
subject to inundation by a 100 -year flood, as indicated on the most recent 6
Flood Insurance Rate Map prepared by the Federal Emergency Management 7
Agency under the National Flood Insurance Program. 8
(3) Homeowners in the 100 -year floodplain who receive homeowner's housing 9
assistance pursuant to this section shall have in effect federal flood insurance, 10
if available, as a precondition to receipt of State homeowner's housing 11
assistance for losses resulting from future flooding. 12
SECTION 5.3.(c) Limitation. – Funds allocated in this section shall be expended in 13
a manner that does not adversel y affect any person's or entity's eligibility for federal funds that 14
are made available, or that are anticipated to be made available, as a result of natural disasters. 15
To the extent practicable, funds allocated in this section shall not be used to cover costs that will 16
be, or likely will be, covered by federal funds. 17
SECTION 5.3.(d) No Reversion of Funds. – Funds allocated in this section shall 18
remain available to implement the provisions of this section until the General Assembly directs 19
the reversion of any unexpended and unencumbered funds and G.S. 143C-6-23(f1)(1) shall not 20
apply to those funds. 21
SECTION 5. 3.(e) Reporting Requirements. – The Office of State Budget and 22
Management shall provide periodic reports on the use of the funds allocated and appropriated in 23
this section in a manner which is consistent with Section 5.10 of Session Law 2019-250. 24
25
GOLDEN LEAF – HURRICANE HELENE BRIDGE LOAN MODIFICATIONS 26
SECTION 5.4.(a) Section 4C.3 of S.L. 2024 -53, as modified by Section 1.1(a) of 27
S.L. 2025-97 reads as rewritten: 28
"… 29
"SECTION 4C.3.(d) Reversion; Reloan; Repayment. – Funds allocated by this section are 30
not subject to the provisions of G.S. 143C-6-23. Funds allocated by this section that have not 31
been expended or encumbered by October 31, 2028March 15, 2026, shall revert to the Savings 32
Reserve established in G.S. 143C-4-2. Net loan funds, including repayments of loans, available 33
to Golden LEAF prior to October 31, 2028March 15, 2026, may be loaned in accordance with 34
this section. Beginning December 15, 2025March 15, 2026 , and every six months thereafter, 35
Golden LEAF shall remit the net loan funds it has received from lenders to the Office of State 36
Budget and Management to be placed into the Savings Reserve. 37
"SECTION 4C.3.(e) Reporting. – Beginning December 15, 2025 March 15, 2026 , and 38
continuing every six months thereafter, Golden LEAF shall submit a report on the program to 39
the Joint Legislative Economic Development and Global Engagement Oversight Committee and 40
the Fiscal Research Division. The duty to r eport pursuant to this section shall cease after the 41
submission of the report following when Golden LEAF has remitted the entirety of the net loan 42
funds to the Office of State Budget and Management. Each report shall contain, at a minimum, 43
all of the following: 44
…." 45
46
NCINNOVATION 47
SECTION 5.5.(a) Return of Funds. – NCInnovation shall transfer back to the State, 48
after consultation with, and in conformity with direction received from, the State Controller, the 49
sum of five hundred million dollars ($500,000,000). 50
General Assembly Of North Carolina Session 2025
Page 12 House Bill 1167-First Edition
SECTION 5.5.(b) State Emergency Response and Disaster Relief Fund. – The State 1
Controller shall facilitate the return of transferred funds from NCInnovation pursuant to 2
subsection (a) of this section and shall deposit the funds into the State Emergency Response and 3
Disaster Relief Fund established in G.S. 166A-19.42. The transfer and deposit of funds into 4
reserves pursuant to this section does not constitute an "appropriation made by law," as that 5
phrase is used in Section 7(1) of Article V of the North Carolina Constitution. The funds shall 6
remain unappropriated unless the General Assembly appropriates the funds in this or a 7
subsequent act. In accordance with G.S. 147-69.1(d), funds in the Reserves shall be invested by 8
the Department of the State Treasurer, with earnings and interest therefrom being transferred to 9
and deposited in the General Fund. 10
SECTION 5.5.(c) Repeal. – Upon the return of the transferred funds to the State 11
pursuant to subsection (a) of this section, Article 76A of Chapter 143 of the General Statutes is 12
repealed. The State Controller shall notify the Revisor of Statutes when the transfer has been 13
completed. 14
SECTION 5.5.(d) This section is effective when it becomes law. 15
16
PART VI. COMMUNITY COLLEGE SYSTEM 17
18
PROPEL NC FUNDING MODEL ADJUSTMENT 19
SECTION 6.1.(a) The funds appropriated in this act for Propel NC shall be used to 20
shift North Carolina Community College System’s enrollment formula from the current tier -21
based allocation model to a labor -market driven model. This new model shall lin k courses to 22
workforce sectors that are ranked and valued by statewide salary job demand data. 23
SECTION 6.1.(b) The State Board of Community Colleges in consultation with the 24
Department of Commerce shall identify the workforce sectors aligned with the Stat e’s high-25
demand, high -salary jobs and allocate the funds appropriated in this act to those workforce 26
sectors. Appropriated funds may also be used for customized training and Small Business Centers 27
at the individual colleges. 28
SECTION 6.1.(c) Part 3 of Arti cle 1 of Chapter 115D of the General Statutes is 29
amended by adding a new subsection to read: 30
"§ 115D-10.5. Program funding. 31
… 32
(aa) The State Board of Community Colleges shall review and revise, as necessary, its 33
workforce sector designations for curriculum, workforce continuing education, and Basic Skills 34
courses at community colleges by July 15, 2029, and every three years thereafter. 35
…." 36
37
PROPEL NC ENROLLMENT INCREASE RESERVE 38
SECTION 6.2. G.S. 115D-31 reads as rewritten: 39
"§ 115D-31. State financial support of institutions. 40
… 41
(e) If receipts for community college tuition and fees exceed the amount certified in 42
General Fund Codes at the end of a fiscal year, the State Board of Community Colleges shall 43
transfer retain the amount of receipts and fees above those budgeted. to the Enrollment Growth 44
Reserve. Funds in the Enrollment Growth Reserve shall not revert to the General Fund and shall 45
remain available to the State Board until expended. The State Board may allocate these funds in 46
this reserve to colleges experiencing an enrollment increase greater than five percent (5%) of 47
budgeted enrollment levels. proportionally to colleges based on actual receipt collections from 48
the prior fiscal year. 49
(f) The Enrollment Increase Reserve shall be est ablished as a recurring, nonreverting 50
reserve under the direction of the State Board of Community Colleges. Funds appropriated by 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 13
the North Carolina General Assembly shall be allocated based on actual fall semester FTE. The 1
method of allocation shall be as follows: at one -half the average FTE value per FTE for the 2
greater of FTE increases in excess of 5% for each category of instruction, or for increases in total 3
FTE greater than 325. If enrollment growth exceeds the funds appropriated in a given year, the 4
value per FTE would be reduced proportionately." 5
6
AUTHORIZE USE OF MOTORCYCLE SAFETY EDUCATION PROGRAM FUNDS 7
FOR A CAPITAL PROJECT 8
SECTION 6.3.(a) Notwithstanding G.S. 115D-10.50, of the funds received for the 9
North Carolina Motorcycle Safety Education Pr ogram (NCMSEP), the State Board of 10
Community Colleges may award up to five -hundred thousand dollars ($500,000) to Lenoir 11
Community College for use in constructing or renovating a facility used for this program. 12
SECTION 6.3.(b) This authorization is for the fiscal year ending on June 30, 2027, 13
and funds transferred under subsection (a) above, shall not revert and shall remain available until 14
expended. 15
16
CLARIFY CUSTOMIZED TRAINING PERSONNEL 17
SECTION 6.4. G.S. 115D-10.17(e) reads as rewritten: 18
"§ 115D-10.17. Customized Training Program. 19
… 20
(e) Of the funds appropriated in a fiscal year for the Customized Training Program, the 21
State Board of Community Colleges may approve the use of up to fifteen percent (15%) for the 22
training and support of regional community college personnel regionally based program 23
personnel to deliver Customized Training Program services to business and industry. For the 24
purpose of this subsection, “regionally based program personnel” is defined as the following: 25
(1) An individual(s) who may be hosted by a local community college to serve a 26
defined region of the state as assigned by the System Office. 27
…." 28
29
FREE COMMUNITY COLLEGE TUITION FOR HIGH DEMAND SKILLS TRAINING 30
SECTION 6.7. G.S. 115D-5.1A reads as rewritten: 31
"§ 115D-10.19. Short-Term Workforce Development Grant Program. 32
… 33
(c) Award Amounts. – To the extent funds are made available for the Program, the State 34
Board of Community Colleges shall award grants in an amount of up to seven hundred fifty 35
dollars ($750.00) to students pursuing short‑term, noncredit State and industry work force 36
credentials. The State Board of Community Colleges shall establish criteria for initial and 37
continuing eligibility for students. The criteria shall include a requirement that eligible students 38
be a resident of North Carolina pursuant to G.S. 116 -143.1(a)(1). At a minimum, students shall 39
be required to qualify as a resident for tuition purposes under the criteria set forth in G.S. 40
116‑143.1 and in accordance with the coordinated and centralized residency determination 41
process administered by the State Education Assistance Authority. 42
(d) Report. – The State Board shall submit a report by April December 1 annually on the 43
Program to the Joint Legislative Education Oversight Committee and the Fiscal Research 44
Division. The report shall contain, for each academic year and by programs of study, the amount 45
of grant funds disbursed and the number of eligible students receiving funds." 46
47
PART VII. PUBLIC INSTRUCTION 48
49
REPEAL THE TEXTBOOK COMMISSION 50
General Assembly Of North Carolina Session 2025
Page 14 House Bill 1167-First Edition
SECTION 7.1.(a) G.S. 115C-86 through G.S. 115C-95 and G.S. 115C-97 are 1
repealed. 2
SECTION 7.1.(b) Part 3 of Article 8 of Chapter 115C of the General Statutes reads 3
as rewritten: 4
"Part 3. Textbooks.Instructional Materials. 5
"§ 115C-85. Textbook Instructional material needs are determined by course of study. 6
When the State Board of Education has adopted, upon the recommendation of the 7
Superintendent of Public Instruction, a standard course of study at each instructional level in the 8
elementary school and the secondary school, setting forth what subjects shall be taught at each 9
level, it shall proceed to select and adopt textbooks. 10
As used in this part, "textbook" "instructional materials " means systematically organized 11
material comprehensive enough to cover the primary objectives outlined in the standard course 12
of study for a grade or course. Formats for textbooks instructional materials may be print or 13
nonprint, including hardbound books, softbound books, activity -oriented programs, classroom 14
kits, and technology-based programs digital resources that require the use of electronic 15
equipment in order to be used in the learning process. 16
Textbooks adopted in accordance with the provisions of this Part shall be used by the public 17
schools of the State except as provided in G.S. 115C-98(b1). 18
… 19
"§ 115C -96. Powers and duties of the State Board of Education in regard to 20
textbooks.instructional materials. 21
(a) The children of the public elementary and secondary schools of the State shall be 22
provided with free basic textbooks instructional materials within the appropriation of the General 23
Assembly for that purpose. To implement this directive, the State Board of Education shall 24
evaluate annually the amount of money necessary to provide textbooks instructional materials 25
based on the actual cost and availability of textbooks the instructional materials and shall request 26
sufficient appropriations from the General Assembly. 27
(b) The State Board of Education shall administer a fund and establish adopt rules and 28
regulations necessary to: 29
(1) Acquire by contract such basic textbooks as are or may be on the adopted list 30
of the State of North Carolina which the Board finds necessary to meet the 31
needs of the State public school system and to carry out the provisions of this 32
Part. 33
(2) Provide a system of dist ribution of these textbooks and distribute the books 34
that are provided without using any depository or warehouse facilities other 35
than those operated by the State Board of Education. 36
(3) Provide for the free use, with proper care and return, of elementary and 37
secondary basic textbooks. instructional materials. The title of said books the 38
instructional materials shall be vested in the State. 39
"§ 115C -98. Local boards of education to provide for local operation of the textbook 40
program, the selection and procurement of other instructional materials, and the 41
use of nonadopted textbooks. selection of supplementary and instructional 42
materials. 43
(a) Local boards of education shall adopt rules policies not inconsistent with the policies 44
rules of the State Board of Education concerning the local operation of the textbook 45
program.selection and procurement of instructional materials. 46
(b) Local boards of education shall adopt written policies concerning the procedures to 47
be followed in their local school administrative units for the selection and procurement of 48
supplementary textbooks, library books, periodicals, audiovisual materials, and other 49
supplementary and instructional materials needed for instructional purposes in the public schools 50
of their units. 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 15
Local boards of education shall have sole authority to select and procure supplementary and 1
instructional materials, including library books and media, whether or not the materials contain 2
commercial advertising, to determine if the materials are related to and within the limits of the 3
prescribed curriculum, and to determine when the materials may be presented to students during 4
the schoo l day. Supplementary materials and contracts for supplementary materials are not 5
subject to approval by the State Board of Education. 6
Supplementary books and other instructional materials shall neither displace nor be used to 7
the exclusion of basic textbooks.instructional materials. 8
(b1) A local board of education may establish a community media advisory committee to 9
investigate and evaluate challenges from parents, teachers, and members of the public to 10
textbooks and supplementary instructional materials on the grounds that they are educationally 11
unsuitable, pervasively vulgar, or inappropriate to the age, maturity, or grade level of the 12
students. The State Board of Education shall review its rules and policies concerning these 13
challenges and shall establis h guidelines to be followed by community media advisory 14
committees. 15
The local board, at all times, has sole authority and discretion to determine whether a 16
challenge has merit and whether challenged material should be retained or removed. 17
(b2) Local boards of education may: 18
(1) Select, procure, and use textbooks that have not been adopted by the State 19
Board of Education for use throughout the local school administrative unit for 20
selected grade levels and courses; and 21
(2) Approve school improvement plans developed under G.S. 115C-105.27 that 22
include provisions for using textbooks that have not been adopted by the State 23
Board of Education for selected grade levels and courses. 24
All textbook instructional material contracts made under this subsection shall include a clause 25
granting to the local board of education the license to produce braille, large print, and 26
audiocassette tape tape, and other accessible copies of the textbooks instructional materials for 27
use in the local school administrative unit. 28
… 29
"§ 115C-98.5. Challenges to supplementary and instructional materials. 30
(a) Local boards of education shall establish a community media advisory committee to 31
investigate and evaluate challenges to supplementary and instructional materials. 32
(b) At a minimum, the committee shall include the following: 33
(1) A principal from a high school, middle school, and elementary school, 34
respectively. 35
(2) A teacher from a high school, middle school, and elementary school, 36
respectively. 37
(3) A parent of a student in high school or middle school and a parent of a student 38
in elementary school. 39
(4) A school library media coordinator from a high school, middle school, and 40
elementary school, respectively. 41
(c) Challenges to instructional and supplemental materials shall be made in writing and 42
submitted to the local board of education. The challenge shall specify that the material being 43
challenged is one or more of the following: 44
(1) Obscene. 45
(2) Inappropriate to the age, maturity, or grade level of the students. 46
(3) Not aligned with the standard course of study. 47
(d) The local board of education and the media advisory committee shall only investigate 48
and evaluate challenges submitted by a parent of a student enrolled in a school governed by the 49
board, a teacher employed by the board, or a resident of the area of assignment for the board. 50
General Assembly Of North Carolina Session 2025
Page 16 House Bill 1167-First Edition
(e) Within two weeks of the filing of the challenge, the media advisory committee shall 1
hold a hearing and provide the challengers an opportunity to present their concerns to the 2
committee. The committee may, in the committee's discretion, request additional information on 3
the subject matter at the hearing from experts employed by the local school administrative unit. 4
Within two weeks of the hearing, the committee shall make a recommendation to the local board 5
of education on whether the challenge has merit and whether the challenged material should be 6
retained or removed as unfit material. The committee 's determination shall be limited to 7
considerations of whether the material is unfit on the specific gr ounds of the material being (i) 8
obscene, (ii) inappropriate to the age, maturity, or grade level of the students, or (iii) not aligned 9
with the standard course of study. 10
(f) At the next meeting of the local board of education after the media advisory 11
committee's recommendation is received, the local board shall determine whether the challenge 12
has merit and whether the challenged material should be retained or removed as unfit material. 13
(g) The local board, at all times, has sole authority and discretion to determine whether a 14
challenge has merit and whether challenged material should be retained or removed. The decision 15
of the board is not appealable. 16
"§ 115C-99. Legal custodians of textbooks instructional materials furnished by State. 17
Local boards of education are the custodians of all textbooks instructional materials 18
purchased by the local boards with State funds. They shall provide adequate and safe storage 19
facilities for the proper care of these textbooks the instructional materials and emphasize to all 20
students the necessity for proper care of textbooks.instructional materials. 21
"§ 115C -100. Rental fees for textbooks instructional materials prohibited; damage fees 22
authorized. 23
No local board of education may charge any pupil a rental fee for the use of textbooks. 24
instructional materials. A pupil's parents or legal guardians may be charged damage fees for 25
abuse or loss of textbooks instructional materials under rules adopted by t he State Board of 26
Education. All money collected from the sale of textbooks instructional materials purchased with 27
State funds under the provisions of this Part shall be paid annually as collected to the State Board 28
of Education. 29
"§ 115C-101. Duties and authority of superintendents of local school administrative units. 30
The superintendent of each local school administrative unit, as an official agent of the State 31
Board of Education, shall administer the provisions of this Part and the rules and regulations of 32
the Board insofar as they apply to his the local school administrative unit. The superintendent of 33
each local school administrative unit shall have authority to require the cooperation of principals 34
and teachers so that the children may receive the bes t possible service, and so that all the books 35
instructional materials and moneys may be accounted for properly. If any principal or teacher 36
fails to comply with the provisions of this section, his the superintendent shall withhold his the 37
salary vouchers of the principal until the duties imposed by this section have been performed. 38
If any superintendent fails to comply with the provisions of this section, the State 39
Superintendent, as secretary to the State Board of Education, shall notify the State Board of 40
Education and the State Treasurer. The State Board and the State Superintendent shall withhold 41
the superintendent's salary vouchers, and the State Treasurer shall make no payment until the 42
State Superintendent notifies him confirms that the provisions of this section have been complied 43
with. 44
"§ 115C-102. Right to purchase; disposal of textbooks and instructional materials. 45
(a) Any parent, guardian, or person in loco parentis may purchase any instructional 46
material needed for any child in the public school s of the State from the board of education of 47
the local school administrative unit in which the child is enrolled or, in the case of basic 48
textbooks, from the State Board of Education.enrolled. 49
(b) Notwithstanding Article 3A of Chapter 143 of the General S tatutes, G.S. 143-49(4), 50
or any other provision of law, the State Board of Education may adopt rules authorizing local 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 17
boards of education to dispose of discontinued instructional material, including State -adopted 1
textbooks.material." 2
SECTION 7.1.(c) G.S. 115C-11(d) reads as rewritten: 3
"(d) Voting. – No voting by proxy shall be permitted. Except in voting on textbook 4
adoptions, a A majority of those present and voting shall be necessary to carry a motion and a 5
roll call vote shall be had on each motion. A record of all such votes shall be kept in the minute 6
book." 7
SECTION 7.1.(d) G.S. 115C-11(e) is repealed. 8
SECTION 7.1.(e) G.S. 115C-12(9)b. is repealed. 9
SECTION 7.1.(f) G.S. 115C-12(18)d. reads as rewritten: 10
"d. The State Board of Education shall modify the Uniform Education 11
Reporting System to provide clear, accurate, and standard information 12
on the use of funds at the unit and school level. The plan shall provide 13
information that will enable the General Assembly to determine State, 14
local, and federal ex penditures for personnel at the unit and school 15
level. The plan also shall allow the tracking of expenditures for 16
textbooks, instructional materials, educational supplies and 17
equipment, capital outlay, at-risk students, and other purposes." 18
SECTION 7.1.(g) G.S. 115C-47 reads as rewritten: 19
"§ 115C-47. Powers and duties generally. 20
In addition to the powers and duties designated in G.S. 115C-36, local boards of education 21
shall have the power or duty: 22
… 23
(6) To Regulate Fees, Charges and Solicitations. – Local boards of education shall 24
adopt rules and regulations governing solicitations of, sales to, and 25
fund-raising activities conducted by, the students and faculty members in 26
schools under their jurisdiction, and no fees, charges, or costs shall be 27
collected from students and school personnel without approval of the board of 28
education as recorded in the minutes of said the board; provided, this 29
subdivision shall not apply to such textbooks instructional material fees as are 30
determined and established by the State Board of Education. The local board 31
of education shall publish a schedule of fees, charges, and solicitations 32
approved by the local board on the local school administrative unit's Web site 33
by October 15 of each school year and, if the schedule is subsequently revised, 34
within 30 days following the revision. 35
… 36
(33) To Approve and Use Supplemental Materials. – Local boards of education 37
shall have sole authority to select and procure supplementary instructional 38
materials, whether or not the materials cont ain commercial advertising, 39
pursuant to the provisions of G.S. 115C-98(b). 40
(33a) To Approve and Use Textbooks Not Adopted by State Board of Education. 41
Instructional Materials. – Local boards of education shall have the authority 42
to select, procure, and use textbooks not adopted by the State Board of 43
Education instructional materials as provided in 44
G.S. 115C-98(b1).G.S. 115C-98. 45
…." 46
SECTION 7.1.(h) G.S. 115C-76.55 reads as rewritten: 47
"§ 115C-76.55. Age-appropriate instruction for grades kindergarten through fourth grade. 48
Instruction on gender identity, sexual activity, or sexuality shall not be included in the 49
curriculum provided in grades kindergarten through fourth grade, regardless of whether the 50
information is provided by school personnel or third parties. For the purposes of this section, 51
General Assembly Of North Carolina Session 2025
Page 18 House Bill 1167-First Edition
curriculum includes the standard course of study and support materials, locally developed 1
curriculum, supplemental instruction, and textbooks and other supplementary materials, but does 2
not include responses to student-initiated questions." 3
SECTION 7.1.(i) G.S. 115C-81.5(b)(3) is repealed. 4
SECTION 7.1.(j) G.S. 115C-81.25(b)(3) is repealed. 5
SECTION 7.1.(k) G.S. 115C-81.25(d) reads as rewritten: 6
"(d) Parental Review. – The State Board of Education shall make avai lable to all local 7
school administrative units for review by the parents and legal guardians of students enrolled at 8
those units any State -developed objectives for instruction, any approved textbooks, the list of 9
reviewed materials, and any other State -developed or approved materials that pertain to or are 10
intended to impart information or promote discussion or understanding in regard to the 11
prevention of sexually transmitted diseases, including HIV/AIDS, to the avoidance of 12
out-of-wedlock pregnancy, or to the reproductive health and safety education curriculum. The 13
review period shall extend for at least 60 days before use." 14
SECTION 7.1.(l) G.S. 115C-105.25(b)(12) reads as rewritten: 15
"(12) Funds allotted for textbooks and digital resources instructional materials may 16
only be used for the purchase of textbooks and digital resources. to acquire 17
instructional and supplemental materials as identified in Part 3 of Article 8 of 18
this Chapter and to acquire software necessary for the use of the instructional 19
or supplemental materials. These funds shall not be transferred out of the 20
allotment for any other purpose." 21
SECTION 7.1.(m) G.S. 115C-242(3) reads as rewritten: 22
"(3) The board of education of any local school administrative unit may operate 23
the school buses of such unit one day prior to the opening of the regular school 24
term for the transportation of pupils and employees to and from the school to 25
which such pupils are assigned or in which they are enrolled and such 26
employees are employed, for the purposes of the registration of students, the 27
organization of classes, the distribution of textbooks, instructional materials, 28
and such other purposes as will, in the opinion of the superintendent of the 29
schools of such unit, promote the efficient organization and operation of such 30
public schools." 31
SECTION 7.1.(n) G.S. 115C-271(d)(2) reads as rewritten: 32
"(2) Local funds appropriated for teachers, textbooks, instructional materials, or 33
classroom materials, supplies, and equipment are not transferred or used for 34
this purpose." 35
SECTION 7.1.(o) G.S. 115C-384(c) reads as rewritten: 36
"(c) Rental Fees for Textbooks Instructional Materials Prohibited; Damage Fees 37
Authorized. – No rental fees are permitted for the use of textbooks, but damage fees may be 38
collected pursuant to the provisions of G.S. 115C-100." 39
SECTION 7.1.(p) G.S. 115C-390.2(l)(1) reads as rewritten: 40
"(1) The opportunity to take textbooks instructional materials and school-furnished 41
digital devices home for the duration of the absence." 42
SECTION 7.1.(q) G.S. 115C-390.5(c)(1) reads as rewritten: 43
"(1) The opportunity to take textbooks instructional materials home for the 44
duration of the suspension." 45
SECTION 7.1.(r) G.S. 115C-398 reads as rewritten: 46
"§ 115C-398. Damage to school buildings, furnishings, textbooks.instructional materials. 47
Students and their parents or legal guardians may be liable for damage to school buildings, 48
furnishings and textbooks instructional materials pursuant to the provisions of G.S. 115C-523, 49
115C-100 and 14-132." 50
SECTION 7.1.(s) G.S. 143A-48 is repealed. 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 19
SECTION 7.1.(t) No further funds shall be allocated into the State Textbook fund. 1
The Department of Public Instruction, in coordination with the Office of State Budget and 2
Management, shall ensure that the fund is dissolved once all funds are expended. 3
SECTION 7.1.(u) Effective July 1, 2026, there is established the Instructional 4
Materials funding allotment within the State Public School Fund. The State Board of Education 5
shall establish the purposes for which the funds within the Instructional Materials funding 6
allotment may be used for the purchase and maintenance of instructional and supplemental 7
materials as identified in Part 3 of Article 8 of Chapter 115C of the General Statutes. Funds 8
allocated to the Instructional Materi als funding allotment in fiscal years 2026 -2027 and 9
2027-2028 shall not revert to the General Fund at the end of the fiscal year but shall remain 10
available until expended. 11
12
EXCEPTIONAL CHILDREN FUNDING 13
SECTION 7.2.(a) G.S. 115C-111.05 reads as rewritten: 14
"§ 115C-111.05. Funding for children with disabilities. 15
To the extent funds are made available for this purpose, the State Board shall allocate funds 16
for children with disabilities to each local school administrative unit on a per child basis. Each 17
local school administrative unit shall receive funds for the lesser of (i) all children who are 18
identified as children with disabilities or (ii) thirteen percent (13%) of its allocated average daily 19
membership in the local school administrative unit for the curr ent school year.The State Board 20
of Education shall adopt an allotment policy to implement the tiered student funding formula for 21
exceptional children as proposed in the report published pursuant to Section 7.7 of S.L. 2023 -22
134 by the Department of Public Instruction. T o the extent funds are made available for this 23
purpose, the Exceptional Children Allotm ent shall be funded at a seventy percent (70%) state 24
share and shall replace the Children With Disabilities Allotment. The State Board shall adjust the 25
amount of funding for children with disabilities each public school unit receives during the fiscal 26
year based on the December 1 headcount of children with disabilities required by 20 U.S.C. 27
1412(a)(3)." 28
SECTION 7.2.(b) Create the Exceptional Children Funding Stabilization Reserve. 29
– The Exceptional Children Funding Stabilization Reserve is established with in the General 30
Fund. The General Assembly shall appropriate in the Current Appropriations Act or other 31
appropriations act a specific amount to this reserve for allocation, on an as-needed basis only, to 32
provide stabilization funds to public school units th at experience a decline in total state funding 33
for exceptional children in the FY 2026-27 fiscal year. 34
SECTION 7.2A.(c) Reserve Authorized Uses. – The funds in the Reserve are 35
available to the Department of Public Instruction to distribute to public schoo l units that would 36
otherwise receive less funding under the Exceptional Children allotment in the FY 2026-27 fiscal 37
year than they received through the Children With Disabilities allotment in FY 2025-26. 38
SECTION 7.2A.(d) Reserve Nonrevert. – The funds in the Reserve shall not revert 39
at the end of FY 2026-27 but shall remain available for use until June 30, 2029 to implement this 40
section. 41
SECTION 7.2.(e) Compliance. – Implementation of the exceptional children 42
weighted funding model and access to funds by public school units through this model shall be 43
contingent upon the provision of a free and appropriate education (FAPE) in the least restrictive 44
environment. The Department of Public Instruction shall routinely monitor public school units 45
commensurate with the authority established by 34 CFR Part 300 and G.S. 115C-451. In 46
exercising its monitoring responsibilities under 34 CFR 300.600(d), the Department of Public 47
Instruction must ensure that when it identifies noncompliance with the requirements of this part 48
by PSUs, the noncompliance is corrected as soon as possible, and in no case later than one year 49
after the State's identification of the noncompliance 34 CFR 300.600(e). 50
SECTION 7.2.(f) G.S. 115C-218.105(a) reads as rewritten: 51
General Assembly Of North Carolina Session 2025
Page 20 House Bill 1167-First Edition
"(a) The State Board of Education shall allocate to each charter school: 1
(1) An amount equal to the average per pupil allocation for average daily 2
membership from the local school administrative unit allotments in which the 3
charter school is located for each child attending the charter school except for 4
the allocation for children with disabilities and for the allocation for children 5
with limited English proficiency; 6
(2) An additional amount for each child attending the charter school who is a child 7
with disabilities; and 8
(3) An additional amount for children with limited English proficiency attending 9
the charter school, based on a formula adopted by the State Board. 10
In accordance with G.S. 115C-218.7 and G.S. 115C-218.8, the State Board 11
shall allow for annual adjustments to the amount allocated to a charter school 12
based on its enrollment growth in school years subsequent to the initial year 13
of operation. 14
In the event a child with disabilities leaves the charter school and enrolls in 15
a public school during the first 60 school days in the school year, the charter 16
school shall return a pro rata amount of funds allocated for that child to the 17
State Board, and the State Board shall reallocate those funds to the local 18
school administrative unit in which t he public school is located. In the event 19
a child with disabilities enrolls in a charter school during the first 60 school 20
days in the school year, the State Board shall allocate to the charter school the 21
pro rata amount of additional funds for children wi th disabilities. The State 22
Board shall adjust the amount of funding for children with disabilities each 23
charter school receives during the fiscal year based on the December 1 24
headcount of children with disabilities required by 20 U.S.C. 1412(a)(3)." 25
SECTION 7.2.(g) G.S. 116-239.11(a) reads as rewritten: 26
"(a) The State Board of Education shall allocate to a laboratory school the following: 27
(1) An amount equal to the average per pupil allocation for average daily 28
membership from the local school administrative unit allotments in which the 29
school is located for each child attending the laboratory school, except for the 30
allocation for children with disabilities and for the allocation for children with 31
limited English proficiency. 32
(2) An additional amount for each child attending the laboratory school who is a 33
child with disabilities. In the event a child with disabilities leaves the 34
laboratory school and enrolls in a public school during the first 60 school days 35
in the school year, the laboratory school shall return a pro rata amount of funds 36
allocated for that child to the State Board, and the State Board shall reallocate 37
those funds to the local school administrative unit in which the public school 38
is located. In the event a child with disabilities enrolls in the laboratory school 39
during the first 60 school days in the school year, the State Board shall allocate 40
to the laboratory school the pro rata amount of additional funds for children 41
with disabilities. The State Board shall adjust the amount of funding for 42
children with disabilities each laboratory school receives during the fiscal year 43
based on the December 1 headcount of children with disabilities required by 44
20 U.S.C. 1412(a)(3). 45
…." 46
47
LIMITED ENGLISH PROFICIENCY FUNDING METHODOLOGY CHANGE 48
SECTION 7.3.(a) The title of Article 32F of Chapter 115C of the General Statutes 49
reads as rewritten: 50
"Supplemental School Funding.Funding and Other Allotments." 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 21
SECTION 7.3.(b) Article 32F of Chapter 115C of the General Statutes is amended 1
by adding a new section to read: 2
"§ 115C-472.30. Limited English proficient allotment. 3
To the extent funds are made available for this purpose, the State Board of Education shall 4
allocate fu nds to local school administrative units, charter schools, regional schools, and 5
laboratory schools operated under Article 29A of Chapter 116 of the General Statutes to provide 6
services to students with limited English proficiency. The State Board shall allocate these funds 7
under a formula that takes into account the average number of students in the units, charters, 8
regional schools, or laboratory schools over the past three years who have limited English 9
proficiency. Local school administrative units shal l use funds allocated to them to pay for 10
classroom teachers, teacher assistants, tutors, textbooks, classroom materials/instructional 11
supplies/equipment, transportation costs, and professional development of teachers for students 12
with limited English proficiency. A county in which a local school administrative unit receives 13
funds under this section shall use the funds to supplement local current expense funds and shall 14
not supplant local current expense funds." 15
SECTION 7.3.(c) When making adjustments to al locations to local school 16
administrative units from the limited English proficient allotment for the 2026 -2027 fiscal year, 17
no local school administrative unit with an average daily membership of 20,000 or fewer students 18
for the 2026 -2027 school year shall receive a negative adjustment in excess of fifty thousand 19
dollars ($50,000) when compared to the allocation received during the 2025 -2026 fiscal year 20
from that allotment. 21
22
SCHOOL RESOURCE OFFICER ALLOTMENT 23
SECTION 7.4.(a) Purpose. – The State Board of Education shall create the School 24
Resource Officer Allotment to provide for the safety of students on school grounds. Middle 25
schools across the state may use allotted funds to hire and train School Resource Officers (SROs). 26
SECTION 7.4.(b) Allotment. – Of the funds appropriated through this act to the 27
Department of Public Instruction, the State Board shall allocate funding to each local school 28
administrative unit for hiring school resource officers. Each local school administrative unit shall 29
receive allotted dollars for each non-virtual school serving students in middle school. 30
SECTION 7.4.(c) Consolidation. – Effective July 1, 2026, G.S. 143B-1209.60 is 31
repealed and all funds for middle school SROs shall be administered through the School Resource 32
Officer Allotment by the Department of Public Instruction. At the discretion of the State Board 33
of Education, the funds provided for high school SROs through the At -Risk Student Allotment 34
may also be consolidated into this allotment. 35
SECTION 7.4.(d) Training. – The Center for Safer Schools and the Department of 36
Public Instruction shall work with the NC Criminal Justice Education and Training Standards 37
Commission to establish initial training and continuing education standards for SROs. Those 38
standards shall include pre-service training and modules on the social and cognitive development 39
of elementary school and middle school children, behavioral health, and trauma -informed 40
practices in schools. All SROs must receive training through a community college, a local la w 41
enforcement agency, or the North Carolina Justice Academy prior to placement in a school. 42
43
EXPAND LITERACY PROF ESSIONAL DEVELOPMENT AND SUPPORT TO 44
GRADES 6-8 45
SECTION 7.5.(a) G.S. 115C-83.6A reads as rewritten: 46
"§ 115C-83.6A. Approval of literacy intervention plans. 47
(a) Each local school administrative unit shall submit to the Department of Public 48
Instruction a plan for the literacy interventions interventions for kindergarten through eighth 49
grade it will offer, including reading camps, in the following school year no later than October 50
1. The plan shall include information about the local school administrative unit's efforts to staff 51
General Assembly Of North Carolina Session 2025
Page 22 House Bill 1167-First Edition
reading camps with the most qualified teachers possible, including the unit's efforts to attract 1
teachers associated with high growth in reading based on EVAAS data and teachers who have 2
earned a reading bonus. The plan shall incorporate any feedback received from the Department 3
on the previous year's plan. As part of their plans, local school administrative units are 4
encouraged to partner with other local school administrative units and with community 5
organizations to enhance literacy interventions. 6
…." 7
SECTION 7.5.(b) G.S. 115C-83.4B reads as rewritten: 8
"§ 115C-83.4B. Early Literacy Program. 9
(a) There is established the Ea rly Literacy Program within the Department of Public 10
Instruction. The Department of Public Instruction, in consultation with the Department of Health 11
and Human Services, shall use the Early Literacy Program to build strong foundational early 12
literacy skills utilizing the Science of Reading for children in the North Carolina Prekindergarten 13
(NC Pre-K) program. 14
(b) As part of the Early Literacy Program, the Department of Public Instruction shall 15
focus on at least the following components: 16
(1) Provide a training program to educatorseducators, principals, and 17
administrators working with children in the NC Pre -K program to ensure 18
developmentally appropriate instruction grounded in the Science of Reading 19
and outcomes promoting reading achievement in students. Any principal who 20
supervises educators who undergo this training shall also complete the 21
training themselves. The Department of Public Instruction shall utilize a third-22
party independent teacher training program to deliver professional 23
development that demonstrates evidence -based success with educators 24
educators, principals, and administrators in establishing deep knowledge of 25
literacy instruction. 26
…." 27
SECTION 7.5.(c) Allotment. – To the extent funds are made available for this 28
purpose, the Department of Public Instruction shall use funds appropriated in this act to contract 29
with Lexia Learning to provide Lexia Aspire® Professional Learning to all English -Language 30
Arts, Math, Science and Social Studies teachers in sixth, seventh, and eighth grades. 31
32
EXPAND USE OF DIAGNOSTIC READING ASSESSMENTS TO GRADES 4-5 33
SECTION 7.6.(a) G.S. 115C-83.3 reads as rewritten: 34
"§ 115C-83.3. Definitions. 35
The following definitions apply in this Part: 36
(1) "Accelerated reading class" means a class where focused litera cy 37
interventions are provided to increase a student's reading level at least two 38
grades in one school year. 39
(2) "Alternative assessment" means a valid and reliable standardized assessment 40
of reading comprehension, approved by the State Board of Education, that is 41
not the same test as the State -approved standardized test of reading 42
comprehension administered to third grade students. The State Board of 43
Education shall provide the valid and reliable alternative assessment to local 44
school administrative units public school units upon request and establish 45
achievement level ranges for the approved alternative assessment. The State 46
Board of Education shall annually review the alternative assessment to ensure 47
ongoing relevance, validity, and reliability. 48
…." 49
SECTION 7.6.(b) G.S. 115C-83.6 reads as rewritten: 50
"§ 115C-83.6. Facilitating early grade reading proficiency. 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 23
(a) Kindergarten, first, second, and third through fifth grade students shall be assessed 1
with valid, reliable, formative, and diagnostic reading assessments made available to local school 2
administrative units public school units by the State Board of Education pursuant to G.S. 115C-3
174.11(a). Difficulty with reading development identified through administration of formative 4
and diagnostic assessments shall be addressed with literacy interventions outlined in the student's 5
Individual Reading Plan. Parents or guardians of first and second grade students offered a reading 6
camp as a literacy intervention shall be encouraged to enroll their student in the reading camp 7
provided by the local school administrative unit. Parents or guardians of a student identified as 8
demonstrating reading comprehension below grade level shall make the final decision regarding 9
a student's reading camp attendance. 10
… 11
(a2) The Department of Public Instruction shall provide for EVAAS analysis all formative 12
and diagnostic assessment data collected pursuant to this section for kindergarten through third 13
fifth grade. The Department shall use a uniform template for all data collected, and the template 14
shall be used each time data is provided. The template shall include clear designations for each 15
data component reported. 16
…." 17
SECTION 7.6.(c) G.S. 115C-83.6B reads as rewritten: 18
"§ 115C-83.6B. Individual Reading Plans. 19
(a) An Individual Reading Plan (IRP) shall be developed for any student in kindergarten 20
through third fifth grade demonstrating difficulty with reading development based on the results 21
of either (i) the first diagnostic or formative assessment of the school year or (ii) the f irst 22
diagnostic or formative assessment of the second semester of the school year . The IRP shall be 23
continually adjusted based on multiple data sources as prescribed by the Department of Public 24
Instruction, indicating that the student is not progressing to ward grade-level standards in one or 25
more major reading areas. Based on the most recently collected data, the IRP shall include the 26
following information, specific to the identified student: 27
(1) The specific reading skill deficiencies identified by assessment data. 28
(2) Goals and benchmarks for growth. 29
(3) The means by which progress will be monitored and evaluated. 30
(4) The specific additional literacy interventions the student will receive. 31
(5) The Science of Reading -based instructional programming the teacher will 32
implement. 33
(6) Any additional services the teacher deems appropriate to accelerate the 34
student's reading skill and development. 35
…." 36
37
SCHOOL PERFORMANCE GRADE REDESIGN 38
SECTION 7.7.(a) Program Established; Purpose. – There is established the School 39
Performance Grade Redesign Pilot Program (Program) for the 2026 -2027 and 2027-2028 fiscal 40
years. The Program shall be composed of a small group of school units and expanded to all K-12 41
schools receiving public funds in the 2028 -29 school year. The purpose of the Program is to 42
improve the school performance grade process to provide more transparent and comprehensive 43
information about school performance to parents, students, and administrators. School 44
performance grades will continue to be issued pursuant to G.S. 115C-83.15 during the pilot 45
program. 46
SECTION 7.7.(b) School Performance Grade Criteria. – The Department of Public 47
Instruction shall develop and publish criteria to be used for school performance grades in the 48
Program. 49
SECTION 7.7.(c) Application for Program. – Public school units interested in 50
participating in the Program shall notify the Department, and the Department shall establish a 51
General Assembly Of North Carolina Session 2025
Page 24 House Bill 1167-First Edition
process for selecting schools to participate. The Department shall select one charter school, one 1
local school administrative unit, and one private school that receives state funds to participate in 2
the Program from each State Board of Education region, balancing characteristics of the school 3
units to represent the diversity of the State. 4
SECTION 7.7.(d) Interim Reporting. – Each school unit participating in the Program 5
shall report to the Department on the criteria developed pursuant to subsection (b) of this section 6
by the deadline established by the Department. 7
SECTION 7.7.(e) Department Reporting. – The Department shall report to the Joint 8
Legislative Oversight Committee and the Office of State Budget and Management by November 9
1, 2027, on the status and progress of the Program. A copy of the report shall be distributed to all 10
local superintendents and principals in public school units participating in the Program. The 11
report shall include at least the following: 12
(1) Any difficulties in collecting data or information required by the Program. 13
(2) Any recommended changes to the Program. 14
(3) Any other information the Department deems relevant to the performance of 15
the Program. 16
(4) Any other information requested by the committee. 17
SECTION 7.7.(f) Statewide Expansion of the Program. – Beginning with the 18
2028-29 school year, the Program shall be expanded to all K-12 schools in the State that receive 19
public funds. All participating schools shall provide the information required by the Program. 20
SECTION 7.7.(g) Final Reporting. – Each participating school u nit, as part of the 21
Program, shall report to the Department on the criteria developed pursuant to subsection (a) of 22
Section 2 of this act by the deadline established by the Department. 23
SECTION 7.7.(h) Final Department Reporting. – The Department shall sub mit a 24
final report to the Joint Legislative Oversight Committee by June 30, 2029, on the outcomes of 25
the Program. A copy of the report shall be distributed to local superintendents and principals in 26
all participating schools. The report shall include at least the following: 27
(1) Any continued difficulties in collecting data or information required by the 28
Program. 29
(2) Any recommended changes to the criteria developed by the Program. 30
(3) Any other information the Department deems relevant to the performance of 31
the Program. 32
(4) The model and scale that the Department would use to assign school 33
performance grades from the criteria developed for the Program. 34
(5) Any recommended legislation for implementing the Program permanently to 35
replace the existing school performance grade system. 36
(6) Any other information requested by the committee. 37
SECTION 7.7.(i) Intention of General Assembly. – It is the intention of the General 38
Assembly that after any statutory changes made pursuant to subsection (h) of this section, school 39
performance measures be issued that are based on the results of the pilot, that more heavily 40
weight growth than the current score, and that comply with federal requirements, including those 41
in the Every Student Succeeds Act. 42
43
FUND VIRTUAL CHARTER SCHOOLS AT STATEWIDE AVERAGE PER -PUPIL 44
FUNDING 45
SECTION 7.8. G.S. 115C-218.105 reads as rewritten: 46
"(a) The State Board of Education shall allocate to each charter school: 47
(1) An amount equal to to: 48
a. Except for charter schools approved to operate pursuant to G.S. 115C-49
218-120(b)(1), the average per pupil allocation for average daily 50
membership from the local school administrative unit allotments in 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 25
which the charter school is located for each child attending the charter 1
school except for the allocation for children with disabilities and for 2
the allocation for children with limited English 3
proficiency.proficiency; 4
b. For charter schools approved to operate pursuant to G.S. 115C -218-5
120(b)(1), the average State per pupil allocation for average daily 6
membership for each child attending the charter school except for the 7
allocation for children with disabilities and for the allocation for 8
children with limited English proficiency. 9
…." 10
11
ELIMINATE TRANSPORTATION FUNDING FOR VIRTUAL CHARTER SCHOOL 12
SECTION 7.9. G.S. 115C-218.105 reads as rewritten: 13
"… 14
(a1) The State Board shall not withhold or reduce distribution of funds to a charter school 15
for any reason except as provided in subsection (a2) of this section. 16
(a2) The State Board shall withhold or reduce distribution of funds to a charter school if 17
any of the following applies: 18
(1) The change in funding is due to an annual adjustment based on enrollment or 19
is a general adjustment to allocations that is not specif ic to the charter or 20
actions of that charter school. 21
(2) The Review Board notifies the State Board that the charter school has 22
materially violated a term of its charter, has violated a State statute or federal 23
law, or has had its charter terminated or nonrenewed. 24
(3) The Review Board notifies the State Board that the charter school has failed 25
to meet generally accepted standards of fiscal management or has violated a 26
State or federal requirement for receipt of funds. 27
(a3) The State Board shall not provide transportation funds to virtual charter school s or 28
remote charter academies for students who attend exclusively online. 29
…." 30
31
INCREASE SUPPORT FOR PUBLIC SCHOOL CAPITAL IMPROVEMENTS 32
SECTION 7.10. G.S. 115C-546.2 reads as rewritten: 33
"… 34
(e) The State Board of Education may use up to two million dollars ($2,000,000) two 35
million five hundred thousand dollars ($2,500,000) each year of monies in the Fund to support 36
positions in the Department of Public Instruction's Support Services Division. 37
…." 38
39
INCREASE PARTICIPATI ON IN COMMUNITY ELIG IBILITY PROVISION ME AL 40
PROGRAM 41
SECTION 7.11.(a) Part 2 of Article 17 of Chapter 115C of the General Statutes is 42
amended by adding a new section to read: 43
"§ 115C-264.6. CEP Meal Incentive Program. 44
(a) Definitions. – The following definitions apply to this section: 45
(1) CEP. – Community Eligibility Provision. 46
(2) Department. – Department of Public Instruction. 47
(3) Eligible unit. – A local school administrative unit, school within a local school 48
administrative unit, r egional school, or charter school that meets all of the 49
following: 50
a. Qualifies for the federal CEP program. 51
General Assembly Of North Carolina Session 2025
Page 26 House Bill 1167-First Edition
b. Did not participate in the federal CEP program in the 2025-2026 fiscal 1
year. 2
(4) ISP. – Identified Student Percentage. 3
(5) Participating school. – A school participating in the Program. 4
(6) Participating unit. – An eligible unit selected to participate in the Program. 5
(7) Program. – The CEP Meal Incentive Program established pursuant to this 6
section. 7
(b) Program; Purpose. – The Department shall es tablish the Program to expand public 8
school participation in the federal CEP program to increase the number of students with access 9
to healthy, cost-free school breakfast and lunch. In each year where funds are made available for 10
this purpose, the Program shall be administered in accordance with the provisions of this section. 11
(c) Application. – By April 15 of each year of the Program, the Department shall develop 12
the application for the Program and make it available to eligible units. To be considered for 13
selection for the Program, eligible units shall submit their applications by June 1 of each year. At 14
a minimum, the application shall include the following information: 15
(1) The school or schools that will participate in the CEP program. 16
(2) The ISP for the school or schools for the current school year. 17
(3) The number of students enrolled in the school or schools for the current school 18
year. 19
(4) Participation rates in the National School Breakfast and Lunch programs for 20
the current school year for the schools requesting to receive the incentive. 21
(d) Selection. – By July 15 of each year of the Program, the Department shall determine 22
whether each applicant is eligible to participate. The Department shall then award grants to all 23
eligible units that apply. If th ere are insufficient funds to award grants to all eligible units that 24
apply, the Department shall first prioritize awarding grants to eligible units with an ISP of greater 25
than or equal to fifty-five percent (55%) and then prioritize awarding grants to those schools that 26
will draw the greatest federal match. 27
(e) Grants. – The Department shall issue State reimbursements to participating units to 28
supplement federal reimbursements of school meals. State reimbursements shall equal the 29
difference between the federal free rate and the federal paid rate for the number of meals served 30
at the participating schools equal to a 0.2 multiplier of the ISP for the participating schools. State 31
and federal reimbursements shall not exceed one hundred percent (100%) of the federal free rate 32
of meals served. Participating schools shall have an innovative breakfast option available where 33
students have access to breakfast and are allowed to consume breakfast in the classroom. 34
(f) Nonsupplant Requirement. – A participating unit shall use the funds to supplement 35
and not supplant local current expense funds. 36
(g) Report. – No later than January 1 of each year of the Program, the Department shall 37
report to the Joint Legislative Education Oversight Committee and the Fiscal Research Division 38
at least the following information: 39
(1) The number of participating schools. 40
(2) The number of students who received free meals who would not have 41
otherwise received free meals had the participating school not utilized the 42
incentive. 43
(3) The amount of federal and State money participating units received. 44
(4) Any increase in student success due to the participating school's utilization of 45
the incentive and participation in the Program. 46
(h) Administration. – The Department may use up to five hundred thousand dollars 47
($500,000) of the funds appropriated for the Program for administrative costs." 48
SECTION 7.11.(b) Section 7.59 of S.L. 2023-134 is repealed. 49
SECTION 7.11.(c) This section becomes effective July 1, 2026. 50
51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 27
PART VII-A. COMPENSATION OF PUBLIC SCHOOL EMPLOYEES 1
2
TEACHER SALARY SCHEDULE 3
SECTION 7A.1.(a) The following monthly teacher salary schedule shall apply for 4
the 2025-26 fiscal year to licensed personnel of the public schools who are classified as teachers. 5
The salary schedule is based on years of teaching experience. 6
2025-2026 Teacher Monthly Salary Schedule 7
Years of Experience "A" Teachers 8
0 4,630 9
1 4,690 10
2 4,750 11
3 4,810 12
4 4,870 13
5 4,930 14
6 4,990 15
7 5,050 16
8 5,110 17
9 5,170 18
10 5,230 19
11 5,290 20
12 5,350 21
13 5,410 22
14 5,470 23
15 5,520 24
16 5,520 25
17 5,520 26
18 5,580 27
19 5,580 28
20 5,580 29
21 5,640 30
22 5,640 31
23 5,640 32
24 5,730 33
25+ 5,730 34
SECTION 7A.1.(b) The following monthly teacher salary schedule shall apply for 35
the 2026 -2027 fiscal year to licensed personnel of the public schools who are classified as 36
teachers. The salary schedule is based on years of teaching experience. 37
2026-2027 Teacher Monthly Salary Schedule 38
Years of Experience "A" Teachers 39
0 5,312 40
1 5,332 41
2 5,355 42
3 5,378 43
4 5,401 44
5 5,424 45
6 5,447 46
7 5,470 47
8 5,493 48
9 5,516 49
10 5,539 50
11 5,562 51
General Assembly Of North Carolina Session 2025
Page 28 House Bill 1167-First Edition
12 5,585 1
13 5,608 2
14 5,631 3
15 5,654 4
16 5,677 5
17 5,700 6
18 5,723 7
19 5,746 8
20 5,769 9
21 5,792 10
22 5,815 11
23 5,838 12
24 5,861 13
25+ 5,875 14
SECTION 7A.1.(c) Salary Supplements for Teachers Paid on This Salary Schedule. 15
(1) Licensed teachers who have NBPTS certification shall receive a salary 16
supplement each month of twelve percent (12%) of their monthly salary on 17
the "A" salary schedule. 18
(2) Licensed teachers who are classified as "M" teachers shall receive a salary 19
supplement each month of ten percent (10%) of their monthly salary on t he 20
"A" salary schedule. 21
(3) Licensed teachers with licensure based on academic preparation at the 22
six-year degree level shall receive a salary supplement of one hundred 23
twenty-six dollars ($126.00) per month in addition to the supplement 24
provided to them as "M" teachers. 25
(4) Licensed teachers with licensure based on academic preparation at the 26
doctoral degree level shall receive a salary supplement of two hundred 27
fifty-three dollars ($253.00) per month in addition to the supplement provided 28
to them as "M" teachers. 29
(5) Certified school nurses shall receive a salary supplement each month of ten 30
percent (10%) of their monthly salary on the "A" salary schedule. 31
(6) School counselors who are licensed as counselors at the master's degree level 32
or higher shall receive a salary supplement each month of one hundred dollars 33
($100.00). 34
SECTION 7A.1.(d) For school psychologists, school speech pathologists who are 35
licensed as speech pathologists at the master's degree level or higher, and school audiologists 36
who are licensed as audiologists at the master's degree level or higher, the following shall apply: 37
(1) The first step of the salary schedule shall be equivalent to the sixth step of the 38
"A" salary schedule. 39
(2) These employees shall receive the following salary supplements each month: 40
a. Ten percent (10%) of their monthly salary, excluding the supplement 41
provided pursuant to sub-subdivision b. of this subdivision. 42
b. Three hundred fifty dollars ($350.00). 43
(3) These employees are eligible to receive salary supplements equivalent to those 44
of teachers for academic preparation at the six -year degree level or the 45
doctoral degree level. 46
(4) The twenty -sixth step of the salary schedule shall be seven and one -half 47
percent (7.5%) higher than the salary received by these same e mployees on 48
the twenty-fifth step of the salary schedule. 49
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 29
SECTION 7A.1.(e) Beginning with the 2014-2015 fiscal year, in lieu of providing 1
annual longevity payments to teachers paid on the teacher salary schedule, the amounts of those 2
longevity payments are included in the monthly amounts under the teacher salary schedule. 3
SECTION 7A.1.(f) A teacher compensated in accordance with this salary schedule 4
for the 2025 -26 and 2026 -27 school years shall receive an amount equal to the greater of the 5
following: 6
(1) The applicable amount on the salary schedule for the applicable school year. 7
(2) For teachers who were eligible for longevity for the 2013 -2014 school year, 8
the sum of the following: 9
a. The salary the teacher received in the 2013-2014 school year pursuant 10
to Section 35.11 of S.L. 2013-360. 11
b. The longevity that the teacher would have received under the longevity 12
system in effect for the 2013 -2014 school year provided in Section 13
35.11 of S.L. 2013-360 based on the teacher's current years of service. 14
c. The annual bonus provided in Section 9.1(e) of S.L. 2014-100. 15
(3) For teachers who were not eligible for longevity for the 2013 -2014 school 16
year, the sum of the salary and annual bonus the teacher received in the 17
2014-2015 school year pursuant to Section 9.1 of S.L. 2014-100. 18
SECTION 7A.1.(g) As used in this section, the term "teacher" shall also include 19
instructional support personnel. 20
21
RESTORE MASTER'S PAY 22
SECTION 7A.2.(a) The following session laws are repealed: 23
(1) Section 8.22 of S.L. 2013-360. 24
(2) Section 8.3 of S.L. 2014-100. 25
SECTION 7A.2.(b) G.S. 115C-302.10 reads as rewritten: 26
"§ 115C-302.10. Qualifications for certain education-based salary supplements. 27
(a) Notwithstanding any other provision of law, only the following teachers and 28
instructional support personnel shall be paid on the "M" salary schedule or receive a salary 29
supplement for academic preparation at the six-year degree level or at the doctoral degree level: 30
(1) Certified school nurses and instructional support personnel in positions for 31
which a master's degree is required for licensure. 32
(2) Teachers and instructional support personnel who were paid on the "M" salary 33
schedule or received that salary supplement prior to the 2014-15 school year. 34
(3) Teachers and instructional support personnel who (i) complete a degree at the 35
master's, six-year, or doctoral degree level for which they completed at least 36
one course prior to August 1, 2013, and (ii) would have qualified for the salary 37
supplement pursuant to State Board of Education policy, TCPA006, as it was 38
in effect on June 30, 2013. 39
(4) Teachers who do not qualify under subdivisions (1), (2), and (3) of this section 40
but who spend at least seventy percent (70%) of their time as follows: 41
a. For teachers, in classroom instruction related to their graduate 42
academic preparation in their field or subject area within their area of 43
licensure. Most of the teachers' remaining time shall be spent in one or 44
more of the following: 45
1. Mentoring teachers. 46
2. Performing demonstration lessons for teachers. 47
3. Writing curricula. 48
4. Developing and leading staff development programs for 49
teachers. 50
General Assembly Of North Carolina Session 2025
Page 30 House Bill 1167-First Edition
b. For instructional support personnel, performing work within the 1
employee's area of graduate academic preparation. 2
(b) Beginning with the 2025-2026 fiscal year and in subsequent fiscal years, for teachers 3
who are paid on the "M" salary schedule under subdivision (4) of subsection (a) of this act, 4
determination of whether teachers shall be paid on the "M" salary schedule or receive a salary 5
supplement for academic preparation shall take place on an annual basis. Teachers may be moved 6
off the "M" salary schedule or discontinue receiving salary supplements if they are not meeting 7
the requirements of subdivision (4) of subsection (a) of this act in that year. 8
(c) Unless an individual otherwise qualifies under subdivision (2) or (3) of subsection (a) 9
of this section, teachers and instructional support personnel who earn an advanced degree in 10
school administration shall not be paid on the "M" salary schedule or receive a salary supplement 11
for academic preparation." 12
13
CONSOLIDATED TEACHER BONUS PROGRAM 14
SECTION 7A.3.(a) Establish Consolidated Bonus Program. – The State Board of 15
Education shall establish a consolidated teacher bonus program for the 2025 -2027 fiscal 16
biennium to reward teacher performance and encourage student learning and improvement. To 17
attain this goal, the Department of Public Instruction shall administer bonus pay to qualifying 18
teachers whose salaries are supported from State funds in January of 2026 and 2027 , based on 19
data from the 2024 -2025 and 2025 -2026 school years, respectively, in accordance with this 20
section. 21
SECTION 7A.3.(b) Definitions. – For purposes of this section, the following 22
definitions shall apply: 23
(1) Eligible advanced course teacher. – A te acher of Advanced Placement 24
courses, International Baccalaureate Diploma Programme courses, or the 25
Cambridge Advanced International Certificate of Education (AICE) program 26
who meets the following criteria: 27
a. Is employed by, or retired having last held a p osition at, one or more 28
of the following: 29
1. A qualifying public school unit. 30
2. The North Carolina Virtual Public School program. 31
b. Taught one or more students who received a score listed in subsection 32
(c) of this section. 33
(2) Eligible career and technical education (CTE) teacher. – A teacher who meets 34
the following criteria: 35
a. Is employed by, or retired having last held a position at, a qualifying 36
public school unit. 37
b. Taught one or more students who attained approved industry 38
certifications or credentials consistent with G.S. 115C-156.2. 39
(3) Eligible growth teacher. – A teacher who meets at least one of the following 40
criteria: 41
a. Is employed by, or retired having last held a position at, a qualifying 42
public school unit and meets one of the following criteria: 43
1. Is in the top twenty-five percent (25%) of teachers in the State 44
according to the EVAAS student growth index score for third 45
grade reading from the previous school year. 46
2. Is in the top twenty-five percent (25%) of teachers in the State 47
according to the EVAAS student growth index score for fourth 48
or fifth grade reading from the previous school year. 49
3. Is in the top twenty-five percent (25%) of teachers in the State 50
according to the EVAAS student growth index score for fourth, 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 31
fifth, sixt h, seventh, or eighth grade mathematics from the 1
previous school year. 2
b. Is employed by, or retired having last held a position at, a local school 3
administrative unit and meets one of the following criteria: 4
1. Is in the top twenty -five percent (25%) of t eachers in the 5
teacher's respective local school administrative unit according 6
to the EVAAS student growth index score for third grade 7
reading from the previous school year. 8
2. Is in the top twenty -five percent (25%) of teachers in the 9
teacher's respective local school administrative unit according 10
to the EVAAS student growth index score for fourth or fifth 11
grade reading from the previous school year. 12
3. Is in the top twenty -five percent (25%) of teachers in the 13
teacher's respective local school administrative unit according 14
to the EVAAS student growth index score for fourth, fifth, 15
sixth, seventh, or eighth grade mathematics from the previous 16
school year. 17
c. Was employed by a local school administrative unit that employed in 18
the previous school year three or fewer total teachers in that teacher's 19
grade level as long as the teacher has an EVAAS student growth index 20
score from the previous school year of exceeded expected growth in 21
one of the following subject areas: 22
1. Third grade reading. 23
2. Fourth or fifth grade reading. 24
3. Fourth, fifth, sixth, seventh, or eighth grade mathematics. 25
(4) EVAAS. – The Education Value-Added Assessment System. 26
(5) Qualifying public school unit. – Any of the following: 27
a. A local school administrative unit. 28
b. A charter school. 29
c. A regional school. 30
d. A school providing elementary or secondary instruction operated by 31
The University of North Carolina under Article 29A of Chapter 116 of 32
the General Statutes. 33
(6) Qualifying teacher. – An eligible teacher who meets one of the following 34
criteria: 35
a. Remains employed teaching in the same qualifying public school unit, 36
or, if an eligible advanced course teacher is only employed by the 37
North Carolina Virtual Public School program, remains employed 38
teaching in that program, at least from the school year the data is 39
collected until January 1 of the corresponding school year that the 40
bonus is paid. 41
b. Retired, between the last day of the school year in which the data is 42
collected and January 1 of the corresponding school year in which the 43
bonus is paid, after attaining one of the following: 44
1. The age of at least 65 with five years of creditable service. 45
2. The age of at least 60 with 25 years of creditable service. 46
3. Thirty years of creditable service. 47
SECTION 7A.3.(c) Advanced Course Bonuses. – A bonus in the amount of fifty 48
dollars ($50.00) shall be provided to qualifying advanced course teachers for each student taught 49
in each advanced course who receives the following score: 50
General Assembly Of North Carolina Session 2025
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(1) For Advanced Placement courses, a score of three or higher on the College 1
Board Advanced Placement Examination. 2
(2) For International Baccalaureate Diploma Programme courses, a score of four 3
or higher on the International Baccalaureate course examination. 4
(3) For the Cambridge AICE program, a score of "E" or higher on the Cambridge 5
AICE program examinations. 6
SECTION 7A.3.(d) CTE Bonuses. – For qualifying career and technical education 7
teachers, bonuses shall be provided in the following amounts: 8
(1) A bonus in the amount of twenty-five dollars ($25.00) for each student taught 9
by a teacher who provided instruction in a course that led to the attainment of 10
an industry certification or credential with a twenty-five dollar ($25.00) value 11
ranking as determined under subsection (e) of this section. 12
(2) A bonus in the amount of fifty dollars ($50.00) for each student taught by a 13
teacher who provided instruction in a course that led to the attainment of an 14
industry certification or credential with a fifty dollar ($50.00) value ranking 15
as determined under subsection (e) of this section. 16
SECTION 7A.3.(e) CTE Course Value Ranking. – The Department of Commerce, 17
in consultation with the State Board, shall assign a value ranking for each industry certification 18
and credential based on academic rigor and employment value in accordance with this subsection. 19
Fifty percent (50%) of the ranking shall be based on academic rigor and the remaining fifty 20
percent (50%) on employment value. Academic rigor and employment value shall be based on 21
the following elements: 22
(1) Academic rigor shall be based on the number of instructional hours, including 23
work experience or internship hours, required to earn the industry certification 24
or credential, with extra weight given for coursework that also provides 25
community college credit. 26
(2) Employment value shall be based on the entry wage, growth rate in 27
employment for each occupational category, and average annual openings for 28
the primary occupation linked with the industry certification or credential. 29
SECTION 7A.3.(f) Statewide Growth Bonuses. – Of the funds appropriated in this 30
act for the program, bonuses shall be provided to qualifying teachers who are eligible teachers 31
under sub-subdivision a. of subdivision (3) of subsection (b) of this section, as follows: 32
(1) The sum of five million dollars ($5,000,000) shall be allocated for bonuses to 33
eligible teachers under sub -sub-subdivision a.1. of subdivision (3) of 34
subsection (b) of this section. These funds shall be distributed equally among 35
qualifying teachers. 36
(2) A bonus in the amount of two thou sand dollars ($2,000) shall be awarded to 37
each qualifying teacher who is an eligible teacher under sub -sub-subdivision 38
a.2. of subdivision (3) of subsection (b) of this section. 39
(3) A bonus in the amount of two thousand dollars ($2,000) shall be awarded to 40
each qualifying teacher who is an eligible teacher under sub -sub-subdivision 41
a.3. of subdivision (3) of subsection (b) of this section. 42
SECTION 7A.3.(g) Local Growth Bonuses. – Of the funds appropriated in this act 43
for the program, bonuses shall be provi ded to eligible teachers under sub-subdivisions b. and c. 44
of subdivision (3) of subsection (b) of this section, as follows: 45
(1) The sum of five million dollars ($5,000,000) shall be allocated for bonuses to 46
eligible EVAAS teachers under sub -sub-subdivisions b.1. and c.1. of 47
subdivision (3) of subsection (b) of this section. These funds shall be divided 48
proportionally based on average daily membership in third grade for each 49
local school administrative unit and then distributed equally among qualifying 50
third grade reading teachers in each local school administrative unit. 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 33
(2) A bonus in the amount of two thousand dollars ($2,000) shall be awarded to 1
each qualifying teacher who is an eligible teacher under sub -sub-subdivision 2
b.2. or c.2. of subdivision (3) of subsection (b) of this section. 3
(3) A bonus in the amount of two thousand dollars ($2,000) shall be awarded to 4
each qualifying teacher who is an eligible teacher under sub -sub-subdivision 5
b.3. or c.3. of subdivision (3) of subsection (b) of this section. 6
SECTION 7A.3.(h) Limitations and Other Criteria. – The following additional 7
limitations and other criteria shall apply to the program: 8
(1) Bonus funds awarded to a teacher pursuant to subsection (c), subsection (d), 9
subdivision (1) of subsection (f), and subdivision (1) of subsection (g) of this 10
section shall not exceed three thousand five hundred dollars ($3,500) per 11
subsection or subdivision in any given school year. 12
(2) A qualifying teacher who is an eligible teacher under sub-sub-subdivision a.1., 13
b.1., or c.1. of subdivision (3) of subsection (b) of this section may receive a 14
bonus under both subdivision (1) of subsection (f) and subdivision (1) of 15
subsection (g) of this section but shall not receive more than seven thousand 16
dollars ($7,000) pursuant to subdivision (1) of subsection (f) and subdivision 17
(1) of subsection (g) of this section in any given school year. 18
(3) A qualifying teacher who is an eligible teacher under sub-sub-subdivision a.2., 19
b.2., or c.2. of subdivision (3) of subsection (b) of this section may receive a 20
bonus under both subdivision (2) of subsection (f) and subdivision (2) of 21
subsection (g) of this section but shall not receive more than two bonuses 22
pursuant to subdivision (2) of subsection (f) and subdivision (2) of subsection 23
(g) of this section in any given school year. 24
(4) A qualifying teacher who is an eligible teacher under sub-sub-subdivision a.3., 25
b.3., or c.3. of subdivision (3) of subsection (b) of this section may receive a 26
bonus under both subdivision (3) of subsectio n (f) and subdivision (3) of 27
subsection (g) of this section but shall not receive more than two bonuses 28
pursuant to subdivision (3) of subsection (f) and subdivision (3) of subsection 29
(g) of this section in any given school year. 30
SECTION 7A.3.(i) Bonuses Not Compensation. – Bonuses awarded to a teacher 31
pursuant to this section shall be in addition to any regular wage or other bonus the teacher receives 32
or is scheduled to receive. Notwithstanding G.S. 135-1(7a), the bonuses awarded under this 33
section are not compensation under Article 1 of Chapter 135 of the General Statutes, Retirement 34
System for Teachers and State Employees. 35
SECTION 7A.3.(j) Study and Report. – The State Board of Education shall study 36
the effect of the program on teacher performance and retention. The State Board shall report the 37
results of its findings and the amount of bonuses awarded to the President Pro Tempore of the 38
Senate, the Speaker of the House of Representatives, the Joint Legislative Education Oversight 39
Committee, the Office of State Budget and Management, and the Fiscal Research Division by 40
March 15 of each year of the 2025-2027 fiscal biennium. The report shall include, at a minimum, 41
the following information: 42
(1) Number of students enrolled and taking examinations in each of the following 43
categories of courses: 44
a. Advanced Placement. 45
b. International Baccalaureate Diploma Programme. 46
c. Cambridge AICE program. 47
d. Courses needed for the attainment of an industry certification or 48
credential. 49
General Assembly Of North Carolina Session 2025
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(2) Number of students receiving outco mes on examinations resulting in the 1
award of a bonus for a teacher in each category of courses identified in 2
sub-subdivision a. of subdivision (1) of this subsection. 3
(3) Number of teachers receiving a bonus in each category of courses identified 4
in sub-subdivision a. of subdivision (1) of this subsection. 5
(4) The amounts awarded to teachers for each category of courses identified in 6
sub-subdivision a. of subdivision (1) of this subsection. 7
(5) The type of industry certifications and credentials earned by the students, the 8
value ranking for each certification and credential, the number of bonuses 9
earned for each certification or credential, and the total bonus amount awarded 10
for each certification or credential. 11
(6) Average bonus amount awarded to each qualifying teacher who is an eligible 12
teacher under sub -sub-subdivision a.1., b.1., or c.1. of subdivision (3) of 13
subsection (b) of this section. 14
(7) The percentage of teachers who received a bonus pursuant to this section and 15
were eligible to receive a bonus for teaching in the same grade level or course 16
in January 2026 or January 2027, or both, where applicable, pursuant to one 17
of the following programs: 18
a. The Advanced Course and CTE Bonus Program provided in Section 19
7A.4 of S.L. 2021-180. 20
b. The Growth-Based Teacher Bonus Program provided in Section 7A.2 21
of S.L. of 2022-74. 22
(8) The percentage of teachers who received a bonus pursuant to this section and 23
received a bonus for teaching in the same grade level or course in either 24
January 2026 or January 2027 pur suant to one of the programs listed in 25
subdivision (7) of this subsection. 26
(9) The percentage of teachers who received a bonus pursuant to this section and 27
received a bonus for teaching in the same grade level or course in January 28
2026 or January 2027, or both, where applicable, pursuant to one of the 29
programs listed subdivision (7) of this subsection. 30
(10) The statistical relationship between a teacher receiving a bonus in January 31
2026 or 2027 pursuant to this section and receiving a bonus pursuant to a 32
predecessor bonus program. For purposes of this subdivision, the following 33
are predecessor programs: 34
a. Bonuses awarded pursuant to Section 7A.4(c) of S.L. 2021 -180 are 35
predecessors to bonuses awarded pursuant to subsection (c) of this 36
section. 37
b. Bonuses awarded pursuant to Section 7A.4(d) of S.L. 2021 -180 are 38
predecessors to bonuses awarded pursuant to subsection (d) of this 39
section. 40
c. Bonuses awarded pursuant to subdivision (1) of subsection (c) and 41
subdivision (1) of subsection (d) of Section 7A.2 of S.L . 2022-74 are 42
predecessors to bonuses awarded pursuant to subdivision (1) of 43
subsection (f) and subdivision (1) of subsection (g) of this section. 44
d. Bonuses awarded pursuant to subdivision (2) of subsection (c) and 45
subdivision (2) of subsection (d) of Sec tion 7A.2 of S.L. 2022-74 are 46
predecessors to bonuses awarded pursuant to subdivision (2) of 47
subsection (f) and subdivision (2) of subsection (g) of this section. 48
e. Bonuses awarded pursuant to subdivision (c)(3) and subdivision (d)(3) 49
of Section 7A.2 of S.L. 2022-74 are predecessors to bonuses awarded 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 35
pursuant to subdivision (3) of subsection (f) and subdivision (3) of 1
subsection (g) of this section. 2
(11) The distribution of statewide and local growth bonuses awarded pursuant to 3
this section as among quali fying public school units and, where applicable, 4
schools within those units. 5
6
SUPPLEMENTAL FUNDS FOR TEACHER COMPENSATION 7
SECTION 7A.4.(a) Use of Funds. – For each year of the 2025-2027 fiscal biennium, 8
except as provided in subsection (f1) of this section, the State Board of Education shall allocate 9
funds pursuant to this section to eligible local school administrative units to provide salary 10
supplements to teachers and qualifying school administrators in those units. Allocation of salary 11
supplements among teachers and qualifying school administrators within each eligible local 12
school administrative unit, including whether a teacher or qualifying school administrator 13
receives a salary supplement and the amount of the supplement provided to that person, shall be 14
determined in the discretion of the local board of education of the eligible unit, except that no 15
individual salary supplement shall exceed the per teacher funding amount awarded to that unit 16
pursuant to subdivision (4) of subsection (c) of this section. 17
SECTION 7A.4.(b) Definitions. – As used in this section, the following definitions 18
shall apply: 19
(1) Adjusted market value of taxable real property. – A county's assessed taxable 20
real property value, using the latest available data published by the 21
Department of Revenue, divided by the county's sales assessment ratio 22
determined under G.S. 105-289(h). 23
(2) Composite value. – For each eligible county, the sum of the following: 24
a. The taxable real property factor multiplied by sixty -five percent 25
(65%). 26
b. The median household income factor multiplied by twenty -five 27
percent (25%). 28
c. The effective tax rate factor multiplied by ten percent (10%). 29
(3) County allocation factor. – For each eligible county, the supplement factor for 30
that county divided by the sum of all supplement factors for the State. 31
(4) Effective tax rate. – The actual county tax rate multiplied by the most recent 32
annual sales assessment ratio for that county. 33
(5) Effective tax rate factor. – For each eligible county, the effective tax r ate for 34
that county divided by the median effective tax rate in the State. 35
(6) Eligible county. – A county that has an adjusted market value of taxable real 36
property of less than fifty billion nine hundred million dollars 37
($50,900,000,000). 38
(7) Eligible local school administrative unit. – A local school administrative unit 39
located in whole or in part in an eligible county. 40
(8) Eligible school. – A public school that is located in an eligible county and 41
governed by a local school administrative unit. 42
(9) Maintenance of effort amount. – For each local school administrative unit in 43
each fiscal year, the supplant factor multiplied by the total State and non-State 44
funds expended for salaries for teachers from the fiscal year for which the 45
most recent salary data are available. 46
(10) Median household income. – A county's median household income for the 47
most recent 12 months for which data are available, as that term is used in 48
G.S. 143B-437.08. 49
General Assembly Of North Carolina Session 2025
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(11) Median household income factor. – For each eligible county, the med ian 1
household income in the State divided by the median household income for 2
that county. 3
(12) Non-State funds. – Any funds held by a local school administrative unit, other 4
than nonrecurring federal funds received as a result of legislation enacted by 5
Congress in response to COVID19, that are not State funds. 6
(13) Qualifying school administrator. – Any of the following: 7
a. Assistant principals paid pursuant to G.S. 115C-285(a)(8). 8
b. Principals paid pursuant to G.S. 115C-285(a)(8a). 9
(14) Supplant factor. – For each local school administrative unit in each fiscal year 10
of the fiscal biennium, the total non -State funds expended for salary 11
supplements for teachers in the 2020 -2021 fiscal year divided by the total 12
State and non-State funds expended for salaries for teachers in the 2020-2021 13
fiscal year. 14
(15) Supplement factor. – For each eligible county, the composite value multiplied 15
by the number of State -funded teachers employed in a school in the county 16
that is governed by a local school administrative unit. 17
(16) Taxable real property factor. – For each eligible county, the median adjusted 18
market value of taxable real property in the State divided by the adjusted 19
market value of taxable real property for that county. 20
(17) Teacher. – Teachers and instructional support personnel. 21
SECTION 7A.4.(c) Allocation of Funds. – The State Board of Education shall 22
allocate funds for salary supplements to eligible local school administrative units according to 23
the following procedure: 24
(1) County allocation. – For each eligible county, the State Board shall determine 25
a county allocation by multiplying the county allocation factor for that county 26
by the funding amount appropriated pursuant to this section for the applicable 27
fiscal year. 28
(2) Per teacher funding amount. – For each eligible county, the State Board shall 29
determine a per teacher funding amount by dividing the county allocation 30
amounts determined pursuant to subdivision (1) of this subsection by the total 31
number of State -funded teachers employed in all eligible schoo ls in that 32
county. 33
(3) Unit funding amount. – For each eligible local school administrative unit, the 34
State Board shall determine the funding amount for that unit based on the per 35
teacher funding amount or amounts for the eligible county or counties where 36
the unit is located. For each county with an eligible school governed by the 37
unit, the State Board shall multiply the applicable per teacher funding amount 38
for that county determined pursuant to subdivision (2) of this subsection by 39
the number of State -funded teachers employed in the eligible school in that 40
county. If the unit is located in multiple eligible counties, the State Board shall 41
aggregate those amounts. 42
(4) Allocation and funding cap. – The State Board shall allocate the amount 43
determined pursuant to subdivision (3) of this subsection to each eligible local 44
school administrative unit for each applicable fiscal year, up to a maximum of 45
five thousand dollars ($5,000) per State-funded teacher. 46
SECTION 7A.4.(d) Charter Schools. – Funds appropriated t o the Department of 47
Public Instruction pursuant to this section shall be subject to the allocation of funds for charter 48
schools described in G.S. 115C-218.105. The General Assembly encourages charter schools 49
receiving funds pursuant to this section to provide salary supplements to teachers and qualifying 50
school administrators in the charter school in accordance with the requirements of this section. 51
General Assembly Of North Carolina Session 2025
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SECTION 7A.4.(e) Formula for Distribution of Supplemental Funding Pursuant to 1
this Section Only. – The formula in this section is solely a basis for distribution of supplemental 2
funding to eligible local school administrative units and is not intended to reflect any measure of 3
the adequacy of the educational program or funding for public schools. The formula is also not 4
intended to reflect any commitment by the General Assembly to appropriate any additional 5
supplemental funds for eligible local school administrative units. 6
SECTION 7A.4.(f) Non-supplant Requirement. – A local school administrative unit 7
that recei ves funds under this section shall use those funds to supplement non -State funds 8
provided for salary supplements for teachers and qualifying school administrators and shall not 9
use any State funds, including funds received under this section or Section 7A. 12 of S.L. 10
2021-180, to supplant non -State funds provided for salary supplements for teachers and 11
qualifying school administrators. For purposes of this section, a local school administrative unit 12
has supplanted non -State funds if the State Board finds tha t the amount of non -State funds 13
expended by the unit for salary supplements was less than ninety -five percent (95%) of the 14
maintenance of effort amount for the local school administrative unit. 15
SECTION 7A.4.(f1) Non-supplant Enforcement. – If the State Board of Education 16
determines that a local school administrative unit has supplanted non-State funds in violation of 17
subsection (f) of this section, the State Board of Education shall not allocate any funds under this 18
section to the unit. 19
SECTION 7A.4.(f2) Additional Penalty for Consecutive Supplanting. – It is the 20
intent of the General Assembly that the State Board of Education will not allocate supplemental 21
funds for teacher compensation to a local school administrative unit in the 2026-2027 fiscal year 22
if the State Board of Education determines that the local school administrative unit supplanted 23
non-State funds provided for salary supplements for teachers and qualifying school 24
administrators with State funds in the 2024-2025 fiscal year and the 2025-2026 fiscal year. 25
SECTION 7A.4.(g) Reports. – No later than April 15 of each year of the 2025-2027 26
fiscal biennium, the State Board of Education shall report the following information for the 27
applicable fiscal year to the Joint Legislative Education Oversight Committee and the Fiscal 28
Research Division: 29
(1) A list of all eligible counties and eligible local school administrative units. 30
(2) Funds allocated to each eligible local school administrative unit. 31
(3) The percentage and amount of teachers and qualifying school administrators 32
in each eligible local school administrative unit receiving salary supplements. 33
(4) The average salary supplement amount in each eligible local school 34
administrative unit. 35
(5) The range of salary supplement amounts in each eligible lo cal school 36
administrative unit. 37
(6) The effect of the salary supplements on the retention of teachers and 38
qualifying school administrators in eligible local school administrative units. 39
(7) The identity of any local school administrative unit that the Stat e Board 40
determines has supplanted funds. 41
42
PRINCIPAL SALARY SCHEDULE 43
SECTION 7A.5.(a) The following annual salary schedule for principals shall apply 44
for the 2025-2026 fiscal year, beginning July 1, 2025. 45
2025-2026 Principal Annual Salary Schedule 46
Avg. Daily Membership Base Met Growth Exceeded Growth 47
0-200 $79,737 $87,709 $95,684 48
201-400 $83,723 $92,095 $100,467 49
401-700 $87,709 $96,481 $105,252 50
701-1,000 $91,698 $100,866 $110,037 51
General Assembly Of North Carolina Session 2025
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1,001-1,600 $95,684 $105,252 $114,821 1
1,601+ $99,670 $109,637 $119,604 2
SECTION 7A.5.(b) The following annual salary schedule for principals shall apply 3
for the 2026-2027 fiscal year, beginning July 1, 2026. 4
2026-2027 Principal Annual Salary Schedule 5
Avg. Daily Membership Base Met Growth Exceeded Growth 6
0-200 $81,730 $89,902 $98,076 7
201-400 $85,816 $94,397 $102,979 8
401-700 $89,902 $98,893 $107,883 9
701-1,000 $93,990 $103,388 $112,788 10
1,001-1,600 $98,076 $107,883 $117,692 11
1,601+ $102,162 $112,378 $122,594 12
SECTION 7A.5.(c) A principal's placement on the salary schedule shall be 13
determined according to the average daily membership of the school supervised by the principal, 14
as described in subsection (b) of this section, and the school growth scores, calculated pursuant 15
to G.S. 115C-83.15(c), for each school the principal supervised in at least one of the prior two 16
school years, as described in subsection (c) of this section, regardless of a break in service, and 17
provided the principal supervised each school as a principal for at least a majority of the school 18
year, as follows: 19
(1) A principal shall be paid according to the Exceeded Growth column of the 20
schedule if the school growth scores show the school or schools exceeded 21
expected growth in at least one of the prior two school years. 22
(2) A principal shall be paid according to the Met Growth column of the schedule 23
if any of the following apply: 24
a. The higher school growth score in one of the two prior school years 25
shows that the school met expected growth. 26
b. The principal supervised a school in the two prior school years that 27
was not eligible to receive a school growth score. 28
(3) A principal shall be paid according to the Base column if either of the 29
following apply: 30
a. The school growth scores show the school or schools did not meet 31
expected growth in either of the two prior years. 32
b. The principal has not supervised any school as a principal for a 33
majority of the school year in at least the two prior school years. 34
SECTION 7A.5.(d) For purposes of determining the average daily membership of a 35
principal's school, the following amounts shall be used during the following time periods: 36
(1) For the 2025-2026 school year, placement on the schedule related to average 37
daily membership shall be based on the average daily membership for the 38
school from the 2024-2025 school year. If the school did not have an average 39
daily membership in the 2024 -2025 school year, the projected average daily 40
membership for the school for the 2025 -2026 school year shall be used 41
between July 1, 2025 and December 31, 2025, and the average daily 42
membership for the school s hall be used between January 1, 2026 and June 43
30, 2026. 44
(2) For the 2026-2027 school year, placement on the schedule related to average 45
daily membership shall be based on the average daily membership for the 46
school from the 2025-2026 school year. If the school did not have an average 47
daily membership in the 2025 -2026 school year, the projected average daily 48
membership for the school for the 2026 -2027 school year shall be used 49
between July 1, 2026 and December 31, 2026, and the average daily 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 39
membership for the s chool shall be used between January 1, 2027 and June 1
30, 2027. 2
SECTION 7A.5.(e) For purposes of determining the school growth scores for each 3
school the principal supervised in one or more prior school years, the following school growth 4
scores shall be used during the following time periods: 5
(1) For purposes of determining the school growth scores for each principal in the 6
2025-2026 school year, school growth scores from the two most recent 7
available school years, up to the 2024-2025 school year, shall be used. 8
(2) For purposes of determining the school growth scores for each principal in the 9
2026-2027 school year, school growth scores from the two most recent 10
available school years, up to the 2025-2026 school year, shall be used. 11
SECTION 7A.5.(f) Beginning with the 2017 -2018 fiscal year, in lieu of providing 12
annual longevity payments to principals paid on the principal salary schedule, the amounts of 13
those longevity payments are included in the annual amounts under the principal salary schedule. 14
SECTION 7A.5.(g) A principal compensated in accordance with this section for the 15
2025-2026 and 2026-27 fiscal year shall receive an amount equal to the greater of the following: 16
(1) The applicable amount determined pursuant to subsections (a) through (d) of 17
this section. 18
(2) For principals who were eligible for longevity in the 2016 -2017 fiscal year, 19
the sum of the following: 20
a. The salary the principal received in the 2016-2017 fiscal year pursuant 21
to Section 9.1 or Section 9.2 of S.L. 2016-94. 22
b. The longevity that the principal would have received as provided for 23
State employees under the North Carolina Human Resources Act for 24
the 2016 -2017 fiscal year based on the principal's current years of 25
service. 26
(3) For principals who were not eligible for longevity in the 2016-17 fiscal year, 27
the salary the principal received in the 2016 -2017 fiscal year pursuant to 28
Section 9.1 or Section 9.2 of S.L. 2016-94 29
30
PRINCIPAL RECRUITMENT BONUS 31
SECTION 7A.6.(a) G.S. 115C-285.1 reads as rewritten: 32
"§ 115C-285.1. Principal recruitment supplement. 33
(a) Definitions. – The following definitions shall apply in this section: 34
(1) Eligible employer. – The governing board of a local school administrative unit 35
with an eligible school. 36
(2) Eligible school. – A low‑performing school, as defined in G.S. 115C-105.37, 37
that received an overall school performance score that placed it in the bottom 38
five percent (5%) ten percent (10%) of all schools in the State in the prior 39
school year. 40
(3) Qualifying principal. – A principal who is paid on th e Exceeded Growth 41
column of the Principal Salary Schedule. 42
(4) Qualifying school. – An eligible school selected by the Department to 43
participate in the Program. 44
(b) Program; Purpose. – The Department of Public Instruction shall establish the 45
Principal Recruitment Supplement Program (Program). To the extent funds are made available, 46
the purpose of the Program shall be to provide significant, time‑limited salary supplements to 47
qualifying principals who accept employment as principals of qualifying schools. 48
(c) Salary Supplement. – A qualifying principal who accepts a position as a principal in 49
a qualifying school shall receive an annual salary supplement of thirty thousand dollars 50
General Assembly Of North Carolina Session 2025
Page 40 House Bill 1167-First Edition
($30,000), paid on a monthly basis, as long as the principal is employed as the principal of that 1
school, up to a maximum period of 36 months, subject to the following: 2
(1) A qualifying principal who contracts with an eligible employer to receive the 3
salary supplement shall not be excluded in future years from contracting with 4
the same eligible employer or a different eligible employer for another salary 5
supplement, subject to the requirements of this section. 6
(2) A qualifying principal who accepts employment as a principal at a qualifying 7
school shall continue to receive the salary supplement during performance of 8
the contract, up to 36 months, even if one or more of the following occur: 9
a. The principal is no longer a qualifying principal. 10
b. The school is no longer an eligible school. 11
(3) Notwithstanding G.S. 135-1(7a), salary supplements provided pursuant to this 12
section are not compensation under Article 1 of Chapter 135 of the General 13
Statutes, the Teachers' and State Employees' Retirement System. 14
(4) In the event that insufficient funds are available to provide awards to all 15
qualifying principals, the Department shall prioritize providing salary 16
supplements to those principals accepting positions in the lowest performing 17
schools. 18
…." 19
20
BONUSES FOR PRINCIPALS 21
SECTION 7A.7.(a) The Department of Public Instruction shall administer a bonus 22
in the 2025-2027 fiscal biennium to any principal who supervised a school as a principal for a 23
majority of the previous school year if that school was in the top fifty percent (50%) of school 24
growth in the State during the previous school year, calculated by the State Board pursuant to 25
G.S. 115C-83.15(c), as follows: 26
2025-2027 Principal Bonus Schedule 27
Statewide Growth Percentage Bonus 28
Top 5% $15,000 29
Top 10% $10,000 30
Top 15% $5,000 31
Top 20% $2,500 32
Top 50% $1,000 33
A principal shall receive no more than one bonus pursuant to this subsection. The 34
bonus shall be paid at the highest amount for which the principal qualifies. 35
SECTION 7A.7.(b) The bonus awarded pursuant to this section shall be in addition 36
to any regular wage or other bonus the principal receives or is scheduled to receive. 37
SECTION 7A.7.(c) Notwithstanding G.S. 135-1(7a), the bonuses awarded pursuant 38
to this section are not c ompensation under Article 1 of Chapter 135 of the General Statutes, 39
Retirement System for Teachers and State Employees. 40
SECTION 7A.7.(d) It is the intent of the General Assembly that funds provided 41
pursuant to this section will supplement principal compensation and not supplant local funds. 42
SECTION 7A.7.(e) The bonus provided pursuant to this section shall be paid no 43
later than October 31, 2025, to qualifying principals employed as of October 1, 2025. 44
45
ASSISTANT PRINCIPAL SALARIES 46
SECTION 7A.8.(a) For the 2025-2027 fiscal biennium, assistant principals shall 47
receive a monthly salary based on the relevant salary schedule for teachers shown in Section 48
7A.1(a) who are classified as "A" teachers plus nineteen percent (19%). An assistant principal 49
shall be pla ced on the step on the salary schedule that reflects the total number of years of 50
experience as a certified employee of the public schools. For purposes of this section, an 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 41
administrator with a one -year provisional assistant principal's certificate shall b e considered 1
equivalent to an assistant principal. 2
SECTION 7A.8.(b) Assistant principals with certification based on academic 3
preparation at the six -year degree level shall be paid a salary supplement of one hundred 4
twenty-six dollars ($126.00) per month and at the doctoral degree level shall be paid a salary 5
supplement of two hundred fifty-three dollars ($253.00) per month. 6
SECTION 7A.8.(c) Participants in an approved full -time master's in school 7
administration program shall receive up to a 10-month stipend during the internship period of the 8
master's program. The stipend shall be at the beginning salary of an assistant principal or, for a 9
teacher who becomes an intern, at least as much as that person would earn as a teacher on the 10
teacher salary schedule. The North Carolina Principal Fellows Program or the school of education 11
where the intern participates in a fulltime master's in school administration program shall supply 12
the Department of Public Instruction with certification of eligible fulltime interns. 13
SECTION 7A.8.(d) Beginning with the 2017-2018 fiscal year, in lieu of providing 14
annual longevity payments to assistant principals on the assistant principal salary schedule, the 15
amounts of those longevity payments are included in the monthly amounts provided to assistant 16
principals pursuant to subsection (a) of this section. 17
SECTION 7A.8.(e) An assistant principal compensated in accordance with this 18
section for the 2025 -2027 fiscal biennium shall receive an amount equal to the greater of the 19
following: 20
(1) The applicable amount determined pursuant to subsections (a) through (d) of 21
this section. 22
(2) For assistant principals who were eligible for longevity in the 2016-2017 fiscal 23
year, the sum of the following: 24
a. The salary the assistant principal received in the 2016-2017 fiscal year 25
pursuant to Section 9.1 or Section 9.2 of S.L. 2016-94. 26
b. The longevity that the assistant principal would have received as 27
provided for State employees under the North Carolina Human 28
Resources Act for the 2016 -2017 fiscal year based on the assistant 29
principal's current years of service. 30
(3) For assistant principals who were not eligible for longevity in the 2016 -2017 31
fiscal year, the salary the assistant principal received in the 2016 -2017 fiscal 32
year pursuant to Section 9.1 or Section 9.2 of S.L. 2016-94. 33
34
CENTRAL OFFICE SALARIES 35
SECTION 7A.9.(a) For the 2025 -2026 fiscal year, beginning July 1, 2025, the 36
annual salary for superintendents, assistant superintendents, associate superintendents, 37
directors/coordinators, supervisors, and finance officers, whose salaries are supported from State 38
funds, shall be increased by two and one half percent (2.5%). 39
SECTION 7A.9.(b) The monthly salary maximums that follow apply to assistant 40
superintendents, associate superintendents, direc tors/coordinators, supervisors, and finance 41
officers for the 2025-2026 fiscal year, beginning July 1, 2025: 42
2025-2026 Fiscal Year 43
Maximum 44
School Administrator I $7,762 45
School Administrator II $8,225 46
School Administrator III $8,715 47
School Administrator IV $9,055 48
School Administrator V $9,417 49
School Administrator VI $9,974 50
School Administrator VII $10,373 51
General Assembly Of North Carolina Session 2025
Page 42 House Bill 1167-First Edition
The local board of education shall determine the appropriate category and placement 1
for each assistant superintendent, associate superintendent, director/c oordinator, supervisor, or 2
finance officer within the maximums and within funds appropriated by the General Assembly 3
for central office administrators and superintendents. The category in which an employee is 4
placed shall be included in the contract of any employee. 5
SECTION 7A.9.(c) The monthly salary maximums that follow apply to public 6
school superintendents for the 2025-2026 fiscal year, beginning July 1, 2025: 7
2025-2026 Fiscal Year 8
Maximum 9
Superintendent I $10,995 10
Superintendent II $11,650 11
Superintendent III $12,350 12
Superintendent IV $13,092 13
Superintendent V $13,880 14
The local board of education shall determine the appropriate category and placement 15
for the superintendent based on the average daily membership of the local school administrative 16
unit and within funds appropriated by the General Assembly for central office administrators and 17
superintendents. 18
SECTION 7A.9.(d) For the 2026 -2027 fiscal year, beginning July 1, 2026, the 19
annual salary for superintendents, assistant superintendents, a ssociate superintendents, 20
directors/coordinators, supervisors, and finance officers, whose salaries are supported from State 21
funds, shall be increased by an additional two and one half percent (2.5%). 22
SECTION 7A.9.(e) The monthly salary maximums that foll ow apply to assistant 23
superintendents, associate superintendents, directors/coordinators, supervisors, and finance 24
officers for the 2026-2027 fiscal year, beginning July 1, 2026: 25
2026-2027 Fiscal Year 26
Maximum 27
School Administrator I $7,956 28
School Administrator II $8,431 29
School Administrator III $8,933 30
School Administrator IV $9,281 31
School Administrator V $9,652 32
School Administrator VI $10,223 33
School Administrator VII $10,632 34
The local board of education shall determine the appropriate category and placement 35
for each assistant superintendent, associate superintendent, director/coordinator, supervisor, or 36
finance officer within the maximums and within funds appropriated by the General Assembly 37
for central office administrators and superintendents. The category in which an employee is 38
placed shall be included in the contract of any employee. 39
SECTION 7A.9.(f) The monthly salary maximums that follow apply to public 40
school superintendents for the 2026-2027 fiscal year, beginning July 1, 2026: 41
2026-2027 Fiscal Year 42
Maximum 43
Superintendent I $11,270 44
Superintendent II $11,941 45
Superintendent III $12,659 46
Superintendent IV $13,419 47
Superintendent V $14,227 48
The local board of education shall determine the appropriate category and placement 49
for the superintendent based on the average daily membership of the local school administrative 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 43
unit and within funds appropriated by the General Assembly for central office administrators and 1
superintendents. 2
SECTION 7A.9.(g) Longevity pay for superintendents, assistant superi ntendents, 3
associate superintendents, directors/coordinators, supervisors, and finance officers shall be as 4
provided for State employees under the North Carolina Human Resources Act. 5
SECTION 7A.9.(h) Superintendents, assistant superintendents, associate 6
superintendents, directors/coordinators, supervisors, and finance officers with certification based 7
on academic preparation at the six -year degree level shall receive a salary supplement of one 8
hundred twenty -six dollars ($126.00) per month in addition to t he compensation provided 9
pursuant to this section. Superintendents, assistant superintendents, associate superintendents, 10
directors/coordinators, supervisors, and finance officers with certification based on academic 11
preparation at the doctoral degree leve l shall receive a salary supplement of two hundred 12
fifty-three dollars ($253.00) per month in addition to the compensation provided for under this 13
section. 14
SECTION 7A.9.(i) The State Board of Education shall not permit local school 15
administrative units to transfer State funds from other funding categories for salaries for public 16
school central office administrators. 17
18
NON-CERTIFIED PERSONNEL SALARIES 19
SECTION 7A.10.(a) For the 2025 -2026 fiscal year, beginning July 1, 2025, the 20
annual salary for non-certified public school employees whose salaries are supported from State 21
funds shall be increased as follows: 22
(1) For permanent, full-time employees on a 12-month contract, by two and one 23
half percent (2.5%). 24
(2) For the following employees, by a prorated and equitable amount based on the 25
amount specified in subdivision (1) of this subsection: 26
a. Permanent, full -time employees on a contract for fewer than 12 27
months. 28
b. Permanent, part-time employees. 29
c. Temporary and permanent hourly employees. 30
SECTION 7A.10.(b) For the 2026 -2027 fiscal year, beginning July 1, 2026, the 31
annual salary for non-certified public school employees whose salaries are supported from State 32
funds shall be increased as follows: 33
(1) For permanent, full-time employees on a 12-month contract, by an additional 34
two and one half percent (2.5%). 35
(2) For the following employees, by a prorated and equitable amount based on the 36
amount specified in subdivision (1) of this subsection: 37
a. Permanent, full -time employees on a contract for fewer than 12 38
months. 39
b. Permanent, part-time employees. 40
c. Temporary and permanent hourly employees. 41
42
PART VII-B. GOVERNOR MOREHEAD SCHOOL FOR THE BLIND – RESERVED 43
44
PART VII -C. EASTERN NORTH CAROLINA SCHOO L FOR THE DEAF – 45
RESERVED 46
47
PART VII-D. NORTH CAROLINA SCHOOL FOR THE DEAF - RESERVED 48
49
PART VIII. THE UNIVERSITY OF NORTH CAROLINA SYSTEM 50
51
General Assembly Of North Carolina Session 2025
Page 44 House Bill 1167-First Edition
COMPLETION ASSISTANCE PROGRAMS 1
SECTION 8.1.(a) For purposes of this section, the term "eligible constituent 2
institutions" refers to the following constituent institutions of The University of North Carolina: 3
(1) Elizabeth City State University. 4
(2) Fayetteville State University. 5
(3) NC Central University. 6
(4) University of North Carolina at Pembroke. 7
(5) Winston-Salem State University. 8
SECTION 8.1.(b) The Board of Governors of The University of North Carolina shall 9
establish a Completion Assistance Program (Program) at each eligible constituent institution. At 10
a minimum, each Program shall meet the following criteria: 11
(1) A student enrolled in a Program established by this section may receive up to 12
one thousand dollars ($1,000) per academic semester under the Program to 13
pay for the costs of continuing attendance and earning necessary credit hours 14
at the eligible constituent institution. 15
(2) A student shall be eligible to receive funds under a Program if the student 16
meets at least the following requirements: 17
a. Needs financial assistance to remain enrolled at the eligible constituent 18
institution and earn credits necessary to graduate on time. 19
b. Is a resident for tuition purposes, as provided in G.S. 116-143.1. 20
c. Meets satisfactory academic progress, as determined by the Board. 21
d. Has completed or is on track to complete at least 60 academic credit 22
hours by the end of the semester in which the funds are provided. 23
e. Has completed the Free Application for Federal Student Aid (FAFSA) 24
for the academic year in which the funds are provided. 25
f. Has an unpaid balance with the eligible constituent institution. This 26
may include an unpaid balance for tuition, fees, room, board, or other 27
expenses of attendance. 28
SECTION 8.1.(c) The Board of Governors of The University of North Carolina shall 29
report on each Completion Assistance Program established pursuant to this section to the Joint 30
Legislative Education Oversight Committee no later than March 15, 2028. The report shall 31
include, at a minimum, an analysis of the impact of each Program on the following: 32
(1) On-time graduation rates. 33
(2) Student debt at graduation. 34
SECTION 8.1.(d) Of the funds appropriated in this act to the Board of Governors 35
of The University of North Carolina for Completion Assistance Programs, the Board shall 36
allocate funds to each eligible constituent institution of The University of North Carolina 37
proportional to the number of undergraduate students enrolled at each eligible constituent 38
institution who are residents of North Carolina and recipients of a federal Pell Grant. 39
40
EXPAND CHEATHAM-WHITE SCHOLARSHIP PROGRAM 41
SECTION 8.2.(a) G.S. 116-290 reads as rewritten: 42
"§ 116‐290. Cheatham-White Scholarships; establishment and purpose; benefits. 43
(a) Scholarships Established; Purpose. – The Cheatham-White Scholarships are 44
established as a merit scholarship program at North Carolina Agricultural and Technical State 45
University, and at North Carolina Central University, and Winston‐Salem State University. The 46
purpose of the scholarships is to provide an outstanding educational experience for students who 47
are exceptional scholars, versatile and well‐ rounded individuals with a broad range of interests, 48
and who are accomplished and proficient in areas of both the arts and the sciences. They must 49
also demonstrate leadership potential and a strong commitment to service. 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 45
(b) Scholarship Benefits. – Each scholarship is a fully funded four-year scholarship that 1
covers the cost of all of the following: full tuition, student fees, housing, meals, textbooks, a 2
laptop, supplies, travel, and personal expenses. Each scholarship also provides four summers of 3
fully funded enrichment and networking opportunities that may include international travel and 4
study. 5
(c) Number of Scholarships Awarded. – Up to 50 150 scholarships, 40 120 for resident 6
students and 10 30 for nonresident students, may be awarded each academic year to students 7
admitted to North Carolina Agricultural and Technical State University. Up to 50 100 8
scholarships, 40 80 for resident students and 10 20 for nonresident students, may be awarded each 9
academic year to students admitted to North Carolina Central University. Up to 50 scholarships, 10
40 for resident students and 10 for nonresident students, may be awarded each academic year to 11
students admitted to Winston‐Salem State University." 12
SECTION 8.2.(b) G.S. 116-292(a) reads as rewritten: 13
"§ 116‑292. Cheatham-White Scholarships; eligibility and selection criteria. 14
(a) Eligibility. – To be eligible to be nominated as a potential candidate for a 15
Cheatham-White Scholarship, a person must satisfy all of the following criteria: 16
(1) Be a competitive applicant for admission as a freshman in the fall semester 17
into a baccalaureate program at either North Carolina Agricultural and 18
Technical State University, or North Carolina Central University, or Winston-19
Salem State University. 20
(2) Be a United States citizen or permanent resident. 21
(3) Be on course to graduate from high school in the spring semester prior to 22
college admission." 23
SECTION 8.2.(c) G.S. 116-294 reads as rewritten: 24
"§ 116‑294. Cheatham-White Scholarships; administration of scholarships. 25
The University of North Carolina System Office shall administer the Cheatham‐White 26
Scholarships, in consultation and collaboration with North Carolina Agricultural and Technical 27
State University, and North Carolina Central University, and Winston‐Salem State University, 28
pursuant to policies adopted by the Board of Trustees of both constituent institutions. As part of 29
its administrative responsibilities, The University of North Carolina System Office, in 30
consultation and collaboration with North Carolina Agricultural and Technical State University, 31
and North Carolina Central University, and Winston‐Salem State University, shall do all of the 32
following: 33
(1) Design and implement an application and school nomination process to be 34
used to identify potential scholarship candidates and a process for awarding 35
the scholarships. 36
… 37
(9) Any other function necessary for the successful implementation of the 38
Cheatham-White Scholarships program and administration of the 39
Cheatham-White Scholarships Fund." 40
41
NORTH CAROLINA SCHOOL OF SCIENCE AND MATH RECEIPT FLEXIBILITY 42
SECTION 8.3. G.S. 116-30.3A reads as rewritten: 43
"§ 116-30.3A. Availability of excess receipts. 44
Notwithstanding the provisions of Chapter 143C of the General Statutes, receipts within The 45
University of North Carolina realized in excess of budgeted levels shall be available, up to a 46
maximum of ten percent (10%) abov e budgeted levels, for each Budget Code, in addition to 47
appropriations to support the operations generating the receipts as approved by the Director of 48
the Budget. Notwithstanding G.S. 143C -6-4(g), the North Carolina School of Science and 49
Mathematics shall be subject to subsections b1 and b2 of G.S. 143C-6-4." 50
51
General Assembly Of North Carolina Session 2025
Page 46 House Bill 1167-First Edition
NORTH CAROLINA SCHOO L OF SCIENCE AND MAT H RESIDENCY 1
DETERMINATION 2
SECTION 8.4. G.S. 116-235 reads as rewritten: 3
"§ 116-235. Board of Trustees; additional powers and duties. 4
… 5
(b) Students. – 6
(1) Admission of Students. – The School shall admit students in accordance with 7
criteria, standards, and procedures established by the Board of Trustees. To be 8
eligible to be considered for admission, an applicant must be either a legal 9
resident of the State, as defined by G.S. 116-143.1(a)(1) G.S. 116-143.1(b) or 10
a student whose parent is an active duty member of the Armed Forces, as 11
defined by G.S. 116-143.3(a)(2), who is abiding in this State incident to active 12
military duty at the time the application is subm itted, provided the student 13
shares the abode of that parent; eligibility to remain enrolled in the School 14
shall terminate at the end of any school year during which a student becomes 15
a nonresident of the State. The Board of Trustees shall ensure, insofar a s 16
possible without jeopardizing admission standards, that an equal number of 17
qualified applicants is admitted to the program and to the residential summer 18
institutes in science and mathematics from each of North Carolina's 19
congressional districts. In no ev ent shall the differences in the number of 20
qualified applicants offered admission to the program from each of North 21
Carolina's congressional districts be more than two and one -half percentage 22
points from the average number per district who are offered admission. 23
…." 24
25
PART VIII-A. NORTH CAROLINA STATE EDUCATION ASSISTANCE AUTHORITY 26
27
OPPORTUNITY SCHOLARSHIPS ACCOUNTABILITY 28
SECTION 8A.1.(a) G.S. 115C-562.1 reads as rewritten: 29
"§ 115C-562.1. Definitions. 30
The following definitions apply in this Part: 31
… 32
(3a) Eligible student. – A student residing in North Carolina who has not yet 33
received a high school diploma and who meets all of the following 34
requirements: 35
a. Is eligible to attend a North Carolina public school pursuant to Article 36
25 of this Chapter. A child who is the age of 4 on or before April 16 is 37
eligible to attend the following school year if the principal, or 38
equivalent, of the school in which the child seeks to enroll finds that 39
the student meets the requirements established by the Authority 40
pursuant to G.S. 115C-562.2(d) and those findings are submitted to the 41
Authority. 42
b. Has not been enrolled in a postsecondary institution as a full -time 43
student taking at least 12 hours of academic credit. 44
c. Has not been placed in a nonpublic school or facility b y a public 45
agency at public expense. 46
d. Received a scholarship grant during the previous school year." 47
SECTION 8A.1.(b) G.S. 115C-562.2 reads as rewritten: 48
"§ 115C-562.2. Scholarship grants. 49
(a) The Authority shall make available no later than February 1 annually applications to 50
eligible students for the award of scholarship grants to attend any nonpublic school on a full or 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 47
part-time basis. Information about scholarship grants and the application process shall be made 1
available on the Authority's Web sit e. Beginning March 15, the Authority shall begin awarding 2
scholarship grants to students who have applied by March 1 in the following order: according to 3
the following criteria: 4
(1) Eligible students who received a scholarship grant for the school year prior to 5
the school year for which the students are applying. 6
(2) Eligible students qualifying for a scholarship grant in the amount provided 7
under subdivision (1) of subsection (b2) of this section. 8
(3) Eligible students qualifying for a scholarship grant in the amount provided 9
under subdivision (2) of subsection (b2) of this section. 10
(4) Eligible students qualifying for a scholarship grant in the amount provided 11
under subdivision (3) of subsection (b2) of this section. 12
(5) All other students. 13
(b) Repealed by Session Laws 2023-134, s. 8A.6(c), effective July 1, 2023. 14
(b1) Repealed by Session Laws 2021-180, s. 8A.3(e), effective July 1, 2021. 15
(b2) Scholarship grants shall be awarded to eligible students as follows: 16
(1) For students residing in households with an income level not in excess of the 17
amount required for the student to qualify for the federal free or reduced-price 18
lunch program, per year per eligible student, an amount of up to one hundred 19
percent (100%) of the average State per pupil allocation fo r average daily 20
membership in the prior fiscal year. 21
(2) For students residing in households with an income level between the amount 22
required for the student to qualify for the federal free or reduced -price lunch 23
program and not in excess of two hundred percent (200%) one hundred and 24
fifty percent (150%) of that amount, per year per eligible student, an amount 25
of up to ninety percent (90%) of the average State per pupil allocation for 26
average daily membership in the prior fiscal year. 27
(3) For students resid ing in households with an income level of between two 28
hundred percent (200%) of the amount required for the student to qualify for 29
the federal free or reducedprice lunch program and not in excess of four 30
hundred fifty percent (450%) of that amount, per year per eligible student, an 31
amount of up to sixty percent (60%) of the average State per pupil allocation 32
for average daily membership in the prior fiscal year. 33
(4) For all students, per year per eligible student, an amount of up to fortyfive 34
percent (45%) of the average State per pupil allocation for average daily 35
membership in the prior fiscal year, unless the student qualifies for a higher 36
amount under this subsection. 37
(b3) Tuition and fees for a nonpublic school may include tuition and fees for books, 38
transportation, equipment, or other items required by the nonpublic school. 39
(b4) No scholarship grant shall exceed, per year per eligible student, an amount equal to 40
one hundred percent (100%) of the average State per pupil allocation for average daily 41
membership in the prior fiscal year, and no scholarship grant shall exceed the required tuition 42
and fees for the nonpublic school the eligible student will attend. 43
(b5) In addition to the amount of the scholarship grant, for any student receiving a 44
scholarship grant in grades three, eight, or 11, the Authority shall provide to the nonpublic school 45
an amount equal to the cost of the nationally standardized test required to be administered as 46
provided in G.S. 115C-562.5. 47
(c) The Authority shall permit an eligible student receiving a scholarship grant to enroll 48
in a different nonpublic school and remain eligible. An eligible student receiving a scholarship 49
grant who transfers to another nonpublic school during the year may be eligible to receive a pro 50
General Assembly Of North Carolina Session 2025
Page 48 House Bill 1167-First Edition
rata share of any unexpended portion of the scholarship grant for tuition and fees at the nonpublic 1
school to which the student transfers. 2
(c1) An eligible student awarded a scholarship grant shall participate in administration of 3
examinations required by G.S. 115C-562.5 to maintain eligibility for receipt of the scholarship 4
grant." 5
SECTION 8A.1.(c) G.S. 115C-562.5 reads as rewritten: 6
"§ 115C -562.5. Obligations of nonpublic schools accepting eligible students receiving 7
scholarship grants. 8
(a) A nonpublic school that accepts eligible students receiving scholarship grants shall 9
comply with the following: 10
(1) Provide to the Authority annually documentation for required tuition and fees 11
charged to the student by the nonpublic school. 12
(1a) Shall not increase tuition each year by more than the Consumer Price Index 13
as calculated by the United States Bureau of Labor Statistics and reported on 14
January 1 of the year in which the school is increasing tuition. 15
(2) Provide to the Authority a criminal background check conducted for the staff 16
member with the highest decision-making authority, as defined by the bylaws, 17
articles of incorporation, or other governing document, to ensure that person 18
has not been convicted of any crime listed in G.S. 115C-332. 19
(3) Provide to the parent or guardian of an eligible student, whose tuition and fees 20
are paid in whole or in part with a scholarship grant, an annual written 21
explanation of the student's progress, including the student's scores on 22
standardized achievement tests. 23
(4) Administer, at least once in each school year (or more as required by State or 24
Federal Requirements), tests as provided in this subdivision. Student-level test 25
performance data shall be submitted to the Authority by July 15 of each year 26
and retained by the nonpublic school for a five-year period and shall be subject 27
to audit by the Authority to ensure compliance with this subdivision.year. Test 28
Personally identifiable individual test performance data reported to the 29
Authority or audited or collected for evaluation purposes by the Authority 30
under this subdivision is not a public record under Chapter 132 of the General 31
Statutes. Nothing in this subdivision shall be deemed to prohibit a nonpublic 32
school from administering other standardized tests or tests at other grade 33
levels for its own purposes. Tests shall be administered to all eligible students 34
enrolled in grades three and higher whose tuition and fees are paid in whole 35
or in part with a scholarship grant as follows: 36
a. The nationally standardized test norm-referenced asse ssment 37
designated by the Authority in grades three and eight. 38
b. The ACT in grade 11. 39
c. A nationally standardized test or other nationally standardized 40
equivalent measurement norm-referenced assessment selected by the 41
chief administrative officer of the nonpublic school from the list of 42
approved assessments determined by the Authority in all other grades 43
four and higher. For grades four through seven, the nationally 44
standardized test or other equivalent measurement selected must 45
measure achievement nationally norm -referenced assessments 46
approved by the Authority must assess student performance in the 47
areas of English grammar, reading, spelling, and mathemat ics. For 48
grades nine, 10, and 12, the nationally standardized test or other 49
equivalent measurement selected must nationally norm -referenced 50
assessments approved by the Authority must measure either (i) 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 49
achievement student performance in the areas of Englis h grammar, 1
reading, spelling, and mathematics or (ii) competencies in the verbal 2
and quantitative areas. The Authority shall approve at least two but not 3
more than three nationally norm -referenced assessments for each 4
grade level for this purpose. 5
d. The assessments and tests required by the State Board of Education 6
for public schools to comply with federal law according to grade level 7
pursuant to G.S. 115C-174.11(c)(1). 8
(4b) Pursuant to G.S. 115C-107.6, educate each child with a disability awarded 9
scholarship funds in accordance with that child 's Individualized Education 10
Program (IEP) and in compliance with the Individuals with Disabilities Act 11
(IDEA) and State Board of Education policies. 12
(5) Provide to the Authority four-year cohort graduation rat es of the students 13
receiving scholarship grants in a manner consistent with requirements of Title 14
I, Part A of ESEA and 34 C.F.R. § 200.19. nationally recognized standards. 15
(5b) Provide to the Authority by August 1 of each year attendance records of 16
students receiving scholarship grants during the previous school year 17
including the name of any schools attended during that time. 18
(5c) Report annually to the State Board of Education the incidents of reportable 19
crime pursuant to G.S. 115C-228. 20
(6) Contract with a certified public accountant to perform a financial reviewaudit, 21
consistent with generally accepted methods of accounting or any other 22
comprehensive basis of accounting recognized by the American Institute of 23
Certified Public Accountants (AICPA) a minimum of once every two years 24
for each school year in which the school enrolls 70 or more students receiving 25
scholarship grants or scholarship funds awarded by the Authority. students 26
who collectively receive more than one hundred thousand dollars ($100, 000) 27
in scholarship grants awarded under this Part. If a nonpublic school accepts 28
students receiving less than one hundred thousand dollars ($100,000) in 29
scholarship grants, the school shall contract with a certified public accountant 30
to perform a financial audit once every three years. The nonpublic school shall 31
submit the audit report to the Authority by December 31 of each year an audit 32
is conducted. The Authority may require a school to be audited annually after 33
the school has two consecutive financial audits with findings. The Authority 34
shall ensure that all schools are audited in accordance with this section. 35
(7) Maintain a school facility within the State where in -person instruction is 36
provided. This subdivision does not prohibit a school from offerin g 37
remote-only courses of instruction in addition to in-person instruction. 38
(8) Provide the following information annually to the Division: 39
a. Name and address of the school, including physical location address. 40
A school with more than one physical location shall establish a 41
separate notice of intent for each physical location and shall provide 42
all information required by this subdivision for each physical location. 43
b. The name of the owners and chief administrator , as well as their 44
contact information. 45
c. Number of students in attendance at the school as of October 1. 46
d. Total number of students enrolled in the school as of the last day of 47
the previous school year. 48
e. Documentation of a completed fire inspection within the previous 365 49
days. 50
General Assembly Of North Carolina Session 2025
Page 50 House Bill 1167-First Edition
(9) In coordinat ion with local law enforcement agencies, adopt a School Risk 1
Management Plan (SRMP) relating to incidents of school violence as detailed 2
in G.S. 115C-47(40). In constructing and maintaining these plans, the school 3
shall utilize the School Risk and Response Management System (SRRMS) 4
established pursuant to G.S. 115C-105.49A. These plans are not considered a 5
public record as the term "public record" is defined under G.S. 132-1. 6
(10) Pursuant to G.S. 115C-105.53, provide schematic diagrams and keys to the 7
main entrance of school facilities to local law enforcement agencies. These 8
diagrams are not considered a public record as the term "public record " is 9
defined under G.S. 132-1. 10
(11) Pursuant to G.S. 115C-105.49, at least once a year, hold a full school -wide 11
lockdown exercise with local law enforcement and emergency management 12
agencies that are part of the qualified nonpublic school's SRMP. 13
(12) Provide the following: (i) schematic diagrams, including digita l schematic 14
diagrams, and (ii) emergency response information requested by the 15
Department of Public Safety, Division of Emergency Management for the 16
SRMP. These diagrams and emergency response information are not 17
considered a public record as the term "public record " is defined under 18
G.S. 132-1. 19
(b) A nonpublic school that accepts students receiving scholarship grants shall not require 20
any additional fees based on the status of the student as a scholarship grant recipient. 21
(c) A nonpublic school enrolli ng more than 25 10 students in any grade whose tuition 22
and fees are paid in whole or in part with a scholarship grant shall provide and retain information 23
on student test performance in each grade with more than 25 10 students, as follows: 24
(1) Report to the Authority on the aggregate standardized test performance of the 25
individual student test performance of eligible students in grades three, eight, 26
and 11 under subsection (4) of this section . Aggregate test performance data 27
reported to the Authority which does not contain personally identifiable 28
student data shall be a public record under Chapter 132 of the General Statutes. 29
The Authority shall make these reports of aggregate student test performance 30
publicly available. Test performance data may be shared with public or private 31
institutions of higher education located in North Carolina and shall be 32
provided to an independent research organization selected by the Authority 33
for research purposes as permitted by the Federal Education Rights and 34
Privacy Act, 20 U.S.C. § 1232g. 35
(2) Retain standardized test performance data for eligible students in all other 36
grades and annually certify to the Authority compliance with the requirements 37
of subdivision (4) of subsection (a) of this section. 38
(c1) A nonpublic school shall not discriminate with respect to : the categories listed in 42 39
U.S.C. § 2000d, as that statute read on January 1, 2014 40
(1) race, color, and national origin as listed in 42 U.S.C. § 2000d, as that statute 41
read on January 1, 2014, 42
(2) disability as define d in the Americans With Disabilities Act of 1990, 42 43
U.S.C. § 12101 as that statute read on January 1, 2024, and 44
(3) sexual orientation." 45
SECTION 8A.1.(d) G.S. 115C-562.7(b) is amended by adding a new subdivision 46
to read: 47
"§ 115C-562.7. Reporting requirements. 48
… 49
(6) Information on the compliance with the academic assessment requirement 50
pursuant to G.S. 115C-562.5(3a-b). 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 51
(7) School-level assessment data for each participating nonpublic school serving 1
10 or more students receiving scholarship funds." 2
SECTION 8A.1.(e) G.S. 115C-562.8(b) reads as rewritten: 3
"§ 115C-562.8. The Opportunity Scholarship Grant Fund Reserve. 4
… 5
(b) The General Assembly finds that, due to the critical need in this State to provide 6
opportunity for school choice for North Carolina students, it is imperative that the State provide 7
an increase of funds for 15 years to the Opportunity Scholarship Grant Fund Reserve. Therefore, 8
there There is appropriated from the General Fund to the Reserve the following amounts for each 9
fiscal year to be used for the purposes set forth in this section: 10
Fiscal Year Appropriation 11
2017-2018 $44,840,000 12
2018-2019 $54,840,000 13
2019-2020 $64,840,000 14
2020-2021 $74,840,000 15
2021-2022 $84,840,000 16
2022-2023 $94,840,000 17
2023-2024 $176,540,000 18
2024-2025 $191,540,000 19
2025-2026 $625,000,000 20
2026-2027 $675,000,000 21
2027-2028 $700,000,000$234,488,935 22
2028-2029 $725,000,000$217,270,804 23
2029-2030 $750,000,000$195,951,245 24
2030-2031 $775,000,000$193,426,448 25
2031-2032 $800,000,000$149,580,223 26
2032-2033 $126,221,744 27
2033-2034 $101,647,252 28
2034-2035 $76,338,957 29
2035-2036 $50,912,730 30
2036-2037 $25,344,985 31
For the 2032-2033 2037-2038 fiscal year and each fiscal year thereafter, there is appropriated 32
from the General Fund to the Reserve the sum of eight hundred twenty -five million dollars 33
($825,000,000) zero dollars ($0) to be used for the purposes set forth in this section. When 34
developing the base budget, as defined by G.S. 143C-11, for each fiscal year specified in this 35
subsection, the Director o f the Budget shall include the appropriated amount specified in this 36
subsection for that fiscal year." 37
SECTION 8A.1.(f) The State Education Assistance Authority shall not award 38
scholarship funds to new recipients pursuant to Part 2A of Article 39 of Subchapter X of Chapter 39
115C of the General Statutes after the 2025-2026 academic year. 40
SECTION 8A.1.(g ) G.S. 115C-112.7 is amended by adding a new subsection to 41
read: 42
"… 43
(c) The State Education Assistance Authority, in coordination with the Department of 44
Public Instruction, shall make publicly available by September 30 of each year school 45
achievement, growth, and performance scores and associated performance grades pursuant to 46
G.S. 115C--83.15 for nonpublic schools that enroll more than 10 students whose tuition and fees 47
are paid in whole or in part with a scholarship grant. This section is effective with the 2026-27 48
school year. The first school achievement, growth, and performance scores and associated 49
performance grades shall be made publicly available by September 30, 2027. 50
…." 51
General Assembly Of North Carolina Session 2025
Page 52 House Bill 1167-First Edition
SECTION 8A.1.(h) Section 8A.6(i) and Section 8A.6(j) of Session Law 2023 -134 1
are repealed. 2
SECTION 8A.1.(i) The State Education Assistance Authority shall transfer one 3
hundred fourteen million, seven hundred twenty -one thousand, four hundred nine dollars 4
($114,721,409) in unused fund balance from the Opportunity Scholarship Grant Fund Rese rve 5
to budget code 16012 in the General Fund. 6
SECTION 8A.1.(j) This provision is effective when it becomes law and applies 7
beginning with the 2026-27 school year. 8
9
CHILDREN OF WARTIME VETERANS SCHOLARSHIP FUND AWARDS 10
FLEXIBILITY 11
SECTION 8A.2. G.S. 143B-1227 reads as rewritten: 12
"143B-1227. Administration and funding. 13
… 14
(c) Allowances for room and board in State educational institutions shall be at such a rate 15
as established by the Secretary of the Department of Military and Veterans Affairs. 16
(d) Within funds available for the Program, the following shall be determined: 17
Due to the sacrifice of veterans for the State of North Carolina and the unique needs and 18
challenges of the children of wartime veterans to ensure they have the greatest opportunities to 19
reach their higher education attainment goals, if there are additional eligible recipients, other than 20
those identified by the Department under this Program, who are attending public colleges and 21
universities of the State who may qualify to have their scholarships funded with monies from the 22
Escheat Fund, the Authority, after consultation with the Secretary, may fund those scholarships 23
with monies from the Escheat Fund. 24
(e) After consultation with the Authority, the Secretary shall determine whether to 25
prioritize the award of new applicants for the 2025-2026 academic year in Class I-A, I-B, and IV 26
scholarships, prior to awarding Class II and III scholarships. Class II and Class III awards may 27
be determined following awards for Class I-A, I-B, and IV depending on the availability of funds 28
for the Program. 29
(f) The Secretary, after consulting with the Authority, may determine based on the 30
number of eligible students, including new and renewal students, that have applied for the 31
2026-2027 academic year, whether to reduce the room and board allowance award for students 32
attending a public institution and the maximum allowance award for students attending private 33
institutions, prior to August 15, 2026. 34
(g) After the actions set forth in sub -subdivisions d., e., a nd f. of this subdivision have 35
been taken, for awards for the 2026 -2027 academic year, if funds available for the Program are 36
still insufficient to provide scholarships to all eligible students, the Authority may adjust and 37
standardize award amounts as nec essary, including providing pro rata scholarship awards for 38
room and board, to ensure the efficient administration of the scholarship funds. 39
(h) All scholarship notifications shall include language that the award of the scholarship 40
is contingent upon the availability of funds. 41
(i) The Authority shall disburse scholarship funds in accordance with 42
G.S. 116-204(11a). 43
(j) From the total amount of funding appropriated to the Board of Governors of The 44
University of North Carolina and allocated to the Authority in a fiscal year to support the award 45
of scholarship funds under the Program, the Authority may use an amount of up to two and 46
one-half percent (2.5%) for administration costs related to the Program from the allocation from 47
the General Fund. The Authority sh all place any unexpended and unencumbered appropriated 48
funds remaining at the end of the 2025-2026 and 2026-2027 fiscal years into an institutional trust 49
fund established in accordance with the provisions of G.S. 116-36.1. Those funds may be used 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 53
for the purpose of awarding scholarships under the Program and for administration costs of the 1
Authority related to the Program." 2
3
PART IX. HEALTH AND HUMAN SERVICES 4
5
PART IX-A. AGING AND ADULT SERVICES [RESERVED] 6
7
PART IX-B. CENTRAL MANAGEMENT AND SUPPORT 8
9
COMMUNITY HEALTH GRANT PROGRAM 10
SECTION 9B.1.(a) Funds appropriated in this act to the Department of Health and 11
Human Services, Division of Central Management, Office of Rural Health, for each year of the 12
2025-2027 fiscal biennium for the Community Health Grant Program shall be used to continue 13
to administer the Community Health Grant Program as modified by Section 11A.8 of S.L. 14
2017-57. 15
SECTION 9B.1.(b) The Office of Rural Health shall make the final decision about 16
awarding grants under this Program, but no single grant award shall exceed one hundred fifty 17
thousand dollars ($150,000) during the fiscal year. In awarding grants, the Office of Rural Health 18
shall consider the availability of other funds for the applicant; the incidence of poverty in the area 19
served by the applicant or the number of indigent clients served by the applicant; the availability 20
of, or arrangements for, after -hours care; and collaboration between the applicant and a 21
community hospital or other safety net organizations. 22
SECTION 9B.1.( c) Grant recipients shall not use these funds to do any of the 23
following: 24
(1) Enhance or increase compensation or other benefits of personnel, 25
administrators, directors, consultants, or any other persons receiving funds for 26
program administration; provide d, however, funds may be used to hire or 27
retain health care providers. The use of grant funds for this purpose does not 28
obligate the Department of Health and Human Services to continue to fund 29
compensation beyond the grant period. 30
(2) Supplant existing fun ds, including federal funds traditionally received by 31
federally qualified community health centers. However, grant funds may be 32
used to supplement existing programs that serve the purposes described in 33
subsection (a) of this section. 34
(3) Finance or satisfy any existing debt. 35
SECTION 9B.1.(d) The Office of Rural Health may use up to two hundred thousand 36
dollars ($200,000) in recurring funds for each fiscal year of the 2025 -2027 fiscal biennium for 37
administrative purposes. 38
SECTION 9B.1.(e) By September 1 of each year, the Office of Rural Health shall 39
submit a report to the Joint Legislative Oversight Committee on Health and Human Services on 40
community health grants that includes at least all of the following information: 41
(1) The identity and a brief description of each grantee and each program or 42
service offered by the grantee. 43
(2) The amount of funding awarded to each grantee. 44
(3) The number of individuals served by each grantee and, for the individuals 45
served, the types of services provided to each. 46
(4) Any other information requested by the Office of Rural Health as necessary 47
for evaluating the success of the Community Health Grant Program. 48
49
REPLACEMENT FOR CRITICAL IT SYSTEMS THAT SUPPORT SUBSTANCE USE 50
DISORDER PREVENTION AND TREATMENT 51
General Assembly Of North Carolina Session 2025
Page 54 House Bill 1167-First Edition
SECTION 9B.2. The Department of Health and Human Services shall develop and 1
implement a replacement for outdated data systems supporting substance use prevention and 2
treatment goals, specifically concerning the Driving While Impaired Services, the Drug 3
Education Scho ol, and the Drug Control Unit programs designed to prevent progression of 4
misuse of substances through education and regulatory supports. The project shall not proceed 5
until the business case has been approved by the Office of State Budget and Management a nd 6
the State Chief Information Officer in the Enterprise Project Management Office's Touchdown 7
System. Upon approval, Mixed Use Beverage tax receipts available in Budget Code 14460, 8
Budget Fund 134603, may be budgeted for transfer to Budget Code 24410 for information 9
technology projects in an amount not to exceed one million two hundred thousand dollars 10
($1,200,000). Following project completion, the Division of Mental Health, Developmental 11
Disabilities, and Substance Use Services may use Mixed Use Beverage Tax receipts to cover 12
operations and maintenance costs for the new IT system. 13
14
USE OF TALC SETTLEMENT FUNDS 15
SECTION 9B.3.(a) The Ovarian Cancer Mitigation Fund (Fund) is created within 16
the Department of Health and Human Services, Division of Central Mana gement and Support, 17
as a nonreverting special fund. The Fund shall consist of (i) monies received by the State as a 18
beneficiary of the final consent judgment resolving the case, State of North Carolina, ex rel. 19
Joshua H. Stein, Attorney General v. Johnson & Johnson (J&J Case), and (ii) all interest and 20
investment earnings received on monies in the Fund. Monies in the Fund shall be expended only 21
by an act of appropriation by the General Assembly and in accordance with the final consent 22
judgment resolving the J&J Case. 23
SECTION 9B.3.(b) There is appropriated from the Ovarian Cancer Mitigation Fund 24
created in subsection (a) of this section to the Department of Health and Human Services, 25
Division of Central Management and Support, the sum of four million dollars ($4,000,000) in 26
nonrecurring funds for the 2026-2027 fiscal year to be allocated and used as follows: 27
(1) Up to two million dollars ($2,000,000) in nonrecurring funds for 2026 -2027 28
shall be used to support a public-private partnership consisting of community-29
based organizations, medical providers, and others to develop, strengthen, and 30
promote improved access to ovarian cancer educational materials, screenings, 31
and care providers. Funds may be used to contract with a lead community -32
based organization with statewide reach to implement related initiatives, 33
including technical assistance and subgrants to other community -based 34
organizations for these purposes. 35
(2) Up to seven hundred and fifty thousand dollars ($750,000) in nonrecurring 36
funds for 2026 -27 shall be used to invest in data collection and analysis 37
infrastructure to support timely and accurate cancer surveillance and improved 38
capacity to address emerging threats. 39
(3) Up to one million two hundred fifty thousand dollars ($1,250,000) in 40
nonrecurring fun ds for 2026 -2027 shall be used to design and implement 41
communication and education strategies designed to raise awareness of 42
ovarian cancer and promote preventive measures, screening, and treatment. 43
In addition to these uses, the Department of Health and H uman Services may use up 44
to two hundred thousand dollars ($200,000) of funds allocated by this subdivision for each year 45
of the fiscal biennium for administrative purposes. 46
SECTION 9B.3.(c) Funds allocated under subsection (b) of this section shall remain 47
available for expenditure in the amounts and for the purposes specified in subsection (a) of this 48
section until expended. 49
SECTION 9B.3.(d) Beginning November 1, 2027, the Department of Health and 50
Human Services shall report to the Joint Legislative Oversight Committee on Health and Human 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 55
Services and the Fiscal Research Division on the expenditures made from the Ovarian Cancer 1
Mitigation Fund during the preceding fiscal year. 2
3
APPROPRIATION OF RURAL HEALTH TRANSFORMATION GRANT FUNDS 4
SECTION 9B. 4. The gra nt funds received from the federal Rural Health 5
Transformation Program authorized under H.R.1 are appropriated in the amounts provided in the 6
notification of award from the federal government or any entity acting on behalf of the federal 7
government to administer the federal funds. State agencies may, with approval of the Director of 8
the Budget, spend funds received from the Rural Health Transformation Program. 9
10
PART IX-C. CHILD AND FAMILY WELL-BEING [RESERVED] 11
12
PART IX-D. CHILD DEVELOPMENT AND EARLY EDUCATION 13
14
NC PRE -K PROGRAMS/ST ANDARDS FOR FOUR AND FIVE-STAR RATED 15
FACILITIES 16
SECTION 9D.1.(a) Eligibility. – The Department of Health and Human Services, 17
Division of Child Development and Early Education, shall continue implementing the 18
prekindergarten program (NC Pre -K). The NC Pre -K program shall serve children who are 4 19
years of age on or before August 31 of the program year. In determining eligibility, the Division 20
shall establish income eligibility requirements for the program not to exceed seventy-five percent 21
(75%) of the State median income. Up to twenty percent (20%) of children enrolled may have 22
family incomes in excess of seventy-five percent (75%) of median income if those children have 23
other designated risk factors. Furthermore, any age -eligible child who is a child of either of the 24
following shall be eligible for the program: (i) an active duty member of the Armed Forces of the 25
United States, including the North Carolina National Guard, State military forces, or a reserve 26
component of the Armed Forces who was ordered to active duty by the proper authority within 27
the last 18 months or is expected to be ordered within the next 18 months, or (ii) a member of the 28
Armed Forces of the United States, including the North Carolina National Guard, State military 29
forces, or a reserve component of the Armed Forces who was injured or killed while se rving on 30
active duty. Eligibility determinations for NC Pre -K participants may continue through local 31
education agencies and local North Carolina Partnership for Children, Inc., partnerships. 32
Other than developmental disabilities or other chronic health issues, the Division shall 33
not consider the health of a child as a factor in determining eligibility for participation in the NC 34
Pre-K program. 35
SECTION 9D.1.(a1) Staff-To-Child Ratio and Class Size. – The classroom shall not 36
exceed a maximum staff -to-child ratio of one to 10 with a maximum class size of 20 children, 37
with at least one teacher and one teacher assistant per classroom. A classroom of 10 children or 38
less shall have at least one teacher. The Child Care Commission shall adopt any rules and the 39
Division of Child Development and Early Education shall revise any rules or policies necessary 40
to implement the provisions of this subsection. 41
SECTION 9D.1.(b) Multi-year Contracts. – The Division of Child Development and 42
Early Education shall require the NC Pre-K contractor to issue multi-year contracts for licensed 43
private child care centers providing NC Pre-K classrooms. 44
SECTION 9D.1.(c) Building Standards. – Notwithstanding G.S. 110-91(4), private 45
child care facilities and public schools operating NC Pre -K classrooms shall meet the building 46
standards for preschool students as provided in G.S. 115C-521.1. 47
SECTION 9D.1.(d) Programmatic Standards. – Except as provided in subsection (c) 48
of this section, entities operating NC Pre -K classrooms shall adhere to all of the policies 49
prescribed by the Division of Child Development and Early Education regarding programmatic 50
standards and classroom requirements. 51
General Assembly Of North Carolina Session 2025
Page 56 House Bill 1167-First Edition
SECTION 9D.1.(e) NC Pre-K Committees. – Local NC Pre-K committees shall use 1
the standard decision-making process developed by the Division of Child Development and Early 2
Education in awarding NC Pre-K classroom slots and student selection. 3
SECTION 9D.1.(f) Reporting. – The Division of Child Development and Early 4
Education shall submit an annual report no late r than March 15 of each year to the Joint 5
Legislative Oversight Committee on Health and Human Services, the Office of State Budget and 6
Management, and the Fiscal Research Division. The report shall include the following: 7
(1) The number of children participating in the NC Pre-K program by county. 8
(2) The number of children participating in the NC Pre -K program who have 9
never been served in other early education programs such as child care, public 10
or private preschool, Head Start, Early Head Start, or early i ntervention 11
programs. 12
(3) The expected NC Pre-K expenditures for the programs and the source of the 13
local contributions. 14
(4) The results of an annual evaluation of the NC Pre-K program. 15
SECTION 9D.1.(g) Audits. – The administration of the NC Pre-K program by local 16
partnerships shall be subject to the financial and compliance audits authorized under 17
G.S. 143B-168.14(b). 18
19
CHILD CARE SUBSIDY RATES 20
SECTION 9D.2.(a) The maximum gross annual income for initial eligibility, 21
adjusted annually, for subsidized chil d care services shall be determined based on a percentage 22
of the federal poverty level as follows: 23
AGE INCOME PERCENTAGE LEVEL 24
0 – 5 200% 25
6 – 12 133% 26
The eligibility for any child with special needs, including a child who is 13 years of 27
age or older, shall be two hundred percent (200%) of the federal poverty level. 28
SECTION 9D.2.(b) Fees for families who are required to share in the cost of care 29
are established based on ten percent (10%) of gross family income. When care is received at the 30
blended rate, the copayment shall be eighty -three percent (83%) of the full -time copayment. 31
Copayments for part-time care shall be seventy-five percent (75%) of the full-time copayment. 32
SECTION 9D.2.(c) Payments for the purchase of child care services for low-income 33
children shall be in accordance with the following requirements: 34
(1) Religious sponsored child care facilities operating pursuant to G.S. 110-106 35
and licensed child care centers and homes that meet the minimum licensing 36
standards that are participating in the s ubsidized child care program shall be 37
paid the one-star county market rate unless prohibited by subsection (f) of this 38
section. 39
(2) Licensed child care centers and homes with two or more stars shall receive the 40
county market rate for that rated license level for that age group or the 41
statewide rate floor, whichever is higher, unless prohibited by subsection (g) 42
of this section. 43
(3) Certified Developmental Day Centers shall receive the statewide average or 44
county market rate, whichever is higher, plus a multiplier of 0.75 for children 45
with special needs and multiplier of 0.5 for typically developing children. 46
(4) No payments shall be made for transportation services charged by child care 47
facilities. 48
(5) Payments for subsidized child care services for postsecondary education shall 49
be limited to a maximum of 20 months of enrollment. This shall not be 50
determined before a family's annual recertification period. 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 57
(6) The Department of Health and Human Services shall implement necessary 1
rule changes to restructure services, including, but not limited to, targeting 2
benefits to employment. 3
SECTION 9D.2.(d) Provisions of payment rates for child care providers in counties 4
that do not have at least 50 children in each age group for center -based and homebased care are 5
as follows: 6
(1) Except as applicable in subdivision (2) of this subsection, payment rates shall 7
be set at the statewide or regional market rate for licensed child care centers 8
and homes. 9
(2) If it can be demonstrated that the application of the statewide or regional 10
market rate to a county with fewer than 50 children in each age group is lower 11
than the county market rate and would inhibit the ability of the county to 12
purchase child care for low-income children, then the county market rate may 13
be applied. 14
SECTION 9D.2.(e) A market rate shall be calculated for child care centers and 15
homes at each rated license level for each county and for each age group or age category of 16
enrollees and shall be representative of fees charged to parents for each age group of e nrollees 17
within the county. The Division of Child Development and Early Education shall also calculate 18
a statewide rate and regional market rate for each rated license level for each age category. 19
SECTION 9D.2.(f) Beginning July 1, 2026, the Department of Health and Human 20
Services, Division of Child Development and Early Education, shall increase the child care 21
subsidy market rates to the seventy -fifth percentile as recommended by the 2023 Child Care 22
Market Rate Study for children in three-, four-, and five-star-rated child care centers and homes. 23
The Department shall also implement a subsidy statewide floor rate based on the seventy -fifth 24
percentile of the 2021 Child Care Market Rate Study for children in three -, four -, and 25
five-star-rated child care centers and homes. 26
SECTION 9D.2.(g) The Division of Child Development and Early Education shall 27
continue implementing policies that improve the quality of child care for subsidized children, 28
including a policy in which child care subsidies are paid, to the extent possible, for child care in 29
the higher quality centers and homes only. The Division shall define higher quality, and subsidy 30
funds shall not be paid for one or two-star-rated facilities. For those counties with an inadequate 31
number of four and five -star-rated facilities, the Division shall continue a transition period that 32
allows the facilities to continue to receive subsidy funds while the facilities work on the increased 33
star ratings. The Division may allow exemptions in counties where there is an inadequate number 34
of four and five-star-rated facilities for non-star-rated programs, such as religious programs. 35
SECTION 9D.2.(h) Facilities licensed pursuant to Article 7 of Chapter 110 of the 36
General Statutes and facilities operated pursuant to G.S. 110-106 may participate in the program 37
that provides for the purchase of care in child care facilities for minor children of needy families. 38
Except as authorized by subsection (f) of this section, no separate licensing requirements shall 39
be used to select facilities to participate. In addition, child care facilities shall be required to meet 40
any additional applicable requirements of federal law or regulations. Child care arrangements 41
exempt from State regulation pursuant to Article 7 of Chapter 110 of the Genera l Statutes shall 42
meet the requirements established by other State law and by the Social Services Commission. 43
County departments of social services or other local contracting agencies shall not 44
use a provider's failure to comply with requirements in additio n to those specified in this 45
subsection as a condition for reducing the provider's subsidized child care rate. 46
SECTION 9D.2.(i) Payment for subsidized child care services provided with 47
Temporary Assistance for Needy Families Block Grant funds shall comply with all regulations 48
and policies issued by the Division of Child Development and Early Education for the subsidized 49
child care program. 50
General Assembly Of North Carolina Session 2025
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SECTION 9D.2.(j) Non-citizen families who reside in this State legally shall be 1
eligible for child care subsidies if all other conditions of eligibility are met. If all other conditions 2
of eligibility are met, non -citizen families who reside in this State illegally shall be eligible for 3
child care subsidies only if at least one of the following conditions is met: 4
(1) The child for whom a child care subsidy is sought is receiving child protective 5
services or foster care services. 6
(2) The child for whom a child care subsidy is sought is developmentally delayed 7
or at risk of being developmentally delayed. 8
(3) The child for w hom a child care subsidy is sought is a citizen of the United 9
States. 10
SECTION 9D.2.(k) The Department of Health and Human Services, Division of 11
Child Development and Early Education, shall require all county departments of social services 12
to include on an y forms used to determine eligibility for child care subsidy whether the family 13
waiting for subsidy is receiving assistance through the NC Pre-K Program or Head Start. 14
SECTION 9D.2.( l) Department of Defense -certified child care facilities licensed 15
pursuant to G.S. 110-106.2 may participate in the State -subsidized child care program that 16
provides for the purchase of care in child care facilities for minor children in needy families, 17
provided that funds allocated from the State -subsidized child care program to Department of 18
Defense-certified child care facilities shall supplement and not supplant funds allocated in 19
accordance with G.S. 143B-168.15(g). Payment rates and fees for military families who choose 20
Department of Defense-certified child care facilities and who are eligible to receive subsidized 21
child care shall be as set forth in this section. 22
23
CHILD CARE ALLOCATION FORMULA 24
SECTION 9D.3.(a) The Department of Health and Human Services, Division of 25
Child Development and Early Education (Division), shall allocate child care subsidy voucher 26
funds to pay the costs of necessary child care for minor children of needy families. The 27
mandatory thirty percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation 28
under G.S. 143B-168.15(g) shall constitute the base amount for each county's child care subsidy 29
allocation. The Department of Health and Human Services shall use the following method when 30
allocating federal and State child care funds, not including the aggregate mandatory thirty percent 31
(30%) North Carolina Partnership for Children, Inc., subsidy allocation: 32
(1) Funds shall be allocated to a county based upon the projected cost of serving 33
children under age 11 in families with all parents working who earn less than 34
the applicable federal poverty level percentage set forth in Section 9D.3(a) of 35
this act. 36
(2) The Division may withhold up to two percent (2%) of available funds from 37
the allocation formula for (i) preventing termination of services throughout 38
the fiscal year and (ii) repayment of any federal funds identified by counties 39
as overpayments, including overpayments due to fraud. The Division shall 40
allocate to counties any funds withheld before the end of the fiscal year when 41
the Division determines the funds are not needed for the purpo ses described 42
in this subdivision. The Division shall submit a report to the Joint Legislative 43
Oversight Committee on Health and Human Services and the Fiscal Research 44
Division, which report shall include each of the following: 45
a. The amount of funds used for preventing termination of services and 46
the repayment of any federal funds. 47
b. The date the remaining funds were distributed to counties. 48
c. As a result of funds withheld under this subdivision and after funds 49
have been distributed, any counties that did not receive at least the 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 59
amount the counties received the previous year and the amount by 1
which funds were decreased. 2
The Division shall submit a report in each year of the 2025 -2027 fiscal biennium 30 3
days after the funds withheld pursuant to this sub division are distributed but no later than April 4
1 of each respective year. 5
(3) The Division shall set aside four percent (4%) of child care subsidy allocations 6
for vulnerable populations, which include a child identified as having special 7
needs and a child whose application for assistance indicates that the child and 8
the child's family is experiencing homelessness or is in a temporary living 9
situation. A child identified by this subdivision shall be given priority for 10
receiving services until such time as set-aside allocations for vulnerable 11
populations are exhausted. 12
SECTION 9D.3.(b) The Division may reallocate unused child care subsidy voucher 13
funds in order to meet the child care needs of low -income families. Any reallocation of funds 14
shall be based upon the expenditures of all child care subsidy voucher funding, including North 15
Carolina Partnership for Children, Inc., funds within a county. Counties shall manage service 16
levels within the funds allocated to the counties. A county with a spending coeffici ent over one 17
hundred percent (100%) shall submit a plan to the Division for managing the county's allocation 18
before receiving any reallocated funds. 19
SECTION 9D.3.(c) When implementing the formula under subsection (a) of this 20
section, the Division shall in clude the market rate increase in the formula process rather than 21
calculate the increases outside of the formula process. Additionally, the Department shall do the 22
following: 23
(1) Deem a county's initial allocation as the county's expenditure in the previou s 24
fiscal year or a prorated share of the county's previous fiscal year expenditures 25
if sufficient funds are not available. 26
(2) Effective immediately following the next new decennial census data release, 27
implement (i) one -third of the change in a county's a llocation in the year 28
following the data release, (ii) an additional one -third of the change in a 29
county's allocation beginning two years after the initial change under this 30
subdivision, and (iii) the final one -third change in a county's allocation 31
beginning the following two years thereafter. 32
33
SMART START INITIATIVES 34
SECTION 9D.4.(a) Policies. – The North Carolina Partnership for Children, Inc., 35
and its Board shall ensure policies focus on the North Carolina Partnership for Children, Inc.'s 36
mission of improving child care quality in North Carolina for children from birth to five years of 37
age. North Carolina Partnership for Children, Inc., funded activities shall include assisting child 38
care facilities with (i) improving quality, including helping one, two, and three -star-rated 39
facilities increase their star ratings, and (ii) implementing prekindergarten programs. State 40
funding for local partnerships shall also be used for evidence -based or evidence -informed 41
programs for children from birth to five years of age that do the following: 42
(1) Increase children's literacy. 43
(2) Increase the parents' ability to raise healthy, successful children. 44
(3) Improve children's health. 45
(4) Assist four and five-star-rated facilities in improving and maintaining quality. 46
SECTION 9D.4.(b) Administration. – Administrative costs shall be equivalent to, 47
on an average statewide basis for all local partnerships, not more than ten percent (10%) of the 48
total statewide allocation to all local partnerships. For purposes of this subsection, administrative 49
costs shall include costs associated with partnership oversight, business and financial 50
management, general accounting, human resources, budgeting, purchasing, contracting, and 51
General Assembly Of North Carolina Session 2025
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information systems management. The North Carolina Partnershi p for Children, Inc., shall 1
continue using a single statewide contract management system that incorporates features of the 2
required standard fiscal accountability plan described in G.S. 143B-168.12(a)(4). All local 3
partnerships are required to participate in the contract management system and, directed by the 4
North Carolina Partnership for Children, Inc., to collaborate, to the fullest extent possible, with 5
other local partnerships to increase efficiency and effectiveness. 6
SECTION 9D.4.(c) Salaries. – The salary schedule developed and implemented by 7
the North Carolina Partnership for Children, Inc., shall set the maximum amount of State funds 8
that may be used for the salary of the Executive Director of the North Carolina Partnership for 9
Children, Inc., and the directors of the local partnerships. The North Carolina Partnership for 10
Children, Inc., shall base the schedule on the following criteria: 11
(1) The population of the area serviced by a local partnership. 12
(2) The amount of State funds administered. 13
(3) The amount of total funds administered. 14
(4) The professional experience of the individual to be compensated. 15
(5) Any other relevant factors pertaining to salary, as determined by the North 16
Carolina Partnership for Children, Inc. 17
The salary schedule shall be used only to determine the maximum amount of State 18
funds that may be used for compensation. Nothing in this subsection shall be construed to prohibit 19
a local partnership from using non-State funds to supplement an individual's salary in excess of 20
the amount set by the salary schedule established under this subsection. 21
SECTION 9D.4.(d) Match Requirements. – The North Carolina Partnership for 22
Children, Inc., and all local partnerships shall, in the aggregate, be required to match one hundred 23
percent (100%) of the total amount budgeted for the program in each fiscal year of the 2025-2027 24
biennium. Of the funds that the North Carolina Partnership for Children, Inc., and the local 25
partnerships are required to match, contributions of cash shall be equal to at least thirteen percent 26
(13%) and in-kind donated resources shall be equal to no more than six percent (6%) for a total 27
match requirement of nineteen percent (19%) for each year of the 2025 -2027 fiscal biennium. 28
The North Carolina Partnership for Children, In c., may carry forward any amount in excess of 29
the required match for a fiscal year in order to meet the match requirement of the succeeding 30
fiscal year. Only in-kind contributions that are quantifiable shall be applied to the in-kind match 31
requirement. Volunteer services may be treated as an in-kind contribution for the purpose of the 32
match requirement of this subsection. Volunteer services that qualify as professional services 33
shall be valued at the fair market value of those services. All other volunteer service hours shall 34
be valued at the statewide average wage rate as calculated from data compiled by the Division of 35
Employment Security of the Department of Commerce in the Employment and Wages in North 36
Carolina Annual Report for the most recent period fo r which data are available. Expenses, 37
including both those paid by cash and in-kind contributions, incurred by other participating non-38
State entities contracting with the North Carolina Partnership for Children, Inc., or the local 39
partnerships also may be considered resources available to meet the required private match. In 40
order to qualify to meet the required private match, the expenses shall: 41
(1) Be verifiable from the contractor's records. 42
(2) If in-kind, other than volunteer services, be quantifiable i n accordance with 43
generally accepted accounting principles for nonprofit organizations. 44
(3) Not include expenses funded by State funds. 45
(4) Be supplemental to and not supplant preexisting resources for related program 46
activities. 47
(5) Be incurred as a direct result of the Early Childhood Initiatives Program and 48
be necessary and reasonable for the proper and efficient accomplishment of 49
the Program's objectives. 50
(6) Be otherwise allowable under federal or State law. 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 61
(7) Be required and described in the co ntractual agreements approved by the 1
North Carolina Partnership for Children, Inc., or the local partnership. 2
(8) Be reported to the North Carolina Partnership for Children, Inc., or the local 3
partnership by the contractor in the same manner as reimbursable expenses. 4
Failure to obtain a nineteen percent (19%) match by June 30 of each year of the 5
2025-2027 fiscal biennium shall result in a dollar-for-dollar reduction in the appropriation for the 6
Program for a subsequent fiscal year. The North Carolina Partnership for Children, Inc., shall be 7
responsible for compiling information on the private cash and in-kind contributions into a report, 8
to be included in its annual report as required under G.S. 143B-168.12(d), in a format that allows 9
verification by the Dep artment of Revenue. The same match requirements shall apply to any 10
expansion funds appropriated by the General Assembly. 11
SECTION 9D.4.(e) Bidding. – The North Carolina Partnership for Children, Inc., 12
and all local partnerships shall use competitive biddin g practices in contracting for goods and 13
services on contract amounts as follows: 14
(1) For amounts of five thousand dollars ($5,000) or less, the procedures specified 15
by a written policy as developed by the Board of Directors of the North 16
Carolina Partnership for Children, Inc. 17
(2) For amounts greater than five thousand dollars ($5,000) but less than fifteen 18
thousand dollars ($15,000), three written quotes. 19
(3) For amounts of fifteen thousand dollars ($15,000) or more but less than forty 20
thousand dollars ($40,000), a request for proposal process. 21
(4) For amounts of forty thousand dollars ($40,000) or more, a request for 22
proposal process and advertising in a major newspaper. 23
SECTION 9D.4.(f) Allocations. – The North Carolina Partnership for Children, Inc., 24
shall not reduce the allocation for counties with less than 35,000 in population below the 25
2012-2013 funding level. 26
SECTION 9D.4.(g) Performance-Based Evaluation. – The Department of Health 27
and Human Services shall continue to implement the performance-based evaluation system. 28
SECTION 9D.4.(h) Expenditure Restrictions. – Except as provided in subsection (i) 29
of this section, the Department of Health and Human Services and the North Carolina Partnership 30
for Children, Inc., shall ensure that the allocation of funds for Early Childhood Education and 31
Development Initiatives for the 2025-2027 fiscal biennium shall be administered and distributed 32
in the following manner: 33
(1) Capital expenditures are prohibited for the 2025-2027 fiscal biennium. For the 34
purposes of this section, "capital expenditures" means expenditures for capital 35
improvements as defined in G.S. 143C-1-1(d)(5). 36
(2) Expenditures of State funds for advertising and promotional activities are 37
prohibited for the 2025-2027 fiscal biennium. 38
For the 2025-2027 fiscal biennium, local partnerships shall not spend any State funds 39
on marketing campaigns, advertising, or any associated materials. Local partnerships may spend 40
any private funds the local partnerships receive on those activities. 41
SECTION 9D.4.(i) Notwithstanding subsection (h) of this section, the North 42
Carolina Partnership for Children, Inc., and local partnerships may use up to one percent (1%) of 43
State funds for fundraising activities. The North Carolina Partnership for Children, Inc., shall 44
include in its annual report required under G.S. 143B-168.12(d) a report on the use of State funds 45
for fundraising. The report shall include the following: 46
(1) The amount of funds expended on fundraising. 47
(2) Any return on fundraising investments. 48
(3) Any other information deemed relevant. 49
50
PART IX-E. HEALTH BENEFITS 51
General Assembly Of North Carolina Session 2025
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1
CONTINUE MEDICAID ANNUAL REPORT 2
SECTION 9E.1. The Department of Health and Human Services, Division of Health 3
Benefits (DHB), shall continue the publication of the Medicaid Annual Report and 4
accompanying tables. DHB shall publish the report and tables on its website no later than 5
December 31 following each State fiscal year. 6
7
VOLUME PURCHASE PLANS AND SINGLE SOURCE PROCUREMENT 8
SECTION 9E.2. The Department of Health and Human Services, Division of Health 9
Benefits, may, subject to the approval of a change in the State Medicaid Plan, contract for 10
services, medical equipment, supplies, and appliances by implementation of volume purchase 11
plans, single source procurement, or other contracting proces ses in order to improve cost 12
containment. 13
14
ADMINISTRATIVE HEARINGS FUNDING 15
SECTION 9E.3. Of the funds appropriated in this act to the Department of Health 16
and Human Services, Division of Health Benefits, for administrative contracts and interagency 17
transfers, the Department of Health and Human Services (DHHS) shall transfer the sum of one 18
million dollars ($1,000,000) for the 2025 -2026 fiscal year and the sum of one million dollars 19
($1,000,000) for the 2026 -2027 fiscal year to the Office of Administrative H earings (OAH). 20
These funds shall be allocated by OAH for mediation services provided for Medicaid applicant 21
and recipient appeals and to contract for other services necessary to conduct the appeals process. 22
OAH shall continue the Memorandum of Agreement (MOA) with DHHS for mediation services 23
provided for Medicaid recipient appeals and contracted services necessary to conduct the appeals 24
process. Upon receipt of invoices from OAH for covered services rendered in accordance with 25
the MOA, DHHS shall transfer the federal share of Medicaid funds drawn down for this purpose. 26
27
ACCOUNTING FOR MEDICAID RECEIVABLES AS NONTAX REVENUE 28
SECTION 9E.4.(a) The Department of Health and Human Services, Division of 29
Health Benefits (DHB), receivables reserved at the end of the 2025-2026 and 2026-2027 fiscal 30
years shall, when received, be accounted for as nontax revenue for each of those fiscal years. The 31
treatment under this section of any revenue derived from federal programs shall be in accordance 32
with the requirements specified in the Code of Federal Regulations, Title 2, Part 225. 33
SECTION 9E.4.(b) For the 2025 -2026 fiscal year, the Department of Health and 34
Human Services shall deposit from its revenues one hundred seven million seven hundred 35
thousand dollars ($170,965,305) with the Department of State Treasurer to be accounted for as 36
nontax revenue. For the 2026 -2027 fiscal year, the Department of Health and Human Services 37
shall deposit from its revenues one hundred nine million dollars ( $174,565,305) with the 38
Department of S tate Treasurer to be accounted for as nontax revenue. These deposits shall 39
represent the return of advanced General Fund appropriations, nonfederal revenue, fund 40
balances, or other resources from State -owned and State operated hospitals that are used to 41
provide indigent and nonindigent care services. The return from State-owned and State operated 42
hospitals to the Department of Health and Human Services shall be made from nonfederal 43
resources in the following manner: 44
(1) The University of North Carolina Hosp itals at Chapel Hill shall make the 45
following deposits: 46
a. For the 2025-2026 fiscal year, the amount of thirty -one million three 47
hundred sixty-five thousand three hundred five dollars ($31,365,305). 48
b. For the 2026-2027 fiscal year, the amount of thirty -one million three 49
hundred sixty-five thousand three hundred five dollars ($31,365,305). 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 63
(2) All State -owned and State operated hospitals, other than the University of 1
North Carolina Hospitals at Chapel Hill, that specialize in psychiatric care 2
shall annually deposit an amount equal to the amount of the payments from 3
DHB for uncompensated care. 4
5
LME/MCO INTERGOVERNMENTAL TRANSFERS 6
SECTION 9E.5.(a) The local management entities/managed care organizations 7
(LME/MCOs) shall make intergovernmental transfers to the Department of Health and Human 8
Services, Division of Health Benefits (DHB), in an aggregate amount of eighteen million twenty-9
eight thousand two hundred seventeen dollars ($18,028,217) in the 2025-2026 fiscal year and in 10
an aggregate amount of eighteen million twenty -eight thousand two hundred seventeen dollars 11
($18,028,217) for the 2026 -2027 fiscal year. The due date and frequency of the 12
intergovernmental transfer required by this section shall be determined by DHB. The amount of 13
the intergovernmental transfer that each individual LME/MCO is required to make in each fiscal 14
year shall be as follows: 15
2025-2026 2026-2027 16
Alliance Behavioral Healthcare $4,508,857 $4,508,857 17
Partners Health Management $3,544,348 $3,544,348 18
Trillium Health Resources $6,448,693 $6,448,693 19
Vaya Health $3,526,319 $3,526,319 20
SECTION 9E.5.(b) In the event that a county disengages from an LME/MCO and 21
realigns with another LME/MCO during the 2025 -2027 fiscal biennium, DHB shall have the 22
authority to reallocate the amount of the intergovernmental transfer that each affected 23
LME/MCO is required to make under subsection (a) of this section, taking into consideration the 24
change in catchment area and covered population, provided that the aggregate amount of the 25
transfers received from all LME/MCOs in each year of the fiscal biennium is achieved. 26
27
MEDICAID TRANSFORMATION FUND BALANCE 28
SECTION 9E.6. The unexpended balance in the Medicaid Transformation Fund of 29
six million eight hundred forty-one thousand four hundred sixty-six dollars ($6,841,466) shall be 30
transferred to the Division of Health Benefits for Medicaid administration needs in FY 2026-27. 31
32
CREATE DESIGNATED STATE HEALTH PROGRAM SAVINGS BUDGET FUND 33
SECTION 9E.7.(a) Fund created. – The Designated State Health Programs budget 34
fund is created as a nonreverting budget fund within the Department of Health and Human 35
Services (DHHS), Division of Health Benefits (DHB) 24445 bud get code. The Division of 36
Central Management Services, Division of Child and Family Well -Being, Division of Mental 37
Health, Developmental Disabilities, and Substance Use Services, and Division of Public Health 38
shall transfer and deposit all freed -up state f unds that result from additional receipts realized 39
through Designated State Health Programs authority in the North Carolina Medicaid Reform 40
Section 1115 Demonstration approved by the Centers for Medicare and Medicaid Services in 41
December, 2024 to this budget fund. 42
43
APPROPRIATION OF GOVERNMENT EFFICIENCY GRANT 44
SECTION 9 E.8. The federal Government Efficiency Grant funds awarded to 45
implement the State Medicaid Community Engagement requirements and other necessary 46
eligibility system requirements resulting from Medicaid expansion eligibility changes in H.R.1 47
are appropriated in the amounts provided in the notification of award from the federal 48
government or any entity acting on behalf of the federal government to administer the federal 49
funds. DHB, with approval of the Director of the Budget, may spend the grant awards. 50
51
General Assembly Of North Carolina Session 2025
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LEGISLATIVE INTENT 1
SECTION 9E.9.1. It is the intent of the General Assembly to provide funding for 2
the increased administrative costs of compliance with frequency of eligibility redeterminations 3
requirements and community engagement requirements in the Medicaid program under Sections 4
71107 and 71119 of P.L. 119 -21 from a source that meets the limitations on funding sources in 5
G.S. 108A-54.3B for NC Health Works. 6
7
SHIFT EXISTING PUBLI C HOSPITAL ASS ESSMENTS TO 8
INTERGOVERNMENTAL TRANSFERS 9
SECTION 9E.9.2.(a) G.S. 108A-146.1 reads as rewritten: 10
"§ 108A-146.1. Public hospital modernized assessment. 11
(a) The public hospital modernized assessment imposed under this Part shall apply to all 12
public acute care hospitals. 13
(b) The public hospital modernized assessment shall be assessed as a percentage of each 14
public acute care hospital's hospital costs. The assessment percentage shall be calculated 15
quarterly by the Department of Health and Human Services 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 modernized assessment collection amount under G.S. 108A-146.5 multiplied by the 18
public hospital historical assessment sha re and divided by the total hospital costs for all public 19
acute care hospitals holding a license on the first day of the assessment quarter. 20
(d) Beginning July 1, 2026, the public hospital modernized assessment quarterly 21
percentage shall equal the modernized IGT actual receipts adjustment component under 22
G.S. 108A-146.14 divided by the total hospital costs for all public acute care hospitals holding a 23
license on the first day of the assessment quarter." 24
SECTION 9E.9.2.(b) Part 2 of Article 7B of Chapter 108A of the General Statutes 25
is amended by adding a new section to read: 26
"§ 108A-146.1A. Public hospital modernized presumptive IGT offset amount. 27
The public hospital modernized presumptive IGT offset amount is the aggregate acute care 28
hospital modernized assessment collection amount under G.S. 108A-146.5 multiplied by the 29
public hospital historical assessment share." 30
SECTION 9E.9.2.(c) G.S. 108A-146.5(a) reads as rewritten: 31
"§ 108A-146.5. Aggregate acute care hospital modernized assessment collection amount. 32
(a) The aggregate modernized assessment collection amount is an amount of money that 33
is calculated by subtracting the modernized intergovernmental transfer presumptive IGT 34
adjustment component under G.S. 108A-146.13 from the total modernized nonfederal receipts 35
under subsection (b) of this section and then adding the positive or negative amount of the 36
modernized IGT actual receipts adjustment component under G.S. 108A-146.14. section." 37
SECTION 9E.9.2.(d) G.S. 108A-146.14 reads as rewritten: 38
"§ 108A-146.14. Modernized IGT actual receipts adjustment component. 39
The modernized IGT actual receipts adjustment components is a positive or negative dollar 40
amount equal to the amount of the modernized presumptive IGT adjustment component under 41
G.S 108A -146.13 G.S. 108A-146.13(c) for the previous quarter plus the public hospital 42
modernized presumptive IGT offset amount under G.S. 108A-146.1A for the previous quarter 43
minus the amount of money received during the previous quarter by the Department through the 44
intergovernmental transfer and designated in the Department’s accounting system as a receipt 45
related to the modernized assessments. If this calculation results in a negative number, the 46
modernized IGT actual receipts adjustment component is zero." 47
SECTION 9E.9.2.(e) G S. 108A-146.14 reads as rewritten: 48
"§ 108A-146.14. Modernized IGT actual receipts adjustment component. 49
The modernized IGT actual receipts adjustment components is a dollar amount equal to the 50
amount of the modernized presumptive IGT adjustment component under G.S. 108A-146.13(c) 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 65
for the previous quarter plus the public hospital modernized presumptive IGT offset amount 1
under G.S. 108A-146.1A for the previous quarter minus the amount of money received during 2
the previous quarter by the Department through the intergovernmental transfer and designated in 3
the Department’s accounting system as a receipt related to the modernized assessments. If this 4
calculation results in a negative number, the modernized I GT actual receipts adjustment 5
component is zero." 6
SECTION 9E.9.2.(f) Subsection (e) of this section is effective October 1, 2026 and 7
applies to assessments imposed on or after that date. 8
SECTION 9E.9.2.(g) G.S. 108A-147.1 reads as rewritten: 9
"§ 108A-147.1. Public hospital health advancement assessment. 10
(a) The public hospital health advancement assessment imposed under this Part shall 11
apply to all public acute care hospitals. 12
(b) The public hospital health advancement assessment shall be assessed as a percentage 13
of each public acute care hospital's hospital costs. The assessment percentage shall be calculated 14
quarterly by the Department in accordance with this Part. The 15
(c) Through June 30, 2026, the percentage for each quarter shall equal the aggregate acute 16
care hospital health advancement assessment collection amount calculated under 17
G.S. 108A-147.3 multiplied by the public hospital historical assessment share and divided by the 18
total hospital costs for all public acute care hospitals holding a license on the first day of the 19
assessment quarter. 20
(d) Beginning July 1, 2026, the public hospital health advancement assessment quarterly 21
percentage shall equal the health advancement IGT actual receipts adjustment components under 22
G.S. 108A-147.10 divided by the total hospital costs for all public acute care hospitals holding a 23
license on the first day of the assessment quarter." 24
SECTION 9E.9.2.(h) Part 3 of Article 7B of Chapter 108A of the General Statutes 25
is amended by adding a new section to read: 26
"§ 108A-147.1A. Public hospital health advancement presumptive IGT offset amount. 27
The public hospital health advancement presumptive IGT offset amount is the aggregate 28
acute care hospital health advancement assessment collection amount under G. S. 108A-147.3 29
multiplied by the public hospital historical assessment share." 30
SECTION 9E.9.2.(i) G.S. 108A-147.3(a) reads as rewritten: 31
"(a) The aggregate health advancement assessment collection amount is an amount of 32
money that is calculated quarterly by adjusting the tot al nonfederal receipts for health 33
advancement calculates under subsection (b) of this section by (i) subtracting the health 34
advancement presumptive IGT adjustment component calculated under G.S. 108A-147.9, (ii) 35
adding the positive or negative health advancement IGT actual receipts adjustment component 36
calculated under G.S. 108A -147.10, G.S. 108A-147.9 and (iii) then subtracting the positive or 37
negative total IGT share of the reconciliation adjustment component calculated under G.S. 108A-38
147.11(b)G.S. 108A-147.11(e)." 39
SECTION 9E.9.2.(j) G.S. 108A-147.10 reads as rewritten: 40
"§ 108A-147.10. Health advancement IGT actual receipts adjustment component. 41
The health advancement IGT actual receipts adjustment component is a positive or negative 42
dollar amount equal to the health advancement presumptive IGT adjustment component 43
calculated under G.S. 108A-147.9 for the previous quarter, plus the positive or negative total IGT 44
share of the reconciliatio n adjustment component calculated under G.S. 45
108A-147.11(b)G.S. 108A-147.11(e) for the previous quarter, and minus the amount of money 46
received during the previous quarter by the Department through intergovernmental transfer and 47
designated in the Departmen t's accounting system as a receipt for health advancement. If this 48
calculation results in a negative number, the health advancement IGT actual receipts adjustment 49
component is zero." 50
General Assembly Of North Carolina Session 2025
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SECTION 9E.9.2.(k) G.S. 108A-147.10 as amended by subsection (j) of this section 1
reads as rewritten: 2
"§ 108A-147.10. Health advancement IGT actual receipts adjustment component. 3
The health advancement IGT actual receipts adjustment component is a positive or negative 4
dollar amount equal to the total of (i) the amount of the health advancement presumptive IGT 5
adjustment component calculated under G.S. 108A-147.9 for the previous quarter, plus (ii) the 6
positive or negative IGT share of the reconciliation adjustment component calculated under 7
G.S. 108A-147.11(e) for the previous quarter, andand (iii) the public hospital health 8
advancement presumptive IGT offset amount for the previous quarter, minus the amount of 9
money received during the previous quarter by the Department through intergovernmental 10
transfer and designated in the Department's accounting system as a receipt for health 11
advancement. If this calculation results in a negative number, the health advancement IGT actual 12
receipts adjustment component is zero." 13
SECTION 9E.9.2.(l) G.S. 108A-147.11 reads as rewritten: 14
"§ 108A-147.11. Health advancement reconciliation adjustment component. 15
(a) The health advancement reconciliation adjustmen t component is a positive or 16
negative dollar amount equal to the actual nonfederal expenditures for the quarter that is two 17
quarters prior to the current quarter minus the sum of the following specified amounts: 18
(1) The presumptive service cost component calculated under G.S. 108A-147.5 19
for the quarter that is two quarters prior to the current quarter. 20
(2) The amount transferred during the current quarter by the Department of 21
Revenue to the State Treasurer for the Health Advancement Receipts Special 22
Fund under G.S. 105-228.5C. 23
(3) The health advancement acute care hospital HASP component calculated 24
under G.S. 108A-147.6 for the quarter that is two quarters prior to the current 25
quarter. 26
(4) The health advancement freestanding psychiatric hospital HASP compon ent 27
calculated under G.S. 108A-147.6A for the quarter that is two quarters prior 28
to the current quarter. 29
(b) The base IGT share of the reconciliation adjustment component is a positive or 30
negative dollar amount that is calculated by multiplying the health advancement reconciliation 31
adjustment component calculated under subsection (a) of this section by the share of public 32
hospital costs calculated under subsection (c) of this section. 33
(c) The share of public hospital costs is calculated by adding total hosp ital costs for the 34
UNC Health Care System, total hospital costs for the primary affiliated teaching hospital for the 35
East Carolina University Brody School of Medicine, and sixty percent (60%) of the total hospital 36
costs for all public acute care hospitals and dividing that sum by the total hospital costs for all 37
acute care hospitals except for critical access hospitals. 38
(d) The supplemental IGT share of the reconciliation adjustment component is a positive 39
or negative dollar amount that is calculated by subtracting the base IGT share of the reconciliation 40
adjustment component calculated under subsection (b) of this section from the health 41
advancement reconciliation component calculated under subsection (a) of this section and 42
multiplying that difference by the public hospital historical assessment share. 43
(e) The total IGT share of the reconciliation adjustment component is a positive or 44
negative dollar amount that is the sum of the base IGT share of the reconciliation adjustment 45
component calculated under subsection (b) of this section and the supplemental IGT share of the 46
reconciliation adjustment component calculated under subsection (d) of this section." 47
SECTION 9E.9.2.(m) Subsection (k) of this section is effective October 1, 2026, 48
and applies to assessments imposed on or after that date. 49
SECTION 9E.9.2.(n) Except as otherwise provided, this section is effective July 1, 50
2026, and applies to assessments imposed on or after that date. 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 67
1
THE 2026 ONE -TIME ASSES SMENTS FOR NEW HEALT H ADVANCEMENT 2
ADMINISTRATIVE COSTS 3
SECTION 9E.9.3.(a) For purposes of this section, the following definitions apply: 4
(1) Acute care hospital. – As defined in G.S. 108A-145.3. 5
(2) Aggregate collection amount. – Fourteen million three hundred thousand 6
dollars ($14,300,000) minus intergovernmental transfer receipts. 7
(3) DHHS. – The Department of Health and Human Services. 8
(4) Hospital costs. – As defined in G.S. 108A-145.3. 9
(5) Intergovernmental transfer receipts. – The amount of money received during 10
the quarter in which this section becomes effective by DHHS through 11
intergovernmental transfers and that is designated in DHHS's accounting 12
system as a receipt for the 2026 one-time assessments. 13
(6) Private acute care hospital. – As defined in G.S. 108A-145.3. 14
(7) Private hospital historical assessment share. – As defined in G.S. 108A-145.3. 15
(8) Public acute care hospital. – As defined in G.S. 108A-145.3. 16
(9) Public hospital historical assessment share. – As defined in G.S. 108A-145.3. 17
SECTION 9E.9.3.(b) Effective when this act becomes law, each private acute care 18
hospital is subject to a 2026 one -time assessment that is a percentage of its hospital costs. The 19
percentage shall equal the aggregate collection amount multiplied by the private hospital 20
historical assessment share and divided by the total hospital costs for all private acute care 21
hospitals. 22
SECTION 9E.9.3.(c) Effective when this act becomes law, each public acute care 23
hospital is subject to a 2026 one-time assessment that is a percentage of its hospital costs. The 24
percentage shall equal the aggregate collection amount multiplied by the public hospital historical 25
assessment share and divided by the total hospital costs for all public acute care hospitals. 26
SECTION 9E.9.3.(d) The proceeds of the assessments under this section 27
and intergovernmental transfer receipts shall be deposited in the Health Advancement 28
Receipts Special Fund under G.S. 143C-9-10 and shall be used for the increased 29
administrative costs described in Section 9E.9 as allowed under G.S. 108A-147.13(a)(2). From 30
the proceeds of this assessment and intergovernmental transfer receipts, DHHS shall use the sum 31
of seven million eight hundred thousand dollars ($7,800,000) to provide funding to county 32
departments of social services to support the counties with the increased administrative costs 33
described in Section 9E.9.9. 34
SECTION 9E.9.3.(e) The hospital assessments under this section shall be imposed 35
by DHHS in accordance with the following procedures: 36
(1) The assessment shall be calculated, imposed, and due in the time and manner 37
prescribed by DHHS and shall be considered delinquent if not paid within 38
seven calendar days of this due date. 39
(2) With respect to any hospital owing a past due assessment amount, DHHS may 40
withhold the unpaid amount from Medicaid payments otherwise due or 41
impose a late payment penalty. DHHS may waive a penalty for good cause 42
shown. 43
(3) A hospital may appeal a determination of the assessment amount owed 44
through a reconsideration review. The pendency of an appeal does not relieve 45
a hospital from its obligation to pay an assessment amount when due. 46
(4) The assessment may be included as allowable costs of a hospital for purposes 47
of any applicable Medicaid reimbursement formula, except the as sessment 48
shall be excluded from cost settlement. 49
(5) The assessment may not be added as a surtax or assessment on a patient's bill. 50
General Assembly Of North Carolina Session 2025
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SECTION 9E.9.3.(f) For purposes of determining the aggregate amount of all 1
assessments due from hospitals under Article 7B of Chapter 108A of the General Statutes 2
pursuant to G.S. 108A-148.1(c)(2), the assessments under this section shall be considered an 3
assessment due from hospitals under that Article. 4
SECTION 9E.9.3.(g) No later than February 1, 2027, DHHS shall submit to the 5
Joint Legislative Oversight Committee on Medicaid and the Fiscal Research Division a report 6
that details the amount of the proceeds from the assessments imposed under this section that 7
DHHS provided to each county department of social services and the date that those proceeds 8
were provided to each county department of social services. 9
10
HOSPITAL HEALTH ADVA NCEMENT ASSESSMENT F UNDING FOR NEW 11
ADMINISTRATIVE COSTS 12
SECTION 9E.9.4.(a) G.S. 108A-147.7 reads as rewritten: 13
"§ 108A-147.7. Administration Base administration component. 14
(a) The base administration component is an amount of money that is calculated by 15
adding the base State administration subcomponent calculated under subsection (b) of this 16
section and the base county administration subcomponent calculated under subsection (c) of this 17
section. 18
(b) For each quarter of the 2023 -2024 State fiscal year, the State administration 19
subcomponent is the product of one million three hundred fifty thousand dollars ($1,350,000) 20
multiplied by the number of months in that State fiscal quarter in which G.S. 108A-54.3A(24) is 21
effective during any part of the month. For each quarter of the 2024 -2025 State fiscal year, the 22
base State administration subcomponent is four million one hundred eighty-seven thousand seven 23
hundred dollars ($4,187,700). For each subsequent State fiscal year, the base State administration 24
subcomponent shall be increased over the prior year's quarterly amount by a percentage that is 25
the sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers 26
for the most recent 12 months available on March 1 of the previous State fiscal year. 27
(c) For each quarter of the 2022 -2023 State fiscal year and the 2023 -2024 State fiscal 28
year, the county administration subcomponent is the pro duct of one million six hundred 29
sixty-seven thousand dollars ($1,667,000) multiplied by the number of months in that State fiscal 30
quarter in which G.S. 108A-54.3A(24) is effective during any part of the month. The base county 31
administration subcomponent is seven million four hundred thousand dollars ($7,400,000) for 32
each quarter of the 2024-2025 State fiscal year and seven million eight hundred thousand dollars 33
($7,800,000) for each quarter of the 2025-2026 State fiscal year. For each State fiscal year afte r 34
the 2025-2026 State fiscal year, the base county administration subcomponent shall be increased 35
over the prior year's quarterly amount by a percentage that is the sum of each monthly percentage 36
change in the Consumer Price Index: All Urban Consumers for the most recent 12 months 37
available on March 1 of the previous State fiscal year." 38
SECTION 9E.9.4.(b) Part 3 of Article 7B of Chapter 108A of the General Statutes 39
is amended by adding a new section to read: 40
"§ 108A-147.7A. Supplemental administration component. 41
(a) The supplemental administration component is an amount of money that is calculated 42
by adding the supplemental State administration subcomponent calculated under subsection (b) 43
of this section and the supplemental county administration subcom ponent calculated under 44
subsection (c) of this section. 45
(b) For the quarter of the 2026 -2027 f iscal year beginning on July 1, 2026, the 46
supplemental State administration subcomponent is zero. For the quarter of the 2026-2027 fiscal 47
year beginning on October 1, 2026, the supplemental State administration subcomponent is three 48
million three hundred thousand dollars ($3,300,000). For the quarter of the 2026-2027 fiscal year 49
beginning on January 1, 2207, the supplement State administration subcomponent is two million 50
three hundred fifty thousand dollars ($2,350, 000). For the quarter of the 2026 -27 fiscal year 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 69
beginning on April 1,2027, the supplemental State administration subcomponent is three million, 1
three hundred thousand dollars ($3,300,000). For the 2027-2028 fiscal year, the quarterly 2
supplemental State administration subcomponent shall be three million three hundred thousand 3
dollars ($3,300,000) increased by a percentage that is the sum of each monthly percentage change 4
in the Consumer Price Index: All Urban Consumers for the most recent 12 months available on 5
March1 of the previous State fiscal year. For each subsequent State fiscal year through the 2035-6
2036 State fiscal year, the supplemental State administration su bcomponent shall be increased 7
over the prior year’s quarterly amount by a percentage that is the sum of each monthly percentage 8
change in the Consumer Price Index: All Urban Consumers for the most recent 12 months 9
available March 1 of the previous State fiscal year. For each State Fiscal year beginning on o r 10
after July 1, 2036, the supplemental State administration subcomponent quarterly amount is zero. 11
(c) For each quarter of the 2026-2027 fiscal year, the supplemental county administration 12
component is seven million eight hundred thousand dollars ($7,800,000). For each subsequent 13
State fiscal year through the 2035-2036 State fiscal year, the supplemental county administration 14
subcomponent shall be increased over the prior year’s quarterly amount by a percentage that is 15
the sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers 16
for the most recent 12 months available on March 1 of the previous State fiscal year. For each 17
State fiscal year beginning on or after July 1, 2036, the supplemental c ounty admi nistration 18
subcomponent quarterly amount is zero." 19
20
SECTION 9E.9.4.(c) G.S. 108A-147.3, as amended by Section 6.1(n) of S.L. 21
2025-64 reads as rewritten: 22
"§ 108A-147.3. Aggregate acute care hospital health advancement assessment collection 23
amount. 24
… 25
(b) The total nonfederal receipts for health advancement is an amount of money that is 26
calculated quarterly by adding all of the following: 27
(1) The presumptive service cost component calculated under G.S. 108A-147.5. 28
(2) The health advancement acute care hospi tal HASP component calculated 29
under G.S. 108A-147.6. 30
(2a) The health advancement freestanding psychiatric hospital HASP component 31
calculated under G.S. 108A-147.6A. 32
(3) The base administration component calculated under G.S. 108A-147.7. 33
(3a) The supp lemental administration component calculated under G.S . 108A-34
147.7A. 35
(4) The State retention component under G.S. 108A-147.9. 36
(5) The positive or negative health advancement reconciliation adjustment 37
component calculated under G.S. 108A-147.11(a). 38
…." 39
SECTION 9E.9.4.(d) G.S. 108A-147.9 reads as rewritten: 40
"§ 108A-147.9. Health advancement presumptive IGT adjustment component. 41
… 42
(b) The public hospital health advancement IGT adjustment subcomponent is the total of 43
the following amounts: 44
(1) Sixty percent (60%) of the public hospital share of the sum of the presumptive 45
service cost component calculated under G.S. 108A-147.5 for the current 46
quarter, the base administration component calculated under G.S. 108A-147.7 47
for the current quarter, the supplemental administration component calculated 48
under G.S. 108A-147.7A, and the State retention component under 49
G.S. 108A-147.8 for the current quarter. The public hospital share is the total 50
hospital costs for all public acute care hospitals divided by the total hospital 51
General Assembly Of North Carolina Session 2025
Page 70 House Bill 1167-First Edition
costs for all acute care hospitals except for critical access hospitals and rural 1
emergency hospitals for the current quarter. 2
… 3
(c) The UNC Health Care System health advancement IGT adjustment subcomponent is 4
the total of the following amounts: 5
(1) The UNC Health Care System share of the sum of the presumptive service 6
cost component calculated under G.S. 108A-147.5 for the current quarter 7
andquarter, the base administration component calculated under 8
G.S. 108A-147.7 for the current quarterquarter, and the supplemental 9
administration component calculated under G.S. 108A-147.7A for the current 10
quarter. The UNC Health Care System share is the total hospital costs for the 11
UNC Health Care System hospitals divided by the total hospital costs for all 12
acute care hospitals except for critical access hospitals and rural emergency 13
hospitals for the current quarter. 14
… 15
(d) The East Carolina University health advancement IGT adjustment subcomponent is 16
the total of the following amounts: 17
(1) The East Carolina University share of the sum of the presumptive service cost 18
component calculated under G.S. 108A-147.5 for the current quarter and 19
quarter, the administration component calculated under G.S. 108A-147.7 for 20
the current quarter, quarter, and the supplemental administration component 21
calculated under G.S. 108A-147.7A for the current quarter. The East Carolina 22
University share is the total hospital costs for the primary affiliated teaching 23
hospital for the East Carolina University Brody School of Medicine divide d 24
by the total hospital costs for all acute care hospitals except for critical access 25
hospitals and rural emergency hospitals for the current quarter. 26
…." 27
SECTION 9E.9.4.(e) G.S. 108A-147.13 reads as rewritten: 28
"§ 108A-147.13. Use of funds. 29
… 30
(b) The Department shall use an amount of the proceeds of the health advancement 31
assessments that is equal to the sum of the base county administration subcomponent of the 32
administration component in G.S. 108A-147.7 and the supplemental county administration 33
subcomponent of the supplemental administration component in G.S. 108A-147.7A to provide 34
funding to county departments of social services to support the counties in determining eligibility 35
for newly eligible individuals. 36
(c) The amount of the proceeds of the health advancement assessments that may be used 37
for administrative expenses attributable to providing Medicaid coverage to newly eligible 38
individuals and administrative expenditures associated with the HASP program shall not exceed, 39
for any State fiscal year , an amount equal to the sum of the base State administration 40
subcomponent of the base administration component in G.S. 108A-147.7 for each quarter of the 41
State fiscal year, the supplemental State administration subcomponent of the supplemental 42
administration component in G.S. 108A-147.7A for each quarter of the State fiscal year, and all 43
corresponding matching federal funds.funds corresponding to those subcomponents. 44
…." 45
SECTION 9E.9.4.(f) This section is effective July 1, 2026, and applies to 46
assessments imposed on or after that date. 47
48
ADMINISTRATIVE COST REPORTING AND RECONCILIATION 49
SECTION 9E.9.5. No later than October 1, 2029, the Department of Health and 50
Human Services, Division of Health Benefits (DHB), shall submit a report to the House of 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 71
Representatives Appropriations Committee on Health and Human Services, the Senate 1
Appropriations Committee on Health and Human Services, the Joint Legislative Oversight 2
Committee on Medicaid, and the Fiscal Research Division that includes all of the following: 3
(1) The estimated share of the actual administrative costs expended through June 4
30, 2029, by DHB that is attributable to compliance with the requirements 5
described in Section 9E.9 of this act. 6
(2) A description of any reduction to the administrative costs described in Section 7
9E.9 of this act resulting from (i) actions taken by DHB to achieve efficiencies 8
or (ii) decreases in enrollment in NC Health Works. 9
(3) The total amount of assessment receipts and intergovernmental transfer 10
receipts from April 1, 2026, through June 30, 2029, that are attributable to 11
G.S. 108A-147.7A or 9E.9.3. of this act. 12
(4) A proposal for crediting against future assessments owed under Article 7B of 13
Chapter 108A of the General Statutes any amounts under subdivision (3) of 14
this section that exceed the amount under subdivision (1) of this section. 15
(5) Any proposed legislative changes to ensure that hospital assessment and 16
intergovernmental transfer amounts attributable to G.S. 108A-147.7A do not 17
exceed the administrative costs expended to comply with the requirements 18
described in Section 9E.9 of this act, including any of the following: 19
a. Adjustments to the supplemental administration component in 20
G.S. 108A-147.7A. 21
b. Addition of a statutory annual reconciliation of any hospital 22
assessment and intergovernmental transfer amounts attributable to 23
G.S. 108A-147.7A in excess of actual administrative costs expended 24
to comply with the requirements described in Section 9E.9 of this act. 25
26
REPORTING ON CERTAIN CHANGES R ESULTING IN REDUCTIO N IN 27
ADMINISTRATIVE COSTS 28
SECTION 9E.9.6.(a) If the Department of Health and Human Services, Division 29
of Health Benefits (DHB), determines that the requirements described in Section 9E.9 of this 30
act as applied to NC Health Works will be modified or eliminated due to a change in federal or 31
State law, rule, or regulation and the modification or elimination will reduce the administrative 32
costs described in Section 9E.9 of this act, then DHB shall submit a report on its determination 33
to the House of Representatives Appropriations Committee on Health and Human Services, the 34
Senate Appropriations Committee on Health and Human Services, the Joint Legislative 35
Oversight Committee on Medicaid, and the Fiscal Research Division. This report shall be due 60 36
days after DHB identifies the anticipated modification or elimination and shall include all of the 37
following: 38
(1) An explanation of the anticipated modification or elimination. 39
(2) The date the modification or elimination is expected to be effective. 40
(3) A fiscal analysis of the anticipated reduction in administrative costs 41
attributable to the modification or elimination. 42
(4) A proposal for a decrease or elimination of the amounts included in the 43
assessments to hospitals under G.S. 108A-147.7A that corresponds to the 44
anticipated reduction in administrative costs. 45
SECTION 9E.9.6.(b) This section expires June 30, 2036. 46
47
END NEW HOSPITAL ASSESSMENT AMOUNTS UNDER CERTAIN CONDITIONS 48
SECTION 9E.9.7.(a) In developing the average commercial rate demonstration for 49
the Healthcare Access and Stabilization Program (HASP), the Department of Health and 50
Human Services, Division of Health Benefits (DHB), shall use the payment methodology or 51
General Assembly Of North Carolina Session 2025
Page 72 House Bill 1167-First Edition
approach that produces the maximum allowable level of HASP reimbursements to hospitals and 1
receives federal approval. 2
SECTION 9E.9.7.(b) DHB shall submit a report to the House of Representatives 3
Appropriations Committee on Health and Human Services, the Senate Appropriations 4
Committee on Health and Human Services, the Joint Legislative Oversight Committee on 5
Medicaid, and the Fiscal Research Division if DHB determines that any of the following 6
conditions have been met: 7
(1) Centers for Medicare and Medicaid Services (CMS) approved a HASP 8
preprint that is less than ninety-five percent (95%) of the maximum allowable 9
amount for HASP under federal law or regulation, calculated based on all of 10
the following: 11
a. Limits on state directed payments and provider taxes established under 12
P.L. 119-21. 13
b. Any federal laws or regulations related to state directed payments, 14
provider taxes, and intergovernmental transfers that are applicable to 15
the period for which the CMS approval is received. 16
(2) The gross HASP reimbursements to hospitals approved by CMS for a fiscal 17
year are less than one billion five hundred million dollars ($1,500,000,000). 18
(3) The gross HASP reimbursements paid to hospitals, calculated on an accrual 19
basis, for a fiscal year are less than one billion five hundred million dollars 20
($1,500,000,000). 21
(4) A change in federal law or regulation resulted in adjusted hospital 22
intergovernmental transfers, in any quarter, that were at least twenty percent 23
(20%) lower than the amount of base hospital intergovernmental transfers for 24
that quarter. For purposes of this subdivision, the following definitions apply: 25
a. Actual hospital intergovernmental transfers. – The sum of all 26
intergovernmental transfers designated in DHHS's accounting system 27
as either a receipt for health advancement or a receipt related to the 28
modernized assessments. 29
b. Adjusted hospital intergovernmental transfers. – The amount of the 30
base hospital intergovernmental transfers adjusted to account for any 31
new federal restrictions on intergovernmental transfers established 32
through federal law or regulation. 33
c. Base hospital intergovernmental transfers. – The sum of actual hospital 34
intergovernmental transfers collected during the quarter of fiscal 35
year 2025 -2026 beginning on October 1, 2025, plus the amount of 36
hospital assessments under Article 7B of Chapter 108A of the 37
General Statutes collected in that quarter from public acute care 38
hospitals, adjusted for any changes in hospital status that occurred after 39
October 1, 2025. 40
d. Changes in hospital status. – As defined in G.S. 108A-146.17. 41
e. Public acute care hospital. – As defined in G.S. 108A-145.3. 42
SECTION 9E.9.7.(c) The report required by subsection (b) of this section is due 120 43
days after DHB's determination that one of the conditions has been met. Prior to submitting the 44
report, DHB shall allow at least 30 days for the North Carolina Healthcare Association to 45
review the determination and to provide written confirmation or disagreement with the 46
determination. Once a report required under subsection (b) of this section has been submitted, 47
DHB shall not be required to submit any further reports under subsection (b) of this section. 48
SECTION 9E.9.7.(d) On the date DHB submits the report required by subsection 49
(b) of this section, DHB shall notify, in writing, the Revisor of Statutes that the report has 50
been submitted. 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 73
SECTION 9E.9.7.(e) G.S. 108A-147.7A, as enacted by Section 9E.9.4.(b) reads 1
as rewritten: 2
"§ 108A-147.7A. Supplemental administration component. 3
(a) The supplemental administration component is an amount of money that is calculated 4
by adding the supplemental State administration subcomponent calculated under subsection (b) 5
of this section and the supplemental county administration subcomponent calculated under 6
subsection (c) of this section. 7
(b) For the quarter of the 2026 -2027 fiscal year beginning on July 1, 2026, the 8
supplemental State administration subcomponent is zero. For the quarter of the 2026-2027 fiscal 9
year beginning on October 1, 2026, the supplemental State administration subcomponent is three 10
million three hundred thousand dollars ($3,300,000). For the quarter of the 2026-2027 fiscal year 11
beginning on January 1, 2027, the supplemental State adm inistration subcomponent is two 12
million three hundred fifty thousand dollars ($2,350,000). For the quarter of the 2026-2027 fiscal 13
year beginning on April 1, 2027, the supplemental State administration subcomponent is three 14
million three hundred thousand d ollars ($3,300,000). For each quarter of the 2027 -2028 fiscal 15
year, the supplemental State administration subcomponent shall be three million three hundred 16
thousand dollars ($3,300,000) increased by a percentage that is the sum of each monthly 17
percentage change in the Consumer Price Index: All Urban Consumers for the most recent 12 18
months available on March 1 of the previous Sstate fiscal year. For each subsequent State fiscal 19
year through the 2035 -2036 State fiscal year , the supplemental State administrati on 20
subcomponent shall be increased over the prior year’s quarterly amount by a perentage that is the 21
sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers for 22
the most recent 12 months available on March 1 of the previous State fiscal year. For each State 23
fiscal year beginning on or after July 1, 2036, the The supplemental State administration 24
subcomponent quarterly amount is zero. 25
(c) For each quarter of the 2026-2027 fiscal year, the supplemental county administration 26
component is seven million eight hundred thousand dollars ($7,800,000). For each subsequent 27
State fiscal year through the 2035-2036 State fiscal year, the supplemental county administration 28
subcomponent shall be increased over the prior year’s quarterly amount by a percentage that is 29
the sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers 30
for the most recent 12 months available on March 1 of the previous State fiscal year. For each 31
State fiscal year beginning on or after July 1, 2036, theThe supplemental county administration 32
subcomponent quarterly amount is zero." 33
SECTION 9E.9.7.(f) Section 9E.6 of this act is repealed. 34
SECTION 9E.9.7.(g) Subsections (e) and (f) of this section are effective on the 35
first day of the next assessment quarter that is two years after the date the report required by 36
subsection (b) of this section is submitted. Subsection (e) of this section applies to assessments 37
imposed on or after the date subsection (e) of this section becomes effective. 38
SECTION 9E.9.7.(h) This section expires on July 1, 2034, if no report required 39
by subsection (b) of this section has been submitted by that date. 40
41
REPORT ON OPTIONS FOR CONTINUED FUNDING AFTER JUNE 30, 2036 42
SECTION 9E.9.8. No later than October 1, 2031, the Department of Health and 43
Human Services, Division of Health Benefits (DHB), shall submit a report, in consultation with 44
relevant stakeholders, to the House of Representatives Appropriations Committee on Health and 45
Human Services, the Senate Appropriations Committee on Health and Human Services, the 46
Joint Legislative Oversight Committee on Medicaid, and the Fiscal Research Division 47
outlining options for the continued funding of the increased administrative costs described in 48
Section 9E.9 of this act after June 30, 2036. 49
50
EFFECTIVE DATE 51
General Assembly Of North Carolina Session 2025
Page 74 House Bill 1167-First Edition
SECTION 9E.9.9. Except as otherwise provided in Sections 9E.9.1 through 9E.9.8 1
of this act, those sections of this act are effective when they become law. 2
3
PART IX-F. HEALTH SERVICES REGULATION 4
5
CONSTRUCTION SECTION PLAN REVIEW FEES REMAIN IN DHSR 6
SECTION 9F.1. G.S. 131E-267(a) reads as rewritten: 7
"§ 131E-267. Fees for departmental review of licensed health care facility or Medical Care 8
Commission bond-financed construction projects. 9
(a) The Department of He alth and Human Services shall charge a fee for the review of 10
each health care facility construction project to ensure that project plans and construction are in 11
compliance with State law. The fee shall be charged on a one-time, per-project basis as provided 12
in this section. In no event shall a fee imposed under this section exceed two hundred thousand 13
dollars ($200,000) for any single project. The first seven hundred twelve thousand six hundred 14
twenty-six dollars ($712,626) one million dollars ($ 1,000,000) in plan review fees collected 15
under this section shall remain in the Division of Health Service Regulation. Additional fees 16
collected shall be credited to the General Fund as nontax revenue and are intended to offset rather 17
than replace appropriations made for this purpose." 18
19
PART IX -G. MENTAL HE ALTH/DEVELOPMENTAL D ISABILITIES/SUBSTANCE 20
USE SERVICES 21
22
SINGLE STREAM FUNDING FOR DMH/DD/SUS COMMUNITY SERVICES 23
SECTION 9G.1.(a) For the purpose of mitigating cash flow problems that many 24
local management entities/ managed care organizations (LME/MCOs) experience at the 25
beginning of each fiscal year relative to single stream funding, the Department of Health and 26
Human Services, Division of Mental Health, Developmental Disabilities, and Substance Use 27
Services (DMH/DD/SUS), shall distribute not less than one -twelfth of each LME/MCO's base 28
budget allocation at the beginning of the fiscal year and subtract the amount of that distribution 29
from the LME/MCO's total reimbursements for the fiscal year. For each month of the fiscal year 30
after July, DMH/DD/SUS shall distribute, on the third working day of the month, one eleventh 31
of the amount of each LME/MCO's single stream allocation that remains after subtracting the 32
amount of the distribution that was made to the LME/MCO in July of the fiscal year. 33
SECTION 9G.1.(b) If, on or after June 1, 2027, the Office of State Budget 34
Management (OSBM) certifies a Medicaid budget surplus and sufficient case in Budget Code 35
14445 to meet total obligations for the 2026 -2027 fiscal year, then D HB shall transfer to 36
DMH/DD/SUS funds not to exceed the amount of the certified surplus or thirty million dollars 37
($30,000,000), whichever is less, to be used for single stream funding. 38
39
LOCAL INPATIENT PSYCHIATRIC BEDS OR BED DAYS 40
SECTION 9G.2.(a) Use of Funds. – Funds appropriated in this act to the Department 41
of Health and Human Services, Division of Mental Health, Developmental Disabilities, and 42
Substance Use Services, shall continue to be used for the purchase of local inpatient psychiatric 43
beds or be d days. The Department of Health and Human Services (DHHS) shall continue to 44
implement a two-tiered system of payment for purchasing these local inpatient psychiatric beds 45
or bed days based on acuity level with an enhanced rate of payment for inpatient psychiatric beds 46
or bed days for individuals with higher acuity levels, as defined by DHHS. The enhanced rate of 47
payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels shall 48
not exceed the lowest average cost per patient bed day among the State psychiatric hospitals. In 49
addition, at the discretion of the Secretary of Health and Human Services, existing funds allocated 50
to LME/MCOs for community -based mental health, developmental disabilities, and substance 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 75
use disorder services may be used to purchase additional local inpatient psychiatric beds or bed 1
days. DHHS may allocate funding to the LME/MCOs for the purchase of facility -based crisis, 2
nonhospital detoxification services and peer respite services to support individuals that do not 3
meet the medical necessity for inpatient treatment and can be diverted from an inpatient hospital 4
stay. 5
SECTION 9G.2.(b) Distribution and Management of Beds or Bed Days. – DHHS 6
shall work to ensure that any local inpatient psychiatric beds or bed days purchased in accordance 7
with this section are utilized solely for individuals who are medically indigent, except that DHHS 8
may use up to forty percent (40%) of the funds appropriated in this act to the Department of 9
Health and Human Services, Divi sion of Mental Health, Developmental Disabilities, and 10
Substance Use Services, for the purchase of local inpatient psychiatric beds, bed days to pay for 11
facility-based crisis services, non -hospital detoxification services, and peer respite services for 12
individuals in need of these services, regardless of whether the individuals are medically indigent. 13
For the purposes of this subsection, "medically indigent" shall mean uninsured persons who (i) 14
are financially unable to obtain private insurance coverage, as determined by DHHS and (ii) are 15
not eligible for government-funded health coverage such as Medicare or Medicaid. 16
In addition, DHHS shall work to ensure that any local inpatient psychiatric beds or 17
bed days purchased in accordance with this section are distributed across the State and according 18
to need, as determined by DHHS. DHHS shall ensure that beds or bed days for individuals with 19
higher acuity levels are distributed across the State and according to greatest need based on 20
hospital bed utilization data . DHHS shall enter into contracts with LME/MCOs and local 21
hospitals for the purchase and management of the local inpatient psychiatric beds or days and 22
allocate up to forty percent (40%) of the total funding to the LME/MCO’s for the purpose of 23
facility-based crisis services, nonhospital detoxification services, and peer respite services. 24
DHHS shall work to ensure that these contracts are awarded equitably around all regions of the 25
State. LME/MCOs shall manage and control these local inpatient psychiatric beds or bed days, 26
including the determination of the specific local hospital or State psychiatric hospital to which 27
an individual should be admitted pursuant to an involuntary commitment order. 28
SECTION 9G.2.(c) Funds to be Held in Statewide Reserve. – Funds appropriated in 29
this act to DHHS for the purchase of local inpatient psychiatric beds or bed days shall not be 30
allocated to LME/MCOs but shall be held in a statewide reserve at the Division of Mental Health, 31
Developmental Disabilities, and Substance Us e Services to pay for services authorized by the 32
LME/MCOs and billed by the hospitals through the LME/MCOs. LME/MCOs shall remit claims 33
for payment to DHHS within 15 working days after receipt of a clean claim from the hospital 34
and shall pay the hospital within 30 working days after receipt of payment from DHHS. 35
SECTION 9G.2.(d) Ineffective LME/MCO Management of Beds or Bed Days. – If 36
DHHS determines that (i) an LME/MCO is not effectively managing the beds or bed days for 37
which it has responsibility, as ev idenced by beds or bed days in the local hospital not being 38
utilized while demand for services at the State psychiatric hospitals has not decreased, or (ii) the 39
LME/MCO has failed to comply with the prompt payment provisions of this section, DHHS may 40
contract with another LME/MCO to manage the beds or bed days or, notwithstanding any other 41
provision of law to the contrary, may pay the hospital directly. 42
SECTION 9G.2.(e) Reporting by LME/MCOs. – LME/MCOs shall be required to 43
report to DHHS regarding the utilization of these beds or bed days. 44
SECTION 9G.2.(f) Reporting by DHHS. – By no later than December 1, 2025, and 45
by no later than December 1, 2026, DHHS shall report to the Joint Legislative Oversight 46
Committee on Health and Human Services and the Fiscal Research Division on all of the 47
following: 48
(1) A uniform system for beds or bed days purchased during the preceding fiscal 49
year from (i) existing State appropriations and (ii) local funds. 50
General Assembly Of North Carolina Session 2025
Page 76 House Bill 1167-First Edition
(2) An explanation of the process used by DHHS to ensure that, exce pt as 1
otherwise provided in subsection (a) of this section, local inpatient psychiatric 2
beds or bed days purchased in accordance with this section are utilized solely 3
for individuals who are medically indigent, along with the number of 4
medically indigent i ndividuals served by the purchase of these beds or bed 5
days. 6
(3) The amount of funds used to pay for facility-based crisis services, along with 7
the number of individuals who received these services and the outcomes for 8
each individual. 9
(4) The amount of funds used to pay for nonhospital detoxification services, along 10
with the number of individuals who received these services and the outcomes 11
for each individual. 12
(5) Other DHHS initiatives funded by State appropriations to reduce State 13
psychiatric hospital use. 14
15
PART IX-H. PUBLIC HEALTH 16
17
USE OF JUUL SETTLEMENT FUNDS 18
SECTION 9H.1.(a) There is appropriated from the Youth Electronic Nicotine 19
Dependence Abatement Fund created in Section 9G.10(a) of S.L. 2021-180 to the Department of 20
Health and Human Services, Division of Public Health (DPH), the sum of six million dollars 21
($6,000,000) in nonrecurring funds for the 2026 -2027 fiscal year to be allocated and used as 22
follows: 23
(1) One million two hundred and fifty thousand dollars ($1,250,000) in 24
nonrecurring funds for the 2026-2027 fiscal year shall be used to support data 25
monitoring to track tobacco/nicotine use and exposure among youth and 26
young adults and populations at risk; for independent evaluation of the reach, 27
effectiveness, and outcomes of the State's evidence based programs designed 28
to help youth addicted to nicotine through electronic cigarettes and other new 29
and emerging tobacco and nicotine products quit; and to prepare the report 30
required by subsection (f) of this section. 31
(2) One million dollars ($1,0 00,000) in nonrecurring funds for the 2026 -2027 32
fiscal year shall be used for tobacco cessation media campaigns, resources, 33
and programs to help both youth and young adults who have become addicted 34
to nicotine using e-cigarettes and other tobacco/nicotine products quit. 35
(3) One million seven hundred and fifty thousand dollars ($1,750,000) in 36
nonrecurring funds for the 2026 -2027 fiscal year shall be used for 37
evidence-based media and education campaigns to prevent initiation of 38
tobacco use, especially with re spect to e -cigarettes and other new and 39
emerging tobacco/nicotine products. 40
(4) Two million dollars ($2,000,000) in nonrecurring funds for the 2026 -2027 41
fiscal year shall be used for staff and projects and systems to educate partners 42
and stakeholders about evidence-based approaches that help youth quit 43
tobacco/nicotine products and prevent initiation of tobacco/nicotine products. 44
SECTION 9H.1.(b) Funds allocated under subsections (a) and (b) of this section 45
shall remain available for expenditure in the amo unts and for the purposes specified in those 46
sections until expended. 47
SECTION 9H.1.(c) Annually on November 1 the Department of Health and Human 48
Services shall report to the Joint Legislative Oversight Committee on Health and Human Services 49
and the Fiscal Research Division on the expenditures made from the Youth Electronic Nicotine 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 77
Dependence Abatement Fund during the preceding fiscal year. The report shall include at least 1
all of the following: 2
(1) An itemized list of expenditures and for each expenditure, an indication of the 3
authority under this section for the expenditure. 4
(2) An evaluation of the reach, effectiveness, and outcomes of each activity 5
funded pursuant to subdivision (a)(2) of this section. 6
(3) An evaluation of the reach, effectiveness, and outcomes of each activity 7
funded by Section 9G.10 of S.L. 2021 -180, as amended by Section 9G.3 of 8
S.L. 2022-74. 9
10
USE OF ELECTRIC TOBACCONIST SETTLEMENT FUNDS 11
SECTION 9H.2.(a) The Electric Tobacconist Fund (Fund) is created within the 12
Department of Health and Human Services, Division of Public Health, as a non-reverting special 13
fund. The Fund shall consist of (i) monies received by the State as a beneficiary of the final 14
consent judgment resolving the case, State of North Carolina, ex rel. Joshua H. Stein, Attorney 15
General v. The Electric Tobacconist, LLC, in the General Court of Justice, Superior Court 16
Division, Durham County (Electric Tobacconist Case) and (ii) all interest and investment 17
earnings received on monies in the Fund. Monies in the Fund shall be expended only by an act 18
of appropriation by the General Assembly and in accordance with the final consent judgment 19
resolving the Electric Tobacconist Case. 20
SECTION 9H.2.(b) There is appropriated from the Electric Tobacconist Fund 21
created in Section 9H.2.(a) to the Department of Health and Human Services, Division of Public 22
Health (DPH), the sum of two hundred seventy-five thousand dollars ($275,000) in nonrecurring 23
funds for the 2026-2027 fiscal year to be allocated and used as follows: 24
(1) Forty thousand seven hundred and fifty dollars ($40,750) shall be transferred 25
to the Department of Justice to cover the costs of litigation incurred by the 26
Office of the Attorney General with respect to the Electric Tobacconist case. 27
(2) Two hundred thirty-four thousand, two hundred and fifty dollars ($234,250) 28
shall be used for staff, projects and systems to educate partners and 29
stakeholders about evidence -based approaches that help youth quit 30
tobacco/nicotine products and prevent initiation of tobacco/nicotine products. 31
SECTION 9H.2.(c) Funds allocated under subsection (a) of this section shall remain 32
available for expenditure in the amounts and for the purposes specified in those sections until 33
expended. 34
35
USE OF BEARD VAPE SETTLEMENT FUNDS 36
SECTION 9H.3.(a) The Beard Vape Fund (Fund) is created within the Department 37
of Health and Human Services, Division of Public Health, as a non -reverting special fund. The 38
Fund shall consist of (i) monies received by the State as a beneficiary of the final consent 39
judgment resolving the case, State of North Carolina, ex rel. Joshua H. Stein, Attorney General 40
v. Beard Vape Co., LLC, in the General Court of Justice, Superior Court Division, Durham 41
County (Beard Vape Case) and (ii) all interest and investment earnings received on monies in the 42
Fund. Monies in the Fund shall be expended only by an act of appropriation by the General 43
Assembly and in accordance with the final consent judgment resolving the Beard Vape Case. 44
SECTION 9H.3.(b) There is appropriated from the Beard Vape Fund crea ted in 45
Section XX.X(a) to the Department of Health and Human Services, Division of Public Health 46
(DPH), the sum of twenty -five thousand dollars ($25,000) in nonrecurring funds for the 47
2026-2027 fiscal year to be allocated and used as follows: 48
(1) Four thou sand seventy -five dollars ($4,075) shall be transferred to the 49
Department of Justice to cover the costs of litigation incurred by the Office of 50
the Attorney General with respect to the Beard Vape case. 51
General Assembly Of North Carolina Session 2025
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(2) Forty-five thousand and nine hundred twenty -five dollars ($20,925) shall be 1
used for staff, projects and systems to educate partners and stakeholders about 2
evidence-based approaches that help youth quit tobacco/nicotine products and 3
prevent initiation of tobacco/nicotine products. 4
SECTION 9H.3.(c) Funds allocated under subsection (a) of this section shall remain 5
available for expenditure in the amounts and for the purposes specified in those sections until 6
expended. 7
8
PART IX-I. SERVICES FOR THE BLIND/DEAF/HARD OF HEARING [RESERVED] 9
10
PART IX-J. SOCIAL SERVICES 11
12
TANF BENEFIT IMPLEMENTATION 13
SECTION 9J.1.(a) Beginning October 1, 2025, the General Assembly approves the 14
plan titled "North Carolina Temporary Assistance for Needy Families State Plan FFY 15
2026-2028," prepared by the Department of Health and Human Services and presented to the 16
General Assembly. The North Carolina Temporary Assistance for Needy Families State Plan 17
covers the period of October 1, 2025, through September 30, 2028. The Department shall submit 18
the State Plan, as revised in accordance wit h subsection (b) of this section, to the United States 19
Department of Health and Human Services. 20
SECTION 9J.1.(b) The counties approved as Electing Counties in the North 21
Carolina Temporary Assistance for Needy Families State Plan FFY 2026 -2028, as approved by 22
this section, are Beaufort, Caldwell, Catawba, Lenoir, Lincoln, Macon, and Wilson. 23
SECTION 9J.1.(c) Counties that submitted the letter of intent to remain as an 24
Electing County or to be redesignated as an Electing County and the accompanying county plan 25
for years 2026 through 2028, pursuant to G.S. 108A-27(e), shall operate under the Electing 26
County budget requirements effective July 1, 2025. For programmatic purposes, all counties 27
referred to in this subsection shall remain under their current county designation through 28
September 30, 2028. 29
SECTION 9J.1.(d) For each year of the 2025 -2027 fiscal biennium, Electing 30
Counties shall be held harmless to their Work First Family Assistance allocations for the 2024 -31
2025 fiscal year, provided that remaining funds allocated for Work First Family Assistance and 32
Work First Diversion Assistance are sufficient for payments made by the Department on behalf 33
of Standard Counties pursuant to G.S. 108A-27.11(b). 34
SECTION 9J.1.(e) In the event that departmental projections of Work First Family 35
Assistance and Work First Diversion Assistance for the 2025-2026 fiscal year or the 2026-2027 36
fiscal year indicate that remaining funds are insufficient for Work First Family Assistance and 37
Work First Diversion Assistance payments to b e made on behalf of Standard Counties, the 38
Department is authorized to deallocate funds, of those allocated to Electing Counties for Work 39
First Family Assistance in excess of the sums set forth in G.S. 108A-27.11, up to the requisite 40
amount for payments in Standard Counties. Prior to deallocation, the Department shall obtain 41
approval by the Office of State Budget and Management. If the Department adjusts the allocation 42
set forth in subsection (d) of this section, then a report shall be made to the Joint Leg islative 43
Oversight Committee on Health and Human Services and the Fiscal Research Division. 44
45
INTENSIVE FAMILY PRE SERVATION SERVICES F UNDING, PERFORMANCE 46
ENHANCEMENTS, AND REPORT 47
SECTION 9J.2.(a) Notwithstanding the provisions of G.S. 143B-150.6, the 48
Intensive Family Preservation Services (IFPS) Program shall provide intensive services to 49
children and families in cases of abuse, neglect, and dependency where a child is at imminent 50
risk of removal from the home and to children and families in cases of abuse where a child is not 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 79
at imminent risk of removal. The Program shall be implemented statewide on a regional basis. 1
The IFPS shall ensure the application of standardized assessment criteria for determining 2
imminent risk and clear criteria for determining out-of-home placement. 3
SECTION 9J.2.(b) The Department of Health and Human Services shall require that 4
any program or entity that receives State, federal, or other funding for the purpose of IFPS shall 5
provide information and data that allows for the following: 6
(1) An established follow-up system with a minimum of six months of follow-up 7
services. 8
(2) Detailed information on the specific interventions applied, including 9
utilization indicators and performance measurement. 10
(3) Cost-benefit data. 11
(4) Data on long-term benefits associated with IFPS. This data shall be obtained 12
by tracking families through the intervention process. 13
(5) The number of families remaining intact and the associated interventions 14
while in IFPS and 12 months thereafter. 15
(6) The number and percentage, by race, of children who received IFPS compared 16
to the ratio of their distribution in the general population involved with Child 17
Protective Services. 18
SECTION 9J.2.(c) The Department shall continue implementing a 19
performance-based funding prot ocol and shall only provide funding to those programs and 20
entities providing the required information specified in subsection (b) of this section. The amount 21
of funding shall be based on the individual performance of each program. 22
SECTION 9J.2.(d) The Dep artment shall submit an annual report to the Joint 23
Legislative Oversight Committee on Health and Human Services and the Fiscal Research 24
Division by December 1 of each year that provides the information and data collected pursuant 25
to subsection (b) of this section. 26
27
CHILD CARING INSTITUTIONS 28
SECTION 9J.3. Until the Social Services Commission adopts rules setting 29
standardized rates for child caring institutions as authorized under G.S. 143B-153(8), the 30
maximum reimbursement for child caring institutions shall not exceed the rate established for the 31
specific child caring institution by the Department of Health and Human Services, Office of the 32
Controller. In determining the maximum reimbursement, the State shall include county and IV-E 33
reimbursements. 34
35
USE FOSTER CARE BUDGET FOR GUARDIANSHIP ASSISTANCE PROGRAM 36
SECTION 9J.4. Of the funds available for the provision of foster care services, the 37
Department of Health and Human Services, Division of Social Services, may continue to provide 38
for the financial support of children who are deemed to be (i) in a permanent family placement 39
setting, (ii) eligible for legal guardianship, and (iii) otherwise unlikely to receive permanency. 40
No additional expenses shall be incurred beyond the funds budgeted for foster care for the 41
Guardianship Assistance Program (GAP). The Guardianship Assistance Program shall include 42
provisions for extending guardianship services for individuals and youth who exited foster care 43
through the Guardianship Assistance Program after 14 years of age or who have attained the age 44
of 18 years and opt to continue to receive guardianship services until reaching 21 years of age if 45
the individual is (i) completing secondary education or a program leading to an equivalent 46
credential, (ii) enrolled in an institution that provides postsecondary or vocational education, (iii) 47
participating in a program or activity designed to promote, or remove barriers to, employment, 48
(iv) employed for at least 80 hours per month, or (v) incapable of completing the educationa l or 49
employment requirements of this section due to a medical condition or disability. The 50
Guardianship Assistance Program rates shall reimburse the legal guardian for room and board 51
General Assembly Of North Carolina Session 2025
Page 80 House Bill 1167-First Edition
and be set at the same rate as the foster care room and board rates in ac cordance with rates 1
established under G.S. 108A-49.1. 2
3
CHILD WELFARE POSTSECONDARY SUPPORT PROGRAM (NC REACH) 4
SECTION 9J.5.(a) Funds appropriated in this act from the General Fund to the 5
Department of Health and Human Services for the child welfare postsecondary support program 6
shall be used to continue providing assistance with the "cost of attendance" as that term is defined 7
in 20 U.S.C. § 1087ll for the educational needs of foster youth aging out of the foster care system, 8
youth who exit foster care to a permanent home through the Guardianship Assistance Program 9
(GAP), or special needs children adopted from foster care after age 12. These funds shall be 10
allocated by the State Education Assistance Authority. 11
SECTION 9J.5.(b) Of the funds appropriated in this act from the General Fund to 12
the Department of Health and Human Services, the sum of fifty thousand dollars ($50,000) for 13
each year of the 2025 -2027 fiscal biennium shall be allocated to the North Carolina State 14
Education Assistance Authority (SEAA). The SEAA shall use these funds only to perform 15
administrative functions necessary to manage and distribute scholarship funds under the child 16
welfare postsecondary support program. 17
SECTION 9J.5.(c) Of the funds appropriated in this act from the General Fun d to 18
the Department of Health and Human Services, the sum of three hundred thirty -nine thousand 19
four hundred ninety-three dollars ($339,493) for each year of the 2025-2027 fiscal biennium shall 20
be used to contract with an entity to administer the child welfare postsecondary support program 21
described under subsection (a) of this section, which administration shall include the performance 22
of case management services. 23
SECTION 9J.5.(d) Funds appropriated in this act to the Department of Health and 24
Human Services for the child welfare postsecondary support program shall be used only for 25
students attending public institutions of higher education in this State. 26
27
FEDERAL CHILD SUPPORT INCENTIVE PAYMENTS 28
SECTION 9J.6.(a) Centralized Services. – The North Carolina C hild Support 29
Services Section (NCCSS) of the Department of Health and Human Services, Division of Social 30
Services, shall retain up to fifteen percent (15%) of the annual federal incentive payments it 31
receives from the federal government to enhance centrali zed child support services. To 32
accomplish this requirement, NCCSS shall do the following: 33
(1) In consultation with representatives from county child support services 34
programs, identify how federal incentive funding could improve centralized 35
services. 36
(2) Use federal incentive funds to improve the effectiveness of the State's 37
centralized child support services by supplementing and not supplanting State 38
expenditures for those services. 39
(3) Continue to develop and implement rules that explain the State process for 40
calculating and distributing federal incentive funding to county child support 41
services programs. 42
SECTION 9J.6.(b) County Child Support Services Programs. – NCCSS shall 43
allocate no less than eighty -five percent (85%) of the annual federal incentive p ayments it 44
receives from the federal government to county child support services programs to improve 45
effectiveness and efficiency using the federal performance measures. To that end, NCCSS shall 46
do the following: 47
(1) In consultation with representatives fr om county child support services 48
programs, examine the current methodology for distributing federal incentive 49
funding to the county programs and determine whether an alternative formula 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 81
would be appropriate. NCCSS shall use its current formula for distribu ting 1
federal incentive funding until an alternative formula is adopted. 2
(2) Upon adopting an alternative formula, develop a process to phase in the 3
alternative formula for distributing federal incentive funding over a four-year 4
period. 5
SECTION 9J.6.(c) Reporting by County Child Support Services Programs. – 6
NCCSS shall continue implementing guidelines that identify appropriate uses for federal 7
incentive funding. To ensure those guidelines are properly followed, NCCSS shall require county 8
child support services programs to comply with each of the following: 9
(1) Submit an annual plan describing how federal incentive funding would 10
improve program effectiveness and efficiency as a condition of receiving 11
federal incentive funding. 12
(2) Report annually on the follo wing: (i) how federal incentive funding has 13
improved program effectiveness and efficiency and been reinvested into their 14
programs, (ii) provide documentation that the funds were spent according to 15
their annual plans, and (iii) explain any deviations from their plans. 16
SECTION 9J.6.(d) Reporting by NCCSS. – NCCSS shall submit a report on federal 17
child support incentive funding to the Joint Legislative Oversight Committee on Health and 18
Human Services and the Fiscal Research Division by November 1 of each year. The report shall 19
describe how federal incentive funds enhanced centralized child support services to benefit 20
county child support services programs and improved the effectiveness and efficiency of county 21
child support services programs. The report shall further include any changes to the State process 22
that NCCSS used in calculating and distributing federal incentive funding to county child support 23
services programs and any recommendations for further changes. 24
25
SUCCESSFUL TRANSITION/FOSTER CARE YOUTH 26
SECTION 9J.7. The Foster Care Transitional Living Initiative Fund shall continue 27
to fund and support transitional living services that demonstrate positive outcomes for youth, 28
attract significant private sector funding, and lead to the development of evidence -based 29
programs to serve the at -risk population described in this section. The Fund shall continue to 30
support a demonstration project with services provided by Youth Villages to (i) improve 31
outcomes for youth ages 17-21 years who transition from foster care through implementation of 32
outcome-based Transitional Living Services, (ii) identify cost -savings in social services and 33
juvenile and adult correction services associated with the provision of Transitional Living 34
Services to youth aging out of foster care, and (iii) take necessary steps to establish an 35
evidence-based transitional living program available to all youth aging out of foster care. In 36
continuing to implement these goals, the Foster Care Transitional Living Initiative Fund shall 37
support the following strategies: 38
(1) Transitional Living Services, which is an outcome-based program that follows 39
the Youth Villages Transitional Living Model. Outcomes on more than 7,000 40
participants have been tracked since the program's inception. The program has 41
been evaluated through an independent randomized controlled trial. Results 42
indicate that the Youth Villages Transitional Living Model had positive 43
impacts in a variety of areas, including housing stability, earnings, economic 44
hardship, mental health, and intima te partner violence in comparison to the 45
control population. 46
(2) Public-Private Partnership, which is a commitment by private -sector funding 47
partners to match at least twenty-five percent (25%) of the funds appropriated 48
to the Foster Care Transitional Living Initiative Fund for the 2025-2027 fiscal 49
biennium for the purposes of providing Transitional Living Services through 50
General Assembly Of North Carolina Session 2025
Page 82 House Bill 1167-First Edition
the Youth Villages Transitional Living Model to youth aging out of foster 1
care. 2
(3) Impact Measurement and Evaluation, which are service s funded through 3
private partners to provide independent measurement and evaluation of the 4
impact the Youth Villages Transitional Living Model has on the youth served, 5
the foster care system, and on other programs and services provided by the 6
State which are utilized by former foster care youth. 7
(4) Advancement of Evidence -Based Process, which is the implementation and 8
ongoing evaluation of the Youth Villages Transitional Living Model for the 9
purposes of establishing the first evidence -based transitional li ving program 10
in the nation. To establish the evidence-based program, additional randomized 11
controlled trials may be conducted to advance the model. 12
13
PART IX -K. DIVISION OF EMPLOYMENT AND IN DEPENDENCE FOR PEOPL E 14
WITH DISABILITIES [RESERVED] 15
16
PART IX-L. DHHS BLOCK GRANTS 17
18
DHHS BLOCK GRANTS 19
SECTION 9L.1.(a) Except as otherwise provided, appropriations from federal Block 20
Grant funds are made for each year of the fiscal biennium ending June 30, 2027, according to the 21
following schedule: 22
23
TEMPORARY ASSISTANCE FOR NEEDY FY 2025-2026 FY 2026-2027 24
FAMILIES (TANF) FUNDS 25
26
Local Program Expenditures 27
28
Division of Social Services 29
30
01. Work First Family Assistance $23,259,794 $23,259,794 31
32
02. Work First County Block Grants 80,093,566 80,093,566 33
34
03. Work First Electing Counties 2,378,213 2,378,213 35
36
04. Adoption Services – Special Children 37
Adoption Fund 4,001,676 4,001,676 38
39
05. Child Protective Services – Child Welfare 40
Workers for Local DSS 11,387,190 11,387,190 41
42
06. Child Welfare Program Improvement Plan 775,176 775,176 43
44
07. Child Welfare Collaborative 400,000 400,000 45
46
08. Child Welfare Initiatives 1,400,000 2,900,000 47
48
Division of Child Development and Early Education 49
50
09. Subsidized Child Care Program 67,913,694 67,913,694 51
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House Bill 1167-First Edition Page 83
1
10. Swap-Child Care Subsidy 0 0 2
3
11. NC Pre-K Services 68,300,000 68,300,000 4
5
Division of Public Health 6
7
12. Teen Pregnancy Prevention Initiatives 3,538,541 3,538,541 8
9
DHHS Administration 10
11
13. Division of Social Services 2,478,284 2,478,284 12
13
14. Division of Child and Family Well Being 3,976 3,976 14
15
15. Office of the Secretary 34,042 34,042 16
17
16. Eligibility Systems – Operations and 18
Maintenance 431,733 431,733 19
20
17. NC FAST Implementation 428,239 428,239 21
22
18. Division of Social Services – Workforce 23
Innovation & Opportunity Act (WIOA) 93,216 93,216 24
25
19. Division of Social Services TANF Modernization 2,000,000 2,000,000 26
27
Transfers to Other Block Grants 28
29
Division of Child Development and Early Education 30
31
20. Transfer to the Child Care and 32
Development Fund 21,773,001 21,773,001 33
34
Division of Social Services 35
36
21. Transfer to Social Services Block 37
Grant for Child Protective Services – 38
Training 285,612 2,285,612 39
40
22. Transfer to Social Services Block 41
Grant for Child Protective Services 5,040,000 5,040,000 42
43
23. Transfer to Social Services Block 44
Grant for County Departments of 45
Social Services for Children's Services 13,166,244 22,413,218 46
47
24. Transfer to Social Services Block 48
Grant – Foster Care Services 3,422,219 3,422,219 49
50
25. Transfer to Social Services Block 51
General Assembly Of North Carolina Session 2025
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Grant – Child Advocacy Centers 1,582,000 1,582,000 1
2
26. Transfer to Social Services Block 3
Grant – Adult Protective Services 0 5,000,000 4
5
TOTAL TEMPORARY ASSISTANCE FOR 6
NEEDY FAMILIES (TANF) FUNDS $314,186,416 $331,933,390 7
8
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) 9
EMERGENCY CONTINGENCY FUNDS 10
11
Local Program Expenditures 12
13
Division of Child Development and Early Education 14
15
01. Subsidized Child Care 34,337,395 34,337,395 16
17
TOTAL TEMPORARY ASSISTANCE FOR 18
NEEDY FAMILIES (TANF) EMERGENCY 19
CONTINGENCY FUNDS $34,337,395 $34,337,395 20
21
SOCIAL SERVICES BLOCK GRANT 22
23
Local Program Expenditures 24
25
Divisions of Social Services and Aging and Adult Services 26
27
01. County Departments of Social Services 19,837,388 19,837,388 28
29
02. County Departments of Social Services 30
(Transfer From TANF) 13,166,244 22,413,218 31
32
03. EBCI Tribal Public Health and Human Services 244,740 244,740 33
34
04. Child Protective Services 35
(Transfer From TANF) 5,040,000 5,040,000 36
37
05. State In-Home Services Fund 1,943,950 1,943,950 38
39
06. Adult Protective Services 3,864,547 3,820,378 40
41
07. Adult Protective Services 42
(Transfer from TANF) 0 5,000,000 43
44
08. State Adult Day Care Fund 1,994,084 1,994,084 45
46
09. Child Protective Services/CPS 47
Investigative Services – Child Medical 48
Evaluation Program 901,868 901,868 49
50
10. Special Children Adoption Incentive Fund 462,600 462,600 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 85
1
11. Child Protective Services – Child 2
Welfare Training for Counties 3
(Transfer From TANF) 285,612 2,285,612 4
5
12. Home and Community Care Block 6
Grant (HCCBG) 2,696,888 2,696,888 7
8
13. Child Advocacy Centers 9
(Transfer from TANF $1,582,000) 1,582,000 1,582,000 10
11
14. Guardianship – Division of Social Services 1,802,671 1,802,671 12
13
15. Foster Care Services 14
(Transfer From TANF) 3,422,219 3,422,219 15
16
15A. Big Brothers Big Sisters of the Triangle, Inc. 350,000 350,000 17
18
Division of Mental Health, Developmental Disabilities, and Substance Abuse Services 19
20
16. Mental Health Services – Adult and 21
Child/Developmental Disabilities Program/ 22
Substance Abuse Services – Adult 4,149,595 4,149,595 23
24
16A. Autism Society of North Carolina, Inc. 2,541,392 2,541,392 25
26
16B. The Arc of North Carolina, Inc. 271,074 271,074 27
28
16C. Easterseals UCP North Carolina & Virginia, Inc. 1,612,059 1,612,059 29
30
DHHS Program Expenditures 31
32
Division of Services for the Blind 33
34
17. Independent Living Program & Program Oversight 4,237,849 4,237,849 35
36
Division of Health Service Regulation 37
38
18. Adult Care Licensure Program 891,520 1,209,402 39
40
19. Mental Health Licensure and 41
Certification Program 266,158 266,158 42
43
Division of Social Services 44
45
20. Guardianship 3,825,443 3,825,443 46
47
DHHS Administration 48
49
21. Division of Aging and Adult Services 188,787 188,787 50
51
General Assembly Of North Carolina Session 2025
Page 86 House Bill 1167-First Edition
22. Division of Social Services 1,724,551 1,724,551 1
2
23. Office of the Secretary/Controller's Office 673,990 673,990 3
4
24. Legislative Increases/Fringe Benefits 293,655 587,310 5
6
25. Division of Child Development and 7
Early Education 13,878 13,878 8
9
26. Division of Mental Health, Developmental 10
Disabilities, and Substance Abuse Services 29,966 29,966 11
12
27. Division of Health Service Regulation 592,882 275,000 13
14
TOTAL SOCIAL SERVICES BLOCK GRANT $78,907,610 $95,404,070 15
16
LOW-INCOME ENERGY ASSISTANCE BLOCK GRANT 17
18
Local Program Expenditures 19
20
Division of Social Services 21
22
01. Low-Income Energy Assistance 23
Program (LIEAP) 56,369,281 62,655,888 24
25
02. Crisis Intervention Program (CIP) 44,804,354 48,995,425 26
27
Local Administration 28
29
Division of Social Services 30
31
03. County DSS Administration 8,037,889 8,037,889 32
33
DHHS Administration 34
35
Division of Central Management and Support 36
37
04. Administration 10,000 10,000 38
39
05. Energy Portal (FIS Transaction Fees) 25,000 25,000 40
41
06. Office of the Secretary/ Division of Information Resource 42
Management (DIRM) (Accountable Results for 43
Community Action (AR4CA) Replacement System) 166,750 166,750 44
45
07. Office of the Secretary/DIRM 278,954 278,954 46
47
08. Office of the Secretary/Controller's Office 18,378 18,378 48
49
09. NC FAST Development 627,869 627,869 50
51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 87
10. NC FAST Operations and Maintenance 1,330,323 1,330,323 1
2
Transfers to Other State Agencies 3
4
Department of Environmental Quality 5
6
11. Weatherization Program 10,356,943 10,356,943 7
8
12. Heating Air Repair and Replacement 9
Program (HARRP) 5,898,508 5,898,508 10
11
13. Local Residential Energy Efficiency Service 12
Providers – Weatherization 574,945 574,945 13
14
14. Local Residential Energy Efficiency Service 15
Providers – HARRP 319,414 319,414 16
17
15. DEQ – Weatherization Administration 628,180 628,180 18
19
16. DEQ – HARRP Administration 393,944 393,944 20
21
Department of Administration 22
23
17. N.C. Commission on Indian Affairs 87,736 87,736 24
25
TOTAL LOW-INCOME ENERGY 26
ASSISTANCE BLOCK GRANT $129,928,468 $140,406,146 27
28
CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT 29
30
Local Program Expenditures 31
32
Division of Child Development and Early Education 33
34
01. Child Care Services 347,089,929 387,089,929 35
36
02. Smart Start Subsidy 7,392,654 7,392,654 37
38
03. Transfer from TANF Block Grant 39
for Child Care Subsidies 21,773,001 21,773,001 40
41
04. Quality and Availability Initiatives 42
(TEACH Program $3,800,000) 77,480,526 67,780,527 43
44
DHHS Administration 45
46
Division of Child Development and Early Education 47
48
05. DCDEE Administrative Expenses 9,710,886 12,710,886 49
50
06. Indirect Cost 7,346 7,346 51
General Assembly Of North Carolina Session 2025
Page 88 House Bill 1167-First Edition
1
Division of Social Services 2
3
07. Direct Deposit for Child Care Payments 5,000 5,000 4
5
08. Local Subsidized Child Care 6
Services Support 18,780,355 18,780,355 7
8
Division of Central Management and Support 9
10
09. NC FAST Operations and Maintenance 1,450,316 1,450,316 11
12
10. DHHS Central Administration – DIRM 13
Technical Services 1,029,762 1,029,762 14
15
11. DHHS Central Administration 118,000 118,000 16
17
Division of Child and Family Well-Being 18
19
12. Child Care Health Consultation Contracts 62,205 62,205 20
21
TOTAL CHILD CARE AND DEVELOPMENT 22
FUND BLOCK GRANT $484,899,980 $518,199,981 23
24
MENTAL HEALTH SERVICES BLOCK GRANT 25
26
Local Program Expenditures 27
28
01. Mental Health Services – Child 2,477,666 2,477,666 29
30
02. Mental Health Services – Adult/Child 19,443,833 22,815,152 31
32
03. Mental Health Services – First 33
Psychotic Symptom Treatment 4,208,378 4,208,378 34
35
04. Child Behavioral Health (Division of Child 36
and Family Well-Being) 5,246,350 5,246,350 37
38
DHHS Administration 39
40
Division of Child and Family Well Being 41
42
05. Administration 140,000 140,000 43
44
Division of Mental Health, Developmental Disabilities, and Substance Abuse Services 45
46
06. Crisis Services 2,377,047 7,377,047 47
48
07. Administration 332,351 332,351 49
50
08. Adult/Child Mental Health Services 350,150 375,150 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 89
1
Division of Public Health 2
3
09. NC Detect – Behavioral Health ER 35,000 35,000 4
5
TOTAL MENTAL HEALTH SERVICES 6
BLOCK GRANT $34,610,775 $43,007,094 7
8
SUBSTANCE ABUSE PREVENTION, TREATMENT, AND RECOVERY SERVICES 9
BLOCK GRANT 10
11
Local Program Expenditures 12
13
Division of Mental Health, Developmental Disabilities, and Substance Use Services 14
15
01. Substance Abuse – IV Drug 2,000,000 2,000,000 16
17
02. Substance Abuse Prevention 13,351,864 13,351,864 18
19
03. Substance Use Services – Treatment for 20
Children/Adults 40,038,949 50,696,855 21
22
04. Crisis Solutions Initiatives – Collegiate 23
Wellness/Addiction Recovery 1,545,205 6,545,205 24
25
05. Veterans Initiatives 250,000 10,000,000 26
27
DHHS Administration 28
29
Division of Mental Health, Developmental Disabilities, and Substance Use Services 30
31
06. Administration $2,297,852 $2,617,280 32
33
07. Controlled Substance Reporting System 34
Enhancement 675,000 675,000 35
36
TOTAL SUBSTANCE ABUSE PREVENTION 37
AND TREATMENT BLOCK GRANT $60,158,870 $85,886,204 38
39
MATERNAL AND CHILD HEALTH BLOCK GRANT 40
41
Local Program Expenditures 42
43
Division of Child and Family Well-Being 44
45
01. Children’s Health Services 11,646,618 11,572,418 46
47
Division of Public Health 48
49
02. Women’s and Children’s Health Services 5,453,930 5,453,930 50
51
General Assembly Of North Carolina Session 2025
Page 90 House Bill 1167-First Edition
03. Oral Health 58,413 60,523 1
2
04. Evidence-Based Programs in Counties 3
With Highest Infant Mortality Rates 1,727,307 1,727,307 4
5
DHHS Program Expenditures 6
7
05. Children's Health Services 1,287,619 1,287,619 8
9
06. Women's Health – Maternal Health 489,568 489,568 10
11
07. Women's and Children's Health – Perinatal 12
Strategic Plan Support Position 81,112 84,067 13
14
08. State Center for Health Statistics 158,583 158,583 15
16
09. Health Promotion – Injury and 17
Violence Prevention 87,271 87,271 18
19
DHHS Administration 20
21
11. Division of Public Health Administration 340,646 340,646 22
23
12. Division of Child and Family Well Being 24
Administration 211,925 211,925 25
26
TOTAL MATERNAL AND CHILD 27
HEALTH BLOCK GRANT $21,542,992 $21,963,519 28
29
PREVENTIVE HEALTH AND HEALTH SERVICES BLOCK GRANT 30
31
Local Program Expenditures 32
33
01. Physical Activity and Prevention $3,081,442 $3,081,442 34
35
DHHS Program Expenditures 36
37
Division of Public Health 38
39
02. HIV/STD Prevention and 40
Community Planning 135,063 135,063 41
42
03. Oral Health Preventive Services 150,000 150,000 43
44
04. Injury and Violence Prevention 45
(Services to Rape Victims – Set-Aside) 217,935 217,935 46
47
05. Performance Improvement and 48
Accountability 1,384,421 1,199,557 49
50
06. State Center for Health Statistics 48,000 48,000 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 91
1
DHHS Administration 2
3
Division of Public Health 4
5
07. Division of Public Health 65,000 65,000 6
7
TOTAL PREVENTIVE HEALTH AND HEALTH 8
SERVICES BLOCK GRANT $5,081,861 $4,896,997 9
10
COMMUNITY SERVICES BLOCK GRANT 11
12
01. Community Action Agencies 22,370,334 23,286,497 13
14
02. Limited Purpose Agencies/Discretionary Funding 504,718 541,000 15
16
03. Office of Economic Opportunity 1,070,001 1,015,712 17
18
04. Office of the Secretary/DIRM (Accountable Results for 19
Community Action (AR4CA) Replacement System) 394,964 414,713 20
21
05. Office of Economic Opportunity – Workforce 22
Investment Opportunities Act (WIOA) 60,000 60,000 23
24
TOTAL COMMUNITY SERVICES 25
BLOCK GRANT $24,400,017 $25,317,922 26
27
GENERAL PROVISIONS 28
SECTION 9L.1.(b) Information to be Included in Block Grant Plans. – The 29
Department of Health and Human Services shall submit a separate plan for each Block Grant 30
received and administered by the Department, and each plan shall include the following: 31
(1) A delineation of the proposed allocations by program or activity, including 32
State and federal match requirements. 33
(2) A delineation of the proposed State and local administrative expenditures. 34
(3) An identification of all new positions to be established through the Block 35
Grant, including permanent, temporary, and time-limited positions. 36
(4) A comparison of the proposed allocations by program or activity with two 37
prior years' program and activity budgets and two prior years' actual program 38
or activity expenditures. 39
(5) A projection of current year expenditures by program or activity. 40
(6) A projection of federal Block Grant funds available, including unspent federal 41
funds from the current and prior fiscal years. 42
(7) The required amount of mai ntenance of effort and the amount of funds 43
qualifying for maintenance of effort in the previous year delineated by 44
program or activity. 45
SECTION 9L.1.(c) Changes in Federal Fund Availability. – If the Congress of the 46
United States increases the federal fun d availability for any of the Block Grants or contingency 47
funds and other grants related to existing Block Grants administered by the Department of Health 48
and Human Services from the amounts appropriated in this act, the Department shall allocate the 49
increase proportionally across the program and activity appropriations identified for that Block 50
Grant in this section. In allocating an increase in federal fund availability, the Office of State 51
General Assembly Of North Carolina Session 2025
Page 92 House Bill 1167-First Edition
Budget and Management shall not approve funding for new programs or activities not 1
appropriated in this act. 2
If the Congress of the United States decreases the federal fund availability for any of 3
the Block Grants or contingency funds and other grants related to existing Block Grants 4
administered by the Department of He alth and Human Services from the amounts appropriated 5
in this act, the Department shall develop a plan to adjust the Block Grants based on reduced 6
federal funding. 7
Notwithstanding the provisions of this subsection, for fiscal years 2025 -2026 and 8
2026-2027, increases in the federal fund availability for the Temporary Assistance to Needy 9
Families (TANF) Block Grant shall be used only for the North Carolina Child Care Subsidy 10
program to pay for child care and shall not be used to supplant State funds. 11
Prior to allocating the change in federal fund availability, the proposed allocation 12
must be approved by the Office of State Budget and Management. If the Department adjusts the 13
allocation of any Block Grant due to changes in federal fund availability, then a repo rt shall be 14
made to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal 15
Research Division. 16
SECTION 9L.1.(d) Except as otherwise provided, appropriations from federal 17
Block Grant funds are made for each year of the fiscal biennium ending June 30, 2027, according 18
to the schedule enacted for State fiscal years 2025-2026 and 2026-2027, or until a new schedule 19
is enacted by the General Assembly. 20
SECTION 9L.1.(e) Except as otherwise provided in subsection (e1) of this section, 21
all changes to the budgeted allocations to the Block Grants or contingency funds and other grants 22
related to existing Block Grants administered by the Department of Health and Human Services 23
that are not specifically addressed in this section shall be approved by the Office of State Budget 24
and Management. The Office of State Budget and Management shall not approve. funding for 25
new programs or activities not appropriated in this section The Office of State Budget and 26
Management shall consult with the Joint Legislative Oversight Committee on Health and Human 27
Services for review prior to implementing any changes. In consulting, the report shall include an 28
itemized listing of affected programs, including associated changes in budgeted allocations. All 29
changes to the budgeted allocations to the Block Grants shall be reported immediately to the Joint 30
Legislative Oversight Committee on Health and Human Services and the Fiscal Research 31
Division. This subsection does not apply to Block Grant changes caused by legislat ive salary 32
increases and benefit adjustments. 33
SECTION 9L.1.(e) The Department of Health and Human Services shall have the 34
authority to realign appropriated funds under subsection (a) of this section for Item 01 or 02 in 35
the Maternal and Child Health Block Grant to maintain federal compliance and programmatic 36
alignment, so long as the realignment does not result in a reduction of funds designated for 37
subrecipients under subsection (a) of this section. The Department of Health and Human Services 38
is authorized to realign appropriated funds between the Maternal and Child Health Block Grant 39
categories as provided in this subsection without prior consultation with the Joint Legislative 40
Oversight Committee on Health and Human Services or without exceeding the tota l amount 41
appropriated for the items. 42
SECTION 9L.1.(f) Except as otherwise provided, the Department of Health and 43
Human Services shall have flexibility to transfer funding between the Temporary Assistance for 44
Needy Families (TANF) Block Grant and the TANF Emergency Contingency Funds Block Grant 45
so long as the total allocation for the line items within those Block Grants remains the same. 46
47
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) FUNDS 48
SECTION 9L.1.(g) The sum of eighty million ninety -three thousand five hundred 49
sixty-six dollars ($80,093,566) for each year of the 2025 -2027 fiscal biennium appropriated in 50
this act in TANF funds to the Department of Health and Human Services, Division of Social 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 93
Services, shall be used for Work First County Block Grants. The Division shall certify these 1
funds in the appropriate State-level services based on prior year actual expenditures. The Division 2
has the authority to realign the authorized budget for these funds among the State-level services 3
based on current year actual expenditures. The Division shall also have the a uthority to realign 4
appropriated funds from Work First Family Assistance for electing counties to the Work First 5
County Block Grant for electing counties based on current year expenditures so long as the 6
electing counties meet Maintenance of Effort requirements. 7
SECTION 9L.1.(h) The sum of eleven million three hundred eighty-seven thousand 8
one hundred ninety dollars ($11,387,190) for each year of the 2025 -2027 fiscal biennium 9
appropriated in this act to the Department of Health and Human Services, Division of Social 10
Services, in TANF funds for child welfare improvements shall be allocated to the county 11
departments of social services for hiring or contracting staff to investigate and provide services 12
in Child Protective Services cases; to provide foster care and support services; to recruit, train, 13
license, and support prospective foster and adoptive families; and to provide interstate and 14
post-adoption services for eligible families. 15
Counties shall maintain their level of expenditures in local funds for Child Protective 16
Services workers. Of the Block Grant funds appropriated for Child Protective Services workers, 17
the total expenditures from State and local funds for fiscal years 2025-2026 and 2026-2027 shall 18
not be less than the total expended from State and local funds for the 2012-2013 fiscal year. 19
SECTION 9L.1.(i) The sum of four million one thousand six hundred seventy -six 20
dollars ($4,001,676) for each year of the 2025 -2027 fiscal biennium appropriated in this act in 21
TANF funds to the Department of Health and Human Services, Special Children Adoption Fund, 22
shall be used in accordance with G.S. 108A-50.2. The Division of Social Services, in consultation 23
with the North Carolina Association of County Directors of Social Services and representatives 24
of license d private adoption agencies, shall develop guidelines for the awarding of funds to 25
licensed public and private adoption agencies upon the adoption of children described in 26
G.S. 108A-50 and in foster care. Payments received from the Special Children Adoptio n Fund 27
by participating agencies shall be used exclusively to enhance the adoption services program. No 28
local match shall be required as a condition for receipt of these funds. 29
SECTION 9L.1.(j) The sum of one million four hundred thousand ($1,400,000) in 30
for the 2025-26 fiscal year and two million nine hundred thousand dollars ($2,900,000) for the 31
2026-27 fiscal year appropriated in this act in TANF funds to the Department of Health and 32
Human Services, Division of Social Services, shall be used for child w elfare initiatives to (i) 33
enhance the skills of social workers to improve the outcomes for families and children involved 34
in child welfare and (ii) enhance the provision of services to families in their homes in the least 35
restrictive setting. 36
37
SOCIAL SERVICES BLOCK GRANT 38
SECTION 9L.1.(k) The sum of nineteen million eight hundred thirty -seven 39
thousand three hundred eighty-eight dollars ($19,837,388) for the 2025-2026 fiscal year and the 40
sum of nineteen million eight hundred thirty -seven thousand three hundred eighty-eight dollars 41
($19,837,388) for the 2026-2027 fiscal year appropriated in this act in the Social Services Block 42
Grant to the Department of Health and Human Services, Division of Social Services, and the sum 43
of thirteen million one hundred sixty -six thousand two forty -four dollars ($13,166,244) for the 44
2025-2026 fiscal year and the sum of twenty -two million four hundred thirteen thousand two 45
hundred eighteen dollars ($22,413,218) for the 2026 -2027 fiscal year transferred from funds 46
appropriated in the TANF Block Grant shall be used for county Block Grants. The Division shall 47
certify these funds in the appropriate State-level services based on prior year actual expenditures. 48
The Division has the authority to realign the authorized budget for these fu nds, as well as State 49
Social Services Block Grant funds, among the State -level services based on current year actual 50
expenditures. 51
General Assembly Of North Carolina Session 2025
Page 94 House Bill 1167-First Edition
SECTION 9L.1.(l) The sum of two hundred eighty-five thousand six hundred twelve 1
dollars ($285,612) for the 2025-26 fiscal year and the sum of two million two hundred eighty-five 2
six hundred twelve dollars ($2,285,612) for the 2026-27 fiscal year appropriated in this act in the 3
Social Services Block Grant to the Department of Health and Human Services, Division of Social 4
Services, shall be used to support the state’s child welfare training system. Training is delivered 5
to county child welfare staff that addresses the knowledge and skills needed to complete their 6
daily tasks in the areas of child protective services, foster care , on-going child welfare services, 7
and adoption. 8
SECTION 9L.1.(m) The Department of Health and Human Services is authorized, 9
subject to the approval of the Office of State Budget and Management, to transfer Social Services 10
Block Grant funding allocated fo r departmental administration between divisions that have 11
received administrative allocations from the Social Services Block Grant. 12
SECTION 9L.1.(n) Social Services Block Grant funds appropriated for the Special 13
Children Adoption Incentive Fund shall require a fifty percent (50%) local match. 14
SECTION 9L.1.(o) The sum of five million forty thousand dollars ($5,040,000) 15
appropriated in this act in the Social Services Block Grant for each fiscal year of the 2025 -2027 16
fiscal biennium transferred from funds appropriated in the TANF Block Grant shall be allocated 17
to the Department of Health and Human Services, Division of Social Services. The Division shall 18
allocate these funds to local departments of social services to replace the loss of Child Protective 19
Services State funds that are currently used by county governments to pay for Child Protective 20
Services staff at the local level. These funds shall be used to maintain the number of Child 21
Protective Services workers throughout the State. These Social Services Block Grant funds shall 22
be used to pay for salaries and related expenses only and are exempt from 10A NCAC 71R 23
.0201(3) requiring a local match of twenty-five percent (25%). 24
SECTION 9L.1.(p) The sum of one million five hundred eighty -two thousand 25
dollars ($1,582,000) appropriated in this act in the Social Services Block Grant for each fiscal 26
year of the 2025-2027 fiscal biennium to the Department of Health and Human Services, Division 27
of Social Services, shall be used to continue support for the Child Advocacy Centers. These funds 28
are exempt from the provisions of 10A NCAC 71R .0201(3). 29
SECTION 9L.1.(q) The sum of three million eight hundred twenty -five thousand 30
four hundred forty -three dollars ($3,825,443) for each fiscal year of the 2025 -2027 fiscal 31
biennium appropriated in this act in the Social Services Block Grant to the Department of Health 32
and Human Services, Division of Social Services, shall be used for guardianship services 33
pursuant to Chapter 35A of the General Statutes. The Department may expend funds allocated in 34
this section to support existing corporate guardianship contracts during the 2025 -2026 and 35
2026-2027 fiscal years. 36
SECTION 9L.1.(r) Of the three million eight hundred sixty -four thousand five 37
hundred forty-seven dollars ($3,864,547) in the 2025-2026 fiscal year and three million eight 38
hundred twenty-two three hundred seventy -eight dollars ($3,820,378) for the 2026 -2027 fiscal 39
year appropriated in this act in the Social Services Block Grant to the Division of Aging and 40
Adult Services for Adult Protective Services, the sum of eight hundred ninety -three thousand 41
forty-one dollars ($893,041) for each year of the 2025 -2027 fiscal biennium shall be used to 42
increase the number of Adult Protective Services workers where these funds can be the mos t 43
effective. These funds shall be used to pay for salaries and related expenses and shall not be used 44
to supplant any other source of funding for staff. These funds are also exempt from 10A NCAC 45
71R .0201(3) requiring a local match of twenty-five percent (25%). 46
SECTION 9L.1.(s) The following amounts appropriated in this act in the Social Services 47
Block Grant for each fiscal year of the 2025 -2027 fiscal biennium to the Department of Health 48
and Human Services, Division of Social Services or Division of Menta l Health, Developmental 49
Disabilities, and Substance Use Services, for the nonprofit organizations described in this 50
subsection shall be exempt from the provisions of 10A NCAC 71R .0201(3): 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 95
(1) The sum of three hundred fifty thousand dollars ($350,000) for each fiscal 1
year of the 2025 -2027 fiscal biennium for Big Brothers Big Sisters of the 2
Triangle, Inc. 3
(2) The sum of two million five hundred forty -one thousand three hundred 4
ninety-two dollars ($2,541,392) for each fiscal year of the 2025 -2027 fiscal 5
biennium for Autism Society of North Carolina, Inc. 6
(3) The sum of two hundred seventy -one thousand seventy -four dollars 7
($271,074) for each fiscal year of the 2025-2027 fiscal biennium for The Arc 8
of North Carolina, Inc. 9
(4) The sum of one million six hundred twelve thousand fifty -nine dollars 10
($1,612,059) for each fiscal year of the 2025 -2027 fiscal biennium for 11
Easterseals UCP of North Carolina & Virginia, Inc. 12
13
LOW-INCOME ENERGY ASSISTANCE BLOCK GRANT 14
SECTION 9L.1.(t) The Division of Social Services shall have the authority to 15
realign appropriated funds between the State -level services Low -Income Energy Assistance 16
Payments and Crisis Assistance Payments without prior consultation with the Joint Legislative 17
Oversight Committee on Health and Human Services to ensure needs are effectively met without 18
exceeding the total amount appropriated for these State -level service items. Additional 19
emergency contingency funds received may be allocated for Energy Assistance Payments o r 20
Crisis Intervention Payments without prior consultation with the Joint Legislative Oversight 21
Committee on Health and Human Services. Additional funds received shall be reported to the 22
Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research 23
Division upon notification of the award. The Department of Health and Human Services shall 24
not allocate funds for any activities, including increasing administration, other than assistance 25
payments, without prior consultation with the Joint Legislative Oversight Committee on Health 26
and Human Services. 27
SECTION 9L.1.(u) The sum of fifty-six million three hundred sixty-nine thousand 28
two hundred eighty-one dollars ($56,369,281) in the 2025 -26 fiscal year and sixty -two million 29
six hundred fifty-five thousand eight hundred eighty-eight dollars ($62,655,888) in the 2026-27 30
fiscal year appropriated in this act in the Low -Income Energy Assistance Block Grant to the 31
Department of Health and Human Services, Division of Social Services, shall be used for Energy 32
Assistance Payments for the households of (i) elderly persons age 60 and above with income up 33
to one hundred fifty percent (150%) of the federal poverty level and (ii) disabled persons eligible 34
for services funded through the Division of Aging and Adult Services. 35
County departments of social services shall submit to the Division of Social Services 36
an outreach plan for targeting households with 60 -year-old household members no later than 37
August 1 of each year. The outreach plan shall comply with the following: 38
(1) Ensure that eligible households are made aware of the available assistance, 39
with particular attention paid to the elderly population age 60 and above and 40
disabled persons receiving services through the Division of Aging and Adult 41
Services. 42
(2) Include efforts by the county department of social services to contact other 43
State and local governmental entities and community -based organizations to 44
(i) offer the opportunity to provide outreach and (ii) receive applications for 45
energy assistance. 46
(3) Be approved by the local board of social services or human services board 47
prior to submission. 48
49
CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT 50
General Assembly Of North Carolina Session 2025
Page 96 House Bill 1167-First Edition
SECTION 9L.1.(v) Payment for subsidized child care services provided with federal 1
TANF funds shall comply w ith all regulations and policies issued by the Division of Child 2
Development and Early Education for the subsidized child care program. 3
SECTION 9L.1.(w) If funds appropriated through the Child Care and Development 4
Fund Block Grant for any program cannot b e obligated or spent in that program within the 5
obligation or liquidation periods allowed by the federal grants, the Department may move funds 6
to child care subsidies, unless otherwise prohibited by federal requirements of the grant, in order 7
to use the federal funds fully. 8
9
COMMUNITY MENTAL HEALTH SERVICES BLOCK GRANT 10
SECTION 9L.1.(x) The sum of five million four hundred sixteen thousand seven 11
hundred fifty-six dollars ($4,208,378) for the 2025-2026 fiscal year and four million two hundred 12
and eight thous and, three hundred and seventy -eight dollars ($4,208,378) for the 2026 -2027 13
fiscal year appropriated in this act in the Community Mental Health Services Block Grant to the 14
Department of Health and Human Services, Division of Mental Health, Developmental 15
Disabilities, and Substance Use Services, is to be used for Mental Health Services – First 16
Psychotic Symptom Treatment. 17
18
MATERNAL AND CHILD HEALTH BLOCK GRANT 19
SECTION 9L.1.(y) The sum of one million seven hundred twenty -seven thousand 20
three hundred seven do llars ($1,727,307) appropriated in this act in the Maternal and Child 21
Health Block Grant to the Department of Health and Human Services, Division of Public Health, 22
for each year of the 2025 -2027 fiscal biennium shall be used for evidence -based programs in 23
counties with the highest infant mortality rates. The Division shall report on (i) the counties 24
selected to receive the allocation, (ii) the specific evidence -based services provided, (iii) the 25
number of women served, and (iv) any impact on the counties' infant mortality rate. The Division 26
shall report its findings to the House of Representatives Appropriations Committee on Health 27
and Human Services, the Senate Appropriations Committee on Health and Human Services, and 28
the Fiscal Research Division no later than December 31 of each year. 29
SECTION 9L.1.(z) The sum of eighty -one thousand one hundred twelve dollars 30
($81,112) for fiscal year 2025 -26 and eighty -four thousand sixty -seven dollars ($84,067) for 31
fiscal year 2026-27, allocated in this section in the Maternal and Child Health Block Grant to the 32
Department of Health and Human Services, Division of Public Health, Women and Children's 33
Health Section, shall not be used to supplant existing State or federal funds. This allocation shall 34
be used for a Public Health Program Consultant position assigned full-time to manage the North 35
Carolina Perinatal Health Strategic Plan and provide staff support for the stakeholder work group. 36
SECTION 9L.1.(aa1) Notwithstanding any provision of law to the contrary, the 37
Department of Health and Human Services, Division of Public Health, shall have the authority 38
to realign appropriated funds between the Maternal and Child Health Block Grant categories to 39
maintain federal compliance and programmatic alignment without exceeding the total amount 40
appropriated for the Maternal and Child Health Block Grant. 41
42
PART X. AGRICULTURE AND CONSUMER SERVICES [RESERVED] 43
44
PART XI. COMMERCE 45
46
COMMUNITY DEVELOPMENT BLOCK GRANTS 47
SECTION 11.1.(a) Allocations. – Of the funds appropriated in this act fo r federal 48
block grant funds, the following allocations are made for the fiscal year ending June 30, 2027, 49
according to the following schedule: 50
51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 97
COMMUNITY DEVELOPMENT BLOCK GRANT 1
2
01. State Administration $1,484,872 3
4
02. Neighborhood Revitalization $27,662,645 5
6
03. Economic Development $14,065,752 7
8
04. Rural Community Development $5,157,442 9
10
TOTAL COMMUNITY DEVELOPMENT BLOCK GRANT 11
2024 Program Year $46,308,393 12
2025 Program Year $46,272,979 13
2026 Program Year $46,272,979 14
2027 Program Year $48,370,711 15
16
SECTION 11.1.(b) Availability Reduction. – If federal funds are reduced below the 17
amounts specified in this section after the effective date of this act, then every program in each 18
of these federal block grants shall be reduced by the same percentage as the reduction in federal 19
funds. 20
SECTION 11.1.(c) Availability Increase. – Any block grant funds appropriated by 21
the Congress of the United States in addition to the funds specified in this section shall be 22
expended as follows: each program category under t he Community Development Block Grant 23
shall be increased by the same percentage as the increase in federal funds. 24
SECTION 11.1.(d) Reallocation. – The Department of Commerce shall consult with 25
the Joint Legislative Commission on Governmental Operations (Co mmission) prior to 26
reallocating Community Development Block Grant Funds. Notwithstanding the provisions of 27
this subsection, whenever the Director of the Budget finds either of the following conditions 28
exist: 29
(1) If a reallocation is required because of an emergency that poses an imminent 30
threat to public health or public safety, then the Director of the Budget may 31
authorize the reallocation without consulting the Commission. The 32
Department of Commerce shall report to the Commission on the reallocation 33
no later than 30 days after it was authorized and shall identify in the report the 34
emergency, the type of action taken, and how it was related to the emergency. 35
(2) If the State will lose federal block grant funds or receive less federal block 36
grant funds in th e next fiscal year unless a reallocation is made, then the 37
Department of Commerce shall provide a written report to the Commission 38
on the proposed reallocation and shall identify the reason that failure to take 39
action will result in the loss of federal funds. If the Commission does not hear 40
the issue within 30 days of receipt of the report, the Department of Commerce 41
may take the action without consulting the Commission. 42
SECTION 11.1.(e) Report. – By October 1, 2026, and September 1, 2027, the 43
Department o f Commerce shall report to the chairs of the House of Representatives 44
Appropriations Committee on Agriculture and Natural and Economic Resources; the chairs of 45
the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources; the 46
chairs of the Joint Legislative Economic Development and Global Engagement Oversight 47
Committee; and the Fiscal Research Division on the use of Community Development Block 48
Grant Funds appropriated in the prior fiscal year. The report shall include the following: 49
(1) A discussion of each of the categories of funding, including information on 50
the statewide need in each category. 51
General Assembly Of North Carolina Session 2025
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(2) Information on the number of applications that were received in each category 1
and the total dollar amount requested in each category. 2
(3) A list of grantees, including the grantee's name, county, category under which 3
the grant was funded, the amount awarded, and a narrative description of the 4
project. 5
SECTION 11.1.(f) Neighborhood Revitalization. – Funds allocated to the 6
Neighborhood Revitalization Category in subsection (a) of this section shall be made available 7
as grants for eligible activities listed in this subsection. The funds available for grants under this 8
category may be used for all of the following, subject to the national ob jectives and eligible 9
activities allowed under guidance issued by the United States Department of Housing and Urban 10
Development (HUD): 11
(1) Essential repairs to prevent abandonment and deterioration of housing in 12
low- and moderate-income neighborhoods. 13
(2) Demolition and rehabilitation of buildings and improvements. 14
(3) Public improvements, including parks, streets, sidewalks, and water and sewer 15
lines. 16
SECTION 11.1.(g) Economic Development. – Funds allocated to the Economic 17
Development Category in subsecti on (a) of this section shall be made available as grants for 18
eligible activities listed in this subsection. The funds available for grants under this category may 19
be used for all of the following, subject to the national objectives and eligible activities allowed 20
under guidance issued by HUD: 21
(1) Acquisition of real property. 22
(2) Demolition and rehabilitation of buildings and improvements. 23
(3) Removal of material and architectural barriers. 24
(4) Public improvements, including parks, streets, sidewalks, and water and sewer 25
lines. 26
(5) Loans and grants to public or private nonprofit entities for construction and 27
rehabilitation activities. 28
(6) Assistance to private, for-profit entities for economic development. 29
(7) Technical assistance to public or nonprofit enti ties for neighborhood 30
revitalization or economic development activities. 31
(8) Assistance to for -profit and nonprofit entities to facilitate economic 32
development activities. 33
SECTION 11.1.(h) Rural Community Development. – Funds allocated for the Rural 34
Community Development Category in subsection (a) of this section shall be made available as 35
grants for eligible activities listed in this subsection. These funds shall provide grants that support 36
community development and comprehensive growth projects to be awa rded by the North 37
Carolina Department of Commerce. The Rural Community Development Category will provide 38
grants to units of local government in development Tier one and development Tier two areas, as 39
defined in G.S. 143B-437.08, and in rural census tracts, as defined in G.S. 143B-472.127(a)(2), 40
in any other area to support projects that promote broad -based community development 41
activities, increased local investment and economic growth, and stronger and more viable rural 42
neighborhoods. In awarding grants un der this section, preference shall be given to projects in 43
development tier one areas, as defined in G.S. 143B-437.08. The funds available for grants under 44
this category may be used for all of the following, subject to the national objectives and eligible 45
activities allowed under guidance issued by HUD: 46
(1) Essential repairs to prevent abandonment and deterioration of housing in low 47
and moderate-income neighborhoods. 48
(2) Public improvements, including parks, streets, sidewalks, and water and sewer 49
lines. 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 99
(3) Public fac ilities, including neighborhood and community facilities and 1
facilities for individuals with special needs. 2
(4) Public services, including employment, crime prevention, and energy 3
conservation. 4
(5) Assistance to private, for-profit entities for economic development. 5
(6) Technical assistance to public or nonprofit entities for neighborhood 6
revitalization or economic development activities. 7
(7) Assistance to for -profit and nonprofit entities to facilitate economic 8
development activities. 9
SECTION 11.1.(i) Deobligated Funds. – Throughout each year, deobligated funds 10
arise in the various funding categories and program years of the Community Development Block 11
Grant (CDBG) program as a result of (i) projects coming in under budget, (ii) projects being 12
cancelled, or (iii) projects being required to repay funds. Surplus federal administrative funds in 13
the CDBG program may vary from year to year based upon the amount of State appropriated 14
funds allocated and the amount of eligible in -kind funds identified. To allow the Department of 15
Commerce to quickly deploy deobligated and surplus federal administrative funds as they are 16
identified throughout the program year, the following shall apply to the use of deobligated CDBG 17
funds and surplus federal administrative funds: 18
(1) All surplus federal administrative funds shall be divided proportionally 19
between the Department of Commerce programs and shall be used as provided 20
in subdivisions (2) and (3) of this subsection. 21
(2) All deobligated funds allocated to the Department of Commerce and any 22
surplus federal administrative funds, as provided for in subdivision (1) of this 23
subsection, may be used by the Department for all of the following: 24
a. To issue grants in the CDBG Economic Development or 25
Neighborhood Revitalization Program Category. 26
b. For providing training and guidance to local governments relative to 27
the CDBG program, its management, and administrative requirements. 28
c. For any other purpose consistent with the Department's administration 29
of the CDBG program if an equal amount of State mat ching funds is 30
available. 31
32
COMMERCE NONPROFITS/REPORTING REQUIREMENTS 33
SECTION 11.2.(a) The entities listed in subsection (b) of this section shall do the 34
following for each year that State funds are expended: 35
(1) By September 1 of each year, and more frequently as requested, report to the 36
chairs of the Joint Legislative Oversight Committee on Agriculture and 37
Natural and Economic Resources; the chairs of the House of Representatives 38
Appropriations Committee on Agriculture and Natural and Economic 39
Resources; the chairs of the Senate Appropriations Committee on Agriculture, 40
Natural, and Economic Resources; and the Fiscal Research Division on prior 41
State fiscal year program activities, objectives, and accomplishments and prior 42
State fiscal year itemized expenditur es and fund sources. If State funds are 43
used to provide matching funds for competitive grants from the federal 44
government or a nongovernmental entity, the report should include a list and 45
description of the grants that are awarded. 46
(2) Provide to the chairs of the Joint Legislative Oversight Committee on 47
Agriculture and Natural and Economic Resources; the chairs of the House of 48
Representatives Appropriations Committee on Agriculture and Natural and 49
Economic Resources; the chairs of the Senate Appropriations Com mittee on 50
Agriculture, Natural, and Economic Resources; and the Fiscal Research 51
General Assembly Of North Carolina Session 2025
Page 100 House Bill 1167-First Edition
Division a copy of the entity's annual audited financial statement within 30 1
days of issuance of the statement. 2
SECTION 11.2.(b) The following entities shall comply with the r equirements of 3
subsection (a) of this section: 4
(1) North Carolina Biotechnology Center. 5
(2) High Point Market Authority. 6
(3) RTI International. 7
(4) Carolina Small Business Development Fund. 8
9
ADMINISTRATIVE EXPENSES FOR ONE NC SMALL BUSINESS PROGRAM 10
SECTION 11.3.(a) G.S. 143B-437.71 reads as rewritten: 11
"§ 143B-437.71. One North Carolina Fund established as a special fund. 12
… 13
(c) [Special Account. –]There is created in the One North Carolina Fund a special 14
account, the One North Carolina Small Business Account, to be used f or the North Carolina 15
SBIR/STTR Incentive Program and the North Carolina SBIR/STTR Matching Funds Program, 16
as specified in Part 2I of Article 10 of Chapter 143B of the General Statutes. Of the total moneys 17
in the One North Carolina Small Business Account, the Department may use up to two percent 18
(2%) annually for costs associated with administration of the North Carolina SBIR/STTR 19
Incentive Program and the North Carolina SBIR/STTR Matching Funds Program." 20
21
NC BIOTECHNOLOGY CENTER 22
SECTION 11.4.(a) Except for the funds appropriated in subsection (b) of this 23
section, funds appropriated in this act to the Department of Commerce for the North Carolina 24
Biotechnology Center (Center) in the fiscal year 2026 -27 shall be allocated for the following 25
purposes in the following proportions: 26
(1) Twenty-one percent (21%) for job creation, including funding for the 27
AgBiotech Initiative, economic and industrial development, and related 28
activities. 29
(2) Sixty-five percent (65%) for science and commercialization, incl uding 30
science and technology development, Centers of Innovation, business and 31
technology development, education and training, and related activities. 32
(3) Fourteen percent (14%) for Center operations, including administration, 33
professional and technical assistance and oversight, corporate 34
communications, human resource management, financial and grant 35
administration, legal, and accounting. 36
SECTION 11.4.(b) Of the funds appropriated in this act to the Department of 37
Commerce for the Center, five hundred tho usand dollars ($500,000) of recurring funds in each 38
fiscal year of the biennium shall be used to support funding for early stage loans to North Carolina 39
agricultural technology companies. 40
SECTION 11.4.(c) The Center shall not use any of the recurring fund s allocated in 41
subsection (b) of this section for administrative costs and shall report on the expenditure of those 42
funds each year pursuant to Section 11.2 of this act. 43
SECTION 11.4.(d) The Center shall prioritize funding and distribution of loans over 44
funding and distribution of grants. 45
SECTION 11.4.(e) Up to ten percent (10%) of the sum of each of the allocations in 46
subsection (a) of this section may be reallocated to subdivision (a)(1) or subdivision (a)(2) of this 47
section if, in the judgment of Cente r management, the reallocation will advance the mission of 48
the Center. 49
50
STRATEGIC WORKFORCE TRAINING FUND AND BUSINESS TAX CUT 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 101
SECTION 11.5.(a) Article 1 of Chapter 96 of the General Statutes is amended by 1
adding a new section to read: 2
"§ 96-6.3. Strategic WorkForce Training fund. 3
(a) Establishment and Use. – There is established in the Department of Commerce a 4
Strategic WorkForce Training fund for the purposes of providing job training, 5
employment-related services, and economic development services to North Carolina job seekers 6
and employers in order to increase or improve labor supply, connect employers with employees, 7
and enhance the employer experience with the Division. The Trust consists of the revenues 8
derived from the Strategic WorkForce Training assessment imposed as outlined in 96-6.3.(b). 9
(b) Assessment Imposed. – An assessment is imposed on an employer who is required to 10
make a contribution to the Unemployment Insurance equal to a percentage of the required 11
contribution calculated in accordance with G.S. 96-9.2 prior to the application of the reduction 12
in G.S. 96-9.2(f). The Division shall calculate the assessment percentage, rounded up to the 13
nearest half percent (0.5%), as the ratio of the Strategic WorkForce Training fund Annual Target 14
Amount divided by the total required contributions estimated using the most recently available 15
Experience Rating Report (ETA 204) prepared for the Employment and Training Administration 16
within the U.S. Department of Labor. The Annual Target Amount shall be one hu ndred million 17
dollars ($100,000,000) for taxable years beginning on or after January 1, 2027, and before 18
January 1, 2028, and shall increase by three and one -half percent (3.5%) in each subsequent 19
taxable year, rounded to the nearest one hundred thousand dollars ($100,000). Except as provided 20
in this section, the assessment is collected and administered in the same manner as contributions 21
as described in Article 2A of this Chapter, except that the full assessment amount is due on the 22
same date as the first quarterly payment of contributions. Assessments collected under this 23
section must be credited to the Strategic WorkForce Training fund established under subsection 24
(a) of this section. Interest and penalties collected on unpaid assessments imposed by this section 25
must be credited to the Supplemental Employment Security Administration. Penalties collected 26
on unpaid assessments imposed by this section must be transferred to the Civil Penalty and 27
Forfeiture established in G.S. 115C-457.1. 28
(c) Suspension of Assessment. – The assessment does not apply in a taxable year if, as 29
of September 1 of the preceding calendar year, the amount in the State's account in the 30
Unemployment Trust is less than one billion dollars ($1,000,000,000)." 31
SECTION 11.5.(b) G.S. 96-9.2 is amended by adding a new subsection to read: 32
"§ 96‑9.2. Required contributions to the Unemployment Insurance Fund. 33
… 34
(f) Strategic Workforce Contribution Tax Credit. – Except when the surtax imposed 35
under G.S. 96-9.7 is in effect, an employer is allowed a tax credit for a contribution to the 36
Unemployment Insurance Fund payable under this section each calendar year equal to one 37
hundred and fifty percent (150%) of the amount of the Strategic WorkForce Training assessment 38
calculated pursuant to G.S. 96-6.3. An employer may claim the full amount of the credit against 39
the contributions payable with the report due on or before April 30 of each calendar year. The 40
Division may suspend the Strategic Workforce Contribution Tax Credit for any employer with 41
contributions more than 90 days past due." 42
43
ENHANCE UNEMPLOYMENT INSURANCE BENEFITS 44
SECTION 11.6.(a) G.S. 96-14.2 reads as rewritten: 45
"§ 96-14.2. Weekly benefit amount. 46
(a) Weekly Benefit Amount. – The weekly benefit amount for an individual who is totally 47
unemployed is an amount equal to the wages paid to the individual in the last two completed 48
quarters of the individual's base period divided by 52 and rounded to the next lower whole dollar. 49
If this amount is less than fifteen dollars ($15.00), the individual is not eligible for benefits. The 50
weekly benefit amount may not exceed three hundred fifty dollars ($350.00).four hundred ninety-51
General Assembly Of North Carolina Session 2025
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five dollars ($495.00), adjusted annually for inflation. Beginning July 1, 2027, and on each July 1
1 thereafter, the Division shall adjust the maximum weekly benefit for claims filed on or after 2
that date by the percentage change in the annual average Consumer Price Index for All Items for 3
All Urban Consumers published by the Bureau of Labor Statistics for the preceding calendar 4
year, rounded to the nearest dollar." 5
SECTION 11.6.(b) G.S. 96-14.3 reads as rewritten: 6
"§ 96-14.3. Duration of benefits. 7
(a) Duration. – The number of weeks an individual is allowed to receive unemployment 8
benefits depends on the seasonal adjusted statewide unemployment rate that applies to the 9
six-month base period in which the claim is filed. One six-month base period begins on January 10
1 and one six-month base period begins on July 1. For the base period that begins January 1, the 11
average of the seasonal ad justed unemployment rates for the State for the preceding months of 12
July, August, and September applies. For the base period that begins July 1, the average of the 13
seasonal adjusted unemployment rates for the State for the preceding months of January, 14
February, and March applies. The Division must use the most recent seasonal adjusted 15
unemployment rate determined by the U.S. Department of Labor, Bureau of Labor Statistics, and 16
not the rate as revised in the annual benchmark. 17
Seasonal Adjusted Number 18
Unemployment Rate of Weeks 19
Less than or equal to 5.5%4.5% 1220 20
Greater than 5.5%4.5% up to 6%5.5% 1322 21
Greater than 6%5.5% up to 6.5% 1424 22
Greater than 6.5% up to 7% 1526 23
Greater than 7% up to 7.5% 16 24
Greater than 7.5% up to 8% 17 25
Greater than 8% up to 8.5% 18 26
Greater than 8.5% up to 9% 19 27
Greater than 9% 20 28
…." 29
SECTION 11.6.(c) Subsections (a) and (b) apply to claims for benefits filed on or 30
after July 1, 2026. 31
32
PART XII. ENVIRONMENTAL QUALITY 33
34
ESTABLISH NON-TITLE V FEES IN STATUTE 35
SECTION 12.1. G.S. 143-215.3(a)(1b) reads as rewritten: 36
"§ 143-215.3. General powers of Commission and Department; auxiliary powers. 37
(a) Additional Powers. – In addition to the specific powers prescribed elsewhere in this 38
Article, and for the purpose of carrying out its duties, the Commission shall have the power: 39
… 40
(1b) The fee to be charged pursuant to G.S. 143 -215.3(a)(1a) for processing an 41
application for a permit under G.S. 143 -215.108 and G.S. 143 -215.109 of 42
Article 21B of this Chapter may not exceed five hundre d dollars ($500.00). 43
The Department shall charge permit fees pursuant to G.S. 143-215.3(a)(1a) to 44
non-Title V facilities subject to permitting under G.S. 143-215.108 and 45
G.S. 143-215.109 of Article 21B according to the following schedule: 46
(a) For facilities seeking federally enforceable limits to avoid Title V 47
permitting, application fees of eight hundred dollars ($800.00) and 48
annual fees of three thousand seventy dollars ($3,070.00). 49
General Assembly Of North Carolina Session 2025
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(b) For facilities with a potential to emit below Title V thresholds, except 1
for general permits, application fees of one hundred dollars ($100.00) 2
and annual fees of four hundred dollars ($400.00). 3
(c) The fee for an ownership change shall be fifty dollars ($50). 4
(d) The Department may provide a discount of up to twen ty-five percent 5
on annual fees authorized by subparagraphs (a) and (b) of this 6
subsection. 7
The fee to be charged pursuant to G.S. 143-215.3(a)(1a) for processing a 8
registration under Part 2A of this Article or Article 38 of this Chapter may not 9
exceed fifty dollars ($50.00) for any single registration. An additional fee of 10
twenty percent (20%) of the registration processing fee may be assessed for a 11
late registration under Article 38 of this Chapter. The fee for administering 12
and compliance monitoring under Article 21, other than Parts 1 and 1A, and 13
G.S. 143-215.108 and G.S. 143 -215.109 of Article 21B shall be charged on 14
an annual basis for each year of the permit term and may not exceed one 15
thousand five hundred dollars ($1,500) per year. Fees for processing all 16
permits under Article 21A and all other sections of Article 21B shall not 17
exceed one hundred dollars ($100.00) for any single permit. The total payment 18
for fees that are set by the Commission under this subsection for all permits 19
for any single facility shall not exceed seven thousand five hundred dollars 20
($7,500) per year, which amount shall include all application fees and fees for 21
administration and compliance monitoring. A single facility is defined to be 22
any contiguous area under one ownership and in which permitted activities 23
occur. For all permits issued under these Articles where a fee sc hedule is not 24
specified in the statutes, the Commission, or other commission specified by 25
statute shall adopt a fee schedule in a rule following the procedures established 26
by the Administrative Procedure Act. Fee schedules shall be established to 27
reflect t he size of the emission or discharge, the potential impact on the 28
environment, the staff costs involved, relative costs of the issuance of new 29
permits and the reissuance of existing permits, and shall include adequate 30
safeguards to prevent unusual fee asse ssments which would result in serious 31
economic burden on an individual applicant. A system shall be considered to 32
allow consolidated annual payments for persons with multiple permits. In its 33
rulemaking to establish fee schedules, the Commission is also dir ected to 34
consider a method of rewarding facilities which achieve full compliance with 35
administrative and self-monitoring reporting requirements, and to consider, in 36
those cases where the cost of renewal or amendment of a permit is less than 37
for the original permit, a lower fee for the renewal or amendment." 38
39
QUADRENNIAL FEE ADJUSTMENT REQUIREMENTS 40
SECTION 12.2. G.S. 143B-279.19 reads as rewritten: 41
"§ 143B-279.19. Quadrennial adjustment of certain fees and rates. 42
(a) Adjustment for Legislatively Mandated S alaries and Benefits. – Beginning July 1, 43
2025, and every four years thereafter, the Department shall adjust the fees and rates imposed 44
pursuant to the statutes listed in this subsection in accordance with the Consumer Price Index 45
computed by the Bureau of Labor Statistics during the prior two bienniums. The adjustment for 46
per transaction rates shall be rounded to the nearest dollar ($1.00): 47
… 48
(21) G.S. 143-215.3(1b). 49
…." 50
51
General Assembly Of North Carolina Session 2025
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MAKING INUNDATION MAPS PUBLICLY AVAILABLE 1
SECTION 12.3.(a) G.S. 143-215.31 reads as rewritten: 2
"§ 143-215.31. Supervision over maintenance and operation of dams. 3
… 4
(a1) The owner of a dam classified by the Department as a high -hazard dam or an 5
intermediate-hazard dam shall develop an Emergency Action Plan for the dam as provided in this 6
subsection: 7
… 8
(6) Information included in an Emergency Action Plan that constitutes sensitive 9
public security information, as provided in G.S. 132-1.7, shall be maintained 10
as confidential information and shall not be subject to disclosure under the 11
Public Records Act. For purposes of this section, "sensitive public security 12
information" shall include Critical Energy Infrastructure Information 13
protected from disclosure under rules adopted by the Federal Energy 14
Regulatory Commission in 18 C.F.R. § 388.112 . § 388.112, but shall not 15
include Emergency Action Plans or inundation maps for any impoundments 16
or dams not regulated by the Federal Energy Regulatory Commission. 17
…." 18
SECTION 12.3.(b) G.S. 66-58 is amended to read: 19
"§ 66‑58. Sale of merchandise or services by governmental units. 20
… 21
(b) Subsection (a) of this section does not apply to any of the following: 22
… 23
(29) The Department of Environmental Quality in the provision of inundation 24
maps for the preparation of Emergency Action Plans to owners or operators 25
of high hazard potential dams. 26
…." 27
28
SOLID WASTE BENEFICIAL REUSE CLARIFICATION 29
SECTION 12.4.(a) G.S. 130A-309.05 reads as rewritten: 30
"§ 130A-309.05. Regulated wastes; certain exclusions. 31
(a) Certain Wastes Regulated as Nonhazardous. – Notwithstanding other provisions of 32
this Article, the following waste shall be regulated pursuant to this Part: 33
… 34
(b) Management of Ash Generated From Burning of Solid Waste. – Ash generated by a 35
solid waste management facility from the burning of solid waste shall be disposed of in a properly 36
designed solid waste disposal area that complies with standards developed by the Department for 37
the disposal of the ash. The Department shall work with solid waste management facilities that 38
burn solid waste to identify and develop methods for recycling and reusing incinerator ash or 39
treated ash. 40
(c) Recovered Material. – Recovered material is not subject to regulation as permitting 41
requirements for solid waste under this Article. In order for a material that would otherwise be 42
regulated as solid waste to qualify as a recovered material, the The Department may require any 43
person who owns or has control over the material to demonstrate that the material meets the 44
requirements of this subsection. In order to protect public health and the environment, the 45
Commission subsection or may require the person to obtain a beneficial use determination from 46
the Department in accordance with subsection (d) of this section. The Department may adopt 47
rules to implement this subsection. Materials that are accumulated speculatively, as that term is 48
defined under 40 Code of Federal Regulations § 261 (July 1, 2014 Edition), shall not qualify as 49
a recovered material, and shall be subject to regulation as s olid waste. In order to qualify as a 50
recovered material, the material. The material shall be managed as a valuable commodity in a 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 105
manner consistent with the desired use or end use, and all of the following conditions shall be 1
met: 2
… 3
(d) Beneficial Use Determination. – For the purposes of preservation of landfill capacity, 4
economic development, energy savings, and reduction of greenhouse emissions, the Department 5
may determine whether nonhazardous solid waste may be used or reused for a particular site o r 6
application as an alternative to disposal at a permitted solid waste management facility as set 7
forth in this subsection. 8
(1) A person seeking a beneficial use determination shall submit an application to 9
the Department. The Department, after a review of an application submitted 10
under this subsection, may take any of the following actions: 11
a. Authorize management of a specified type of nonhazardous solid 12
waste at a site other than a permitted solid waste management facility. 13
b. Issue a beneficial use dete rmination with appropriate conditions for 14
use of specific types of solid waste in construction, land application, 15
or other projects and applications. 16
(2) An applicant for a determination under this subsection shall submit 17
information on forms prescribed by the Department and any additional 18
information required by the Department necessary for a determination under 19
this subsection. In its review of the application and additional information, the 20
Department shall also consider internal research or information submitted by 21
any person or entity concerning the potential hazard to public health or the 22
environment of any type of solid waste. 23
(3) The Department may require submittal of a demonstration that the solid waste 24
is being managed in a manner to protect public health or the environment and 25
may include any of the following as a part of an authorization under 26
subdivision (1) of this subsection: 27
a. Requirements for periodic testing of solid wastes; and 28
b. Conditions to ensure that the product or by -products of a material 29
recovered or diverted for beneficial use shall not be discharged, 30
deposited, injected, dumped, spilled, leaked, or placed into or upon 31
any land or water so that the products or by -products or any 32
constituents thereof may enter other lands or be emitted into the air, or 33
discharged into any waters, including groundwaters, or otherwise enter 34
the environment or pose a threat to public health and safety. 35
(4) Approvals granted under this subsection are valid for no longer than five 36
years. Requests for renewal shall be made at least 60 days in advance of the 37
expiration date of the approval. 38
(5) The applicant for a determination under this subdivision shall submit to the 39
Department on an annual basis a report detailing the usage of material under 40
the approval and certifying compliance with this Article and any applicable 41
rules adopted under this Article. 42
(6) The Department may suspend or revoke an authorization and may modify an 43
authorization if it is determined that the activity is not in compliance with the 44
requirements of applicable laws or rules or if new information is provided to 45
the Department that impacts the determination of protection of public health 46
or the environment. 47
(7) The Department shall provide notice on its website of approved beneficial use 48
determinations. 49
General Assembly Of North Carolina Session 2025
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(8) Facilities that manage source-separated materials for the purpose of recycling 1
as defined in G.S. 130A-290 are not subject to the provisions of this 2
subsection. 3
(9) The Department may adopt rules to implement this subsection and establish 4
application fees for a reuse determination under this subsection. All fees 5
collected under this subdivision shall be credited to the Solid Waste 6
Management Account established under G.S. 130A-295.8(a). In determining 7
the amount of the total appli cation fee in rule, the Department shall have the 8
authority to establish separate fee amounts for annual fees for each year based 9
on the length of time for which the approval will be valid as requested by the 10
applicant." 11
SECTION 12.4.(b) This section becomes effective January 1, 2027. 12
13
EXPAND ELIGIBILITY FOR TARGETED INTEREST RATES 14
SECTION 12.5. G.S. 159G-20(21) reads as rewritten: 15
"§ 159G-20. Definitions. 16
… 17
(21) Targeted interest rate project. – Either one of the following types of projects: 18
a. A project that is awarded a loan from the Drinking Water Reserve or the 19
Wastewater Reserve based on affordability. 20
b. A project that is awarded a loan from the CWSRF or the DWSRF and is 21
in a category for which federal law or the Department encourages a special 22
focus. 23
…." 24
25
RAISE LIMITS FOR MRF AND AIA GRANT FUNDING 26
SECTION 12.6. G.S. 159G-36(c) is amended to read: 27
"§ 159G-36. Limits on loans and grants. 28
… 29
(c) Certain Reserve Recipient Limit. – The following limits apply to the loan or grant 30
types made from the Wastewater Reserve or the Drinking Water Reserve to the same local 31
government unit or nonprofit water corporation: 32
… 33
(4) The amount of merger/regionalization feasibility grants awarded for three 34
consecutive fiscal years for a fiscal year may not exceed fifty thousand dollars 35
($50,000) seventy-five thousand dollars ($75,000). 36
(5) The amount of asset inventory and assessment grants awarded for three 37
consecutive fiscal years may not exceed one hundred fifty thousand dollars 38
($150,000)two hundred twenty-five thousand dollars ($225,000). 39
…." 40
41
PART XIII. LABOR [RESERVED] 42
43
PART XIV. NATURAL AND CULTURAL RESOURCES 44
45
JOHNSTON COUNTY/BENTONVILLE BATTLEFIELD GRANT EXTENSION 46
SECTION 14.1. Notwithstanding any provision of law to the contrary, the funds 47
appropriated in S.L. 2023-134, Sec. 2.2 to be allocated as a directed grant to Johnston County to 48
be used for the Bentonville Battlefield State Historic Site shall not revert until June 30, 2028. 49
50
FRIENDS OF NC MARITIME MUSEUM AT SOUTHPORT GRANT EXTENSION 51

General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 107
SECTION 14.2. Notwithstanding any provision of law to the contrary, the funds 1
appropriated in S.L. 2023-134, Sec. 2.2 to be allocated as a directed grant to the Friends of the 2
North Carolina Maritime Museum at Southport to be used for fire suppression system and related 3
costs shall not revert until June 30, 2028. 4
5
CODIFY EXEMPTION FRO M STATE PARKS FEES F OR ELIGIBLE DISABLED 6
VETERANS 7
SECTION 14.3. Article 2 of Chapter 143B of the Gene ral Statutes is amended by 8
adding a new section to read: 9
"§ 143B-135.17. Exemption of State Parks fees for eligible disabled veterans. 10
(a) Definitions. – As used in this section, the following words and phrases have the 11
following meanings: 12
(1) Annual Pass Program. – The North Carolina State Parks Annual Pass program 13
offered by the Division that includes the following passes: (i) seasonal access 14
passes, (ii) annual passes, and (iii) four -wheel-drive beach access annual 15
passes. 16
(2) Disabled Veteran. – A veteran of any branch of the Armed Forces of the 17
United States who character of service at separation was honorable or under 18
honorable conditions and who satisfies either of the following requirements: 19
a. As of the date of application required by this section is submitted, the 20
veteran has received benefits under 38 U.S.C. § 2101; or 21
b. The veteran has received a certification by the United States 22
Department of Vete rans Affairs or another federal agency indicating 23
that, as of the date the application required by this section is submitted, 24
the veteran has a service-connected disability. 25
(3) Division. – The North Carolina Division of Parks and Recreation of the North 26
Carolina Department of Natural and Cultural Resources. 27
(4) Eligible Disabled Veteran. – A Disabled Veteran who (i) has submitted an 28
application for a pass included within the Annual Pass Program and (ii) has 29
provided the Division a copy of the veteran 's disability certi fication or 30
evidence of benefits received under 38 U.S.C. § 2101. 31
(b) Fee Exemption. – An Eligible Disabled Veteran seeking a pass under the Annual Pass 32
Program shall apply for the pass on a forum and in a manner prescribed by the Division. 33
(c) Application Required. – A Disabled Veteran seeking a pass under the Annual Pass 34
Program shall apply for the pass on a form and in a manner prescribed by the Division. 35
(d) Rulemaking. – The Department of Natural and Cultural Resources shall adopt rules, 36
or amend any current rules, necessary to implement this section." 37
38
GRASSROOTS ARTS PROGRAM ADMINISTRATIVE COST ALLOWANCE 39
SECTION 14.4. G.S. 143B-122 reads as rewritten: 40
"§143-122. Distribution of funds. 41
(a) Administrative Expenses. – Of the funds appropriated to the Fund, the Trustees may 42
use no more than five percent ( 5%) for operating expenses associated with programs and 43
activities authorized by this Section. 44
(b) After adminis trative expenses are deducted from Of the funds available under 45
Grassroots Arts Program, 20% total shall be distributed among counties equally, and the 46
remaining eighty percent (80%) shall be distributed among the counties on a per capita basis." 47
48
AUTHORIZE PARTF MATC H FOR SHALLOWDRAFT N AVIGATION CHANNEL 49
DREDGING AND AQUATIC WEED FUND 50
SECTION 14.5. G.S. 143-215.73F reads as rewritten: 51
General Assembly Of North Carolina Session 2025
Page 108 House Bill 1167-First Edition
"§143-215.73F. Shallow Draft Navigation Channel Dredging and Aquatic Weed Fund. 1
… 2
(c) Cost-Share. – Any project funded by revenue from the Fund must be cost-shared with 3
non-State dollars as follow: 4
… 5
(3) The cost-share for an aquatic weed control or navigation channel dredging 6
project shall be at least one non -State dollar for every dollar from the Fund. 7
The cost-share for an aquatic weed control or navigation channel dredging 8
project located within a component of the State Parks System shall be 9
provided by the Division of Parks and Recreation of the Department of 10
Natural and Cultural Resources. The Division of Parks and Recreation may 11
use funds allocated to the State parks System for capital projects under 12
G.S. 143B-135.56 for the cost share. 13
…." 14
15
AMEND CONTINUING RESOLUTIONS TO ALLOW ACTING PAY 16
SECTION 14.6. G.S. 143-5-4 reads as rewritten: 17
"§ 143-5-4. Enactment deadline; procedures to be followed when the Current Operations 18
Appropriations Act does not become law prior to the end of certain fiscal years. 19
(a) Procedure for Budget Continuation. – If a fiscal year begins for which no Current 20
Operations Appropriation Act providing for current operations of S tate government during that 21
fiscal year has become law, then the following procedures shall be followed and the following 22
limitations shall apply; 23
… 24
(5) State employee salaries. – The salary schedules and specific salaries 25
established for the prior fiscal year and in effect on June 30 of the prior fiscal 26
year for offices and positions shall remain in effect until the Current 27
Operations Appropriations Act for the fiscal year becomes law. State 28
employees subject to G.S. 7A-102(c), 7A -171.1, 143B -1715, or any other 29
statutory salary schedule, shall not move up on salary schedules or receive 30
automatic increases including automatic step increases, until authorized by the 31
General Assembly. State employees, including those exempt from the 32
classification and comp ensation rules established by the State Human 33
Resources Commission, shall not receive any automatic step increases, 34
annual, performance, merit, bonuses, or other increments until authorized by 35
the General Assembly. Notwithstanding these restrictions, acting pay may still 36
be offered when an employee has a temporary assignment in which he or she 37
remains in the same position, but assumes a higher -level duties or when an 38
employee has a temporary assignment with a change in the variety and scope 39
of duties. 40
…." 41
42
SALUDA GRADE TRAILS CONSERVATORY 43
SECTION 14.7. The funds allocated by Section 2H.7(1) of S.L. 2024 -57 of the 44
Department of Natural and Cultural Resources to provide a directed grant to the Saluda Grade 45
Trails Conservancy, a nonprofit corporation, may, notwithstanding that provision, also be used 46
for the purposes of designing, planning, and developing a recreational trail along the Saluda 47
Grade, including but not limited to the provision of matching funds for grants related to 48
recreational trail development along the Saluda Grade. For purposes of this subsection, "Saluda 49
Grade" means that portion of the Norfolk Southern W -Line railroad between milepost 26 in the 50

General Assembly Of North Carolina Session 2025
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unincorporated community of Zirconia in Henderson County and the boundary between North 1
Carolina and South Carolina. 2
3
PART XV. WILDLIFE RESOURCES COMMISSION [RESERVED] 4
5
PART XVI. ADMINISTRATIVE OFFICE OF THE COURTS 6
7
IOLTA FUNDS TRANSFER 8
SECTION 16.1. Section 25 of Session Law 2025-70 is repealed. 9
10
CRIMINAL JUSTICE INFORMATION NETWORK TRANSFER 11
SECTION 16.2. G.S. 143B-1203 reads as re-written: 12
"§ 143B-1203. Transfer; definitions. 13
(a) The statutory authority, powers, duties, functions, records, personnel, property, and 14
unexpended balances of appropriations, allocations, or other funds of the Cri minal Justice 15
Information Network Governing Board are transferred to the Department of Public Safety 16
Administrative Office of the Courts as a Type II transfer as defined in G.S. 143A-6. 17
(b) As used in this Part: 18
(1) "Board" means the Criminal Justice Information Network Governing Board 19
established by G.S. 143B-1204. 20
(2) "Department" means the Department of Public Safety. Administrative Office 21
of the Courts. 22
(3) "Local government user" means a unit of local government of this State having 23
authorized access to the Network. 24
(4) "Network" means the Criminal Justice Information Network established by 25
the Board pursuant to this Part. 26
(5) "Network user" or "user" means any person having authorized access to the 27
Network. 28
(6) "State agency" means any State depar tment, agency, institution, board, 29
commission, or other unit of State government." 30
31
PART XVII. INDIGENT DEFENSE SERVICES [RESERVED] 32
33
PART XVIII. JUSTICE 34
35
STATE CRIME LABORATORY FEASIBILITY STUDY 36
SECTION 18.1. Of the funds appropriated in Section 18.9 of S.L. 2021 -180 to the 37
Department of Justice (Department) for the 2021-2022 fiscal year to conduct a study on the siting 38
of an Eastern Regional Laboratory to be located on the campus of Elizabeth City State University, 39
the remainder shall be used to conduct a study for a permanent laboratory facility for the Triad 40
Laboratory to replace the current location, which the Department is currently leasing, and to do 41
a feasibility and advanced planning study for a new Raleigh laboratory due to the ag e of the 42
building. The Department shall report on the study outlined in this section to the Chairs of the 43
House Justice and Public Safety Appropriations Committee, the Chairs of the Senate 44
Appropriations on Justice and Public Safety Committee, and the Fiscal Research Division on or 45
before June 30, 2027. The report shall include (i) the estimated cost of completing the laboratory, 46
(ii) the estimated cost of operating the laboratory during its first five years of operation, (iii) an 47
estimated time line for completion of the laboratory, and (iv) any other relevant information. 48
49
PART XIX. ADULT CORRECTION 50
51
General Assembly Of North Carolina Session 2025
Page 110 House Bill 1167-First Edition
PART XIX-A. DEPARTMENT OF ADULT CORRECTION ADMINISTRATION 1
2
STATEWIDE MISDEMEANANT CONFINEMENT PROGRAM FUNDING TRANSFER 3
SECTION 19A.1. Of the funds appropriat ed in this act for the Statewide 4
Misdemeanant Confinement Program: 5
(1) The sum of one million dollars ($1,000,000) shall be transferred each fiscal 6
year to the North Carolina Sheriffs' Association, Inc., a nonprofit corporation, 7
to support the Program and for administrative and operating expenses of the 8
Association and its staff. 9
(2) The sum of two hundred twenty -five thousand dollars ($225,000) shall be 10
allocated each fiscal year to the Department of Adult Correction for its 11
administrative and operating expenses for the Program. 12
(3) Up to the sum of five hundred thousand dollars ($500,000) may be used in 13
each fiscal year of the 2025 -2027 fiscal biennium to reimburse sheriffs 14
utilizing inmate labor pursuant to the provisions of Section 19C.10 of S.L. 15
2021-180. 16
17
INMATE MEDICAL REPORTING 18
SECTION 19A.2. G.S. 143B-1470 reads as rewritten: 19
"§ 143B-1470. Medical costs for inmates. 20
… 21
(c) The Department of Adult Correction shall report quarterly annually by September 1 22
of each year to the Joint Legislative Oversight Committee on Justice and Public Safety and the 23
chairs of the Justice and Public Safety Appropriations Committees on: 24
(1) The percentage of the total inmates requiring hospitalization or hospital 25
services who receive that treatment at each hospital. 26
… 27
(10) The reimbursement rate for contracted providers. The Department shall 28
randomly audit high -volume contracted providers to ensure adherence to 29
billing at the contracted rate. 30
Reports submitted on August 1 shall include totals for the previous fiscal year for all the 31
information requested." 32
33
REIMBURSE COUNTIES F OR HOUSING AND EXTRA ORDINARY MEDICAL 34
EXPENSES 35
SECTION 19A.3. Notwithstanding G.S. 143C-6-9, the Department of Adult 36
Correction may use funds available to the Department for the 2025-27 fiscal biennium to 37
reimburse counties for the cost of housing convicted inmates, parolees, and post-release 38
supervisees awaiting transfer to the State prison system, as provided in G.S. 148-29. The 39
reimbursement may not exceed forty dollars ($40.00) per day per prisoner awaiting transfer. 40
The Department shall report annually by February 1 of each year to the chairs of the Joint 41
Legislative Oversight Committee on Justice and Public Safety and the chairs of the House of 42
Representatives Appropriations Committee on Justice and Public Safety and the Senate 43
Appropriations Committee on Justice and Public Safety on the expenditure of funds to 44
reimburse counties for prisoners awaiting transfer. 45
46
PART XIX-B. PRISONS 47
48
CENTER FOR COMMUNITY TRANSITIONS/CONTRACT AND REPORT 49
SECTION 19B.1. The Department of Adult Correction may continue to contract 50
with The Center for Community Transitions, Inc., a nonprofit corporation, for the purchase of 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 111
prison beds for minimum security female inmate s during the 2025 -27 fiscal biennium. The 1
Center for Community Transitions, Inc., shall report by February 1 of each year to the chairs of 2
the House of Representatives Appropriations Committee on Justice and Public Safety and the 3
Senate Appropriations Committee on Justice and Public Safety on the annual cost per inmate and 4
the average daily inmate population compared to bed capacity using the same methodology as 5
that used by the Department of Adult Correction. 6
7
NURSE STAFFING AT STATE PRISONS 8
SECTION 19B.2. Notwithstanding any other provision of law, the Department of 9
Adult Correction may, in its discretion and subject to the approval of the Office of State Budget 10
and Management, convert funds appropriated for contractual nursing services to permanent 11
nursing positions when it is determined to promote security, generate cost savings, and improve 12
health care quality. The Department shall report on any such conversions to the Fiscal Research 13
Division. 14
15
DOT CONTRACT OF INMATE LITTER CREW 16
SECTION 19B.3.(a) After the issuance of a request for information (RFI) and 17
receipt of bids by the Department of Transportation for litter pickup on State highways and roads, 18
the Department of Transportation shall first offer the contract to the Department of Adult 19
Correction u pon the same terms and conditions as the most favorable bid received by the 20
Department of Transportation from a suitable contractor. The Department of Adult Correction 21
shall have 30 days to accept or decline the offered contract. 22
SECTION 19B.3.(b) It is the policy of the General Assembly that the Department 23
of Transportation shall utilize inmate litter crews for litter pickup on State highways and roads 24
as often as is necessary and practicable. 25
26
PART XIX-C. COMMUNITY SUPERVISION 27
28
INTERSTATE COMPACT F EES TO SUPPORT TRAINING PR OGRAMS AND 29
EQUIPMENT PURCHASES SECTIONS 30
SECTION 19C.1. Notwithstanding the provisions of G.S. 148-65.7, fees collected 31
for the Interstate Compact Fund during the 2025 -27 fiscal biennium may be used by the 32
Department of Adult Correction during the 2025-27 fiscal biennium to provide training programs 33
and equipment purchases for the Division of Community Supervision, but only to the extent 34
sufficient funds remain available in the Fund to support the mission of the Interstate Compact 35
Program. 36
37
PART XIX-D. REHABILITATION AND REENTRY [RESERVED] 38
39
PART XIX-E. PUBLIC SAFETY [RESERVED] 40
41
PART XIX -F. DEPARTME NT OF PUBLIC SAFETY ADMINISTRATION 42
[RESERVED] 43
44
PART XIX-G. LAW ENFORCEMENT [RESERVED] 45
46
PART XIX-H. JUVENILE JUSTICE [RESERVED] 47
48
PART XIX-I. EMERGENCY MANAGEMENT AND NATIONAL GUARD [RESERVED] 49
50
PART XIX-J. STATE BUREAU OF INVESTIGATION 51
General Assembly Of North Carolina Session 2025
Page 112 House Bill 1167-First Edition
1
CODIFY USE OF SEIZED AND FORFEITED PROPERTY 2
SECTION 19J.1. G.S. 14-2.3 reads as re-written: 3
"§ 14-2.3. Forfeiture of gain acquired through criminal activity. 4
… 5
(d) Seized and forfeited assets transferred to the Department of Justice, Department of 6
Adult Correction, the State Bureau of Investigation, the State Highway Patrol , and the 7
Department of Public Safety, pursuant to applicable federal law shall be credite d to the budget 8
of the recipient department and shall result in an increase of law enforcement resources for that 9
department. The Department of Justice, Department of Adult Correction, State Bureau of 10
Investigation, State Highway Patrol, and the Department of Public Safety shall each make the 11
following reports to the chairs of House of Representatives Appropriations Committee on Justice 12
and Public Safety and the Senate Appropriations Committee on Justice and Public Safety: 13
(1) A report upon receipt of any assets. 14
(2) A report that shall be made prior to the use of the assets on their intended use 15
and the departmental priorities on which the assets may be expended. 16
(3) A report on receipts, expenditur es, encumbrances, and availability of these 17
assets for the previous fiscal year, which shall be 18
(e) The General Assembly finds that the use of seized and forfeited assets transferred 19
pursuant to federal law for new personnel positions, new projects, acquisition of real property, 20
repair of buildings where the repair includes structural change, and constru ction of or additions 21
to buildings may result in additional expenses for the State in future fiscal periods. Therefore, the 22
Department of Justice, Department of Adult Correction, State Bureau of Investigation, State 23
Highway Patrol, and the Department of Public Safety are prohibited from using these assets for 24
such purposes without the prior approval of the General Assembly. 25
(f) Nothing in this section prohibits State law enforcement agencies from receiving funds 26
from the United States Department of Justice, the United States Department of the Treasury, and 27
the United States Department of Health and Human Services." 28
29
CONTINUED EXEMPTION FROM IT CONSOLIDATION 30
SECTION 19J.2. G.S. 143B-1320 reads as rewritten: 31
"§ 143B-1320. Definitions; scope; exemptions. 32
… 33
(b) Exemptions. – Except as otherwise specifically provided by law, this Article does not 34
apply to the following entities: the General Assembly, the Judicial Department, the Community 35
Colleges System Office, The University of North Carolina and its constit uent institutions, the 36
Office of the State Auditor, the State Board of Elections, the State Highway Patrol, and the 37
Department of State Treasurer. Treasurer, and the State Bureau of Investigation. These entities 38
may elect to participate in the information technology programs, services, or contracts offered 39
by the Department, including information technology procurement, in accordance with the 40
statutes, policies, and rules of the Department. The election shall be made in writing, as follows: 41
(1) For the General Assembly, by the Legislative Services Commission. 42
… 43
(9) For the Investment Authority under Part I of Article 6 of Chapter 147 of the 44
General Statutes, by the Board of Directors of the Authority. 45
(10) For the State Bureau of Investigation, by the Director. 46
…." 47
48
ADD OFFENSES FOR WHICH ORDERS FOR ELECTRONIC SURVEILLANCE MAY 49
BE GRANTED 50
SECTION 19J.3. G.S. 15A-290 reads as rewritten: 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 113
"§ 15A-290. Offenses for which orders for electronic surveillance may be granted. 1
(a) Orders authorizing or approving the in terception of wire, oral, or electronic 2
communications may be granted, subject to the provisions of this Article and Chapter 19 of Title 3
18 of the United States Code, when the interception does any of the following: 4
(1) May provide or has provided evidence of the commission of, or any 5
conspiracy to commit, any of the following: 6
a. Any of the drug-trafficking violations listed in G.S. 90-95(h). 7
b. A continuing criminal enterprise in violation of G.S. 90-95.1. 8
c. The offense of money laundering in violation of G.S. 14-118.8. 9
… 10
(c) Orders authorizing or approving the interception of wire, oral, or electronic 11
communications may be granted, subject to the provisions of this Article and Chapter 119 of 12
Title 18 of the United States Code, when the interception may provide, or has provided, evidence 13
of any of the following offenses, or any conspiracy to commit these offenses, or when the 14
interception may expedite the apprehension of persons indicted for the commission of these 15
offenses: 16
(1) Any felony offense against a minor, including any violation of G.S. 14-27.31 17
(Sexual activity by a substitute parent or custodian), G.S. 14-27.32 (Sexual 18
activity with a student), G.S. 14-41 (Abduction of children), G.S. 14-43.11 19
(Human trafficking), G.S. 14-43.12 (Involuntary serv itude), G.S. 14-43.13 20
"(Sexual servitude), G.S. 14-190.16 (First degree sexual exploitation of a 21
minor), G.S. 14-190.17 (Second degree sexual exploitation of a minor), 22
G.S. 14-202.1 (Taking indecent liberties with children), G.S. 14-205.2(c) or 23
(d) (Patronizing a prostitute who is a minor or has a mental disability), or 24
G.S. 14-205.3(b) (Promoting prostitution of a minor or a person who has a 1 25
mental disability). 26
… 27
(5) Any offense involving the manufacture, assembly, possession, storage, 28
transportation, sa le, purchase, delivery, or acquisition of weapons of mass 29
death or destruction in violation of G.S. 14-288.8 or the adulteration or 30
misbranding of food, drugs, cosmetics, etc., with the intent to cause serious 31
injury in violation of G.S. 14-34.4. 32
(6) Any felony offense involving human trafficking of an adult, including but not 33
limited to violation of G.S. 14-43.11 (Human trafficking), G.S. 14-43.12 34
(Involuntary servitude), or G.S. 14-43.13 (Sexual servitude). 35
…." 36
37
TECHNICAL CORRECTION S RELATED TO MAKING THE STATE BUREAU OF 38
INVESTIGATION AN INDEPENDENT DEPARTMENT 39
SECTION 19J.4. The Revisor of Statutes shall replace a reference to the Department 40
of Public Safety with a reference to the State Bureau of Investigation in the following statutes: 41
(1) Article 27A of Chapter 14. 42
(2) G.S. 18B-902. 43
(3) G.S. 74C-8.1. 44
(4) G.S. 74D-2.1. 45
(5) G.S. 84-24. 46
(6) G.S. 90D-7. 47
(7) G.S. 90-11. 48
(8) G.S. 90-30. 49
(9) G.S. 90-102.1. 50
(10) G.S. 90-210.25. 51
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(11) G.S. 90-224. 1
(12) G.S. 93A-4. 2
(13) G.S. 95-47.2. 3
(14) G.S. 110-90.2. 4
(15) G.S. 143B-901. 5
(16) G.S. 143B-902. 6
(17) G.S. 143B-903. 7
(18) G.S. 143B-904. 8
(19) G.S. 160A-304. 9
10
CONTINUE POLICE AUTHORITY 11
SECTION 19J.5. G.S. 20-49 reads as rewritten: 12
"§ 20-49. Police authority of Division. 13
All members of the Highway Patrol and law enforcement officers of the Department of Public 14
Safety and the State Bureau of Investigation shall have the power: 15
…." 16
17
CONTINUE EXPANDED SCOPE OF CONCEALED HANDGUN PERMITS 18
SECTION 19J.6. G.S. 14-415.27 reads as rewritten: 19
"§ 14-415.27. Expanded permit scope for certain persons. 20
Notwithstanding G.S. 14-415.11(c), any of the following p ersons who has a concealed 21
handgun permit issued pursuant to this Article or that is considered valid under G.S. 14-415.24 22
is not subject to the area prohibitions set out in G.S. 14-415.11(c) and may carry a concealed 23
handgun in the areas listed in G.S. 14-415.11(c) unless otherwise prohibited by federal law: 24
… 25
(8) A person employed by the Department of Public Safety who has been 8 26
designated in writing by the Secretary of the Department and who has in the 27
9 person's possession written proof of the designation. 28
(8a) A person employed by the State Bureau of Investigation who has been 29
designated in writing by the Director of the Bureau and who has in the 30
person’s possession written proof of the designation. 31
…." 32
33
DIVISION OF CRIMINAL INFORMATION UPDATES 34
SECTION 19J.7. G.S. 143B-905 is recodified as G.S. 143B-208.19. 35
G.S. 143B-208.19 reads as rewritten: 36
"§ 143B-208.19. Division of Criminal Information. 37
(a) The Department of Public SafetyState Bureau of Investigation (Bureau) is authorized 38
to establish, devise, maintain and operate a system for receiving and disseminating to 39
participating agencies information collected, maintained and correlated under authority of 40
G.S. 143B-902. The system shall be known as the Criminal Information Network. Division of 41
Criminal Information (DCI). 42
(b) The Department of Public SafetyBureau is authorized to cooperate with the Division 43
of Motor Vehicles, Department of Administration, and other State, local and federal agencies and 44
organizations in carrying out the purpose and intent of this section, and to utilize, in cooperation 45
with other State agencies and to the extent as may be practical, computers and related equipment 46
as may be operated by other State agencies. 47
(c) The Department of Public Sa fety,Bureau, after consultation with participating 48
agencies, shall adopt rules and regulations governing the organization and administration of the 49
Criminal Information Network, DCI, including rules and regulations governing the types of 50
information relating to the administration of criminal justice to be entered into the system, and 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 115
who shall have access to such information. The rules and regulations governing access to the 1
Criminal Information Network DCI shall not prohibit an attorney who has entered a cri minal 2
proceeding in accordance with G.S. 15A-141 from obtaining information relevant to that 3
criminal proceeding. The rules and regulations governing access to the Criminal Information 4
NetworkDCI shall not prohibit an attorney who represents a person in adjudicatory or 5
dispositional proceedings for an infraction from obtaining the person's driving record or criminal 6
history. 7
(d) The Department Bureau may impose monthly fees on participating agenci es. The 8
monthly fees collected under this subsection shall be used to offset the cost of operating and 9
maintaining the Criminal Information Network.DCI. The fee amount varies depending upon the 10
type of device. For a desktop device, the monthly fee is twenty-five dollars ($25) per device. For 11
a mobile device, the monthly fee is twelve dollars ($12) per device. 12
(1) The Department may impose a monthly circuit fee on agencies that access the 13
Criminal Information Network through a circuit maintained and operated by 14
the Department of Public Safety. The amount of the monthly fee is three 15
hundred dollars ($300.00) plus an additional fee amount for each device 16
linked to the Network. The additional fee amount varies depending upon the 17
type of device. For a desktop device after the first seven desktop devices, the 18
additional monthly fee is twentyfive dollars ($25.00) per device. For a mobile 19
device, the additional monthly fee is twelve dollars ($12.00) per device. 20
(2) The Department may impose a monthly device fee on agencies that access the 21
Criminal Information Network through some other approved means. The 22
amount of the monthly device fee varies depending upon the type of device. 23
For a desktop device, the monthly fee is twentyfive dollars ($25.00) per 24
device. For a mobile device, the fee is twelve dollars ($12.00) per device." 25
26
SBI/WORKERS' COMPENS ATION FOR RESERVE LA W ENFORCEMENT 27
OFFICERS 28
SECTION 19J.8. G.S. 143B-1208.13 reads as rewritten: 29
"§ 143B-1208.13. Personnel of the State Bureau of Investigation. 30
The Direct or of the State Bureau of Investigation may appoint a sufficient number of 31
assistants who shall be competent and qualified to do the work of the Bureau. The Director shall 32
be responsible for making all hiring and personnel decisions of the Bureau. Persons serving as 33
reserve law enforcement officers of the Bureau are considered employees of the Bureau for 34
workers' compensation purposes while performing duties assigned or approved by the Director 35
of the Bureau or the Director's designee." 36
37
PART XIX-K. STATE HIGHWAY PATROL [RESERVED] 38
39
PART XX. ADMINISTRATION 40
41
SALE OF STATE PROPERTY/NEGATIVE RESERVE 42
SECTION 20.1.(a) There is established a negative reserve in the amount of 43
twenty-five million dollars ($25,000,000) for the 2026 -2027 fiscal year to be supported by the 44
sale of State-owned real property. 45
SECTION 20.1.(b) The Department of Administration (DOA) shall identify, market, 46
and execute the sale of State property sufficient to generate proceeds to fill the negative reserve 47
established by subsection (a) of th is section. DOA shall take all actions necessary to ensure the 48
timely deposit of proceeds into the appropriate budget code to offset the reserve. 49
SECTION 20.1.(c) DOA shall report quarterly to the Office of State Budget and 50
Management (OSBM) and the Joint Legislative Commission on Governmental Operations on the 51
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status of property sales and the amount of proceeds collected toward satisfying the negative 1
reserve. 2
3
PROCUREMENT SAVINGS/NEGATIVE RESERVE 4
SECTION 20.2.(a) The Department of Administration (DOA) and the Department 5
of Information Technology (DIT) shall jointly develop and implement procurement strategies, 6
including strategic sourcing, consolidated procurement, enterprise contracts, and improved 7
demand management, to achieve statewide savings of at least forty million dollars ($40,000,000), 8
of which no less than ten million dollars ($10,000,000) shall be recurring savings, with the 9
remainder being nonrecurring. 10
SECTION 20.2.(b) A negative reserve in the amou nt of thirty million dollars 11
($30,000,000), of which at least ten million dollars ($10,000,000) shall be recurring, is 12
established for the 2026 -2027 fiscal year to be supported by procurement savings achieved 13
pursuant to subsection (a) of this section. 14
SECTION 20.2.(c) State agencies that generate procurement savings pursuant to 15
subsection (a) of this section may retain twenty -five percent (25%) of the savings realized. The 16
remaining seventy -five percent (75%) of savings, including no less than ten million dollars 17
($10,000,000) in recurring savings, shall be transferred and credited toward filling the negative 18
reserve established by subsection (b) of this section. 19
SECTION 20.2.(d) The Office of State Budget and Management (OSBM) shall 20
work jointly with DOA and DIT to (i) verify procurement savings, (ii) administer the retention 21
of savings by agencies, (iii) ensure the transfer of savings necessary to fill the negative reserve, 22
and (iv) reconcile savings across the fiscal year. 23
SECTION 20.2.(e) DOA, DIT, an d OSBM shall provide quarterly reports to the 24
Joint Legislative Commission on Governmental Operations on procurement savings achieved, 25
agency savings retained, and progress toward filling the negative reserve. 26
27
PART XXI. ADMINISTRATIVE HEARINGS [RESERVED] 28
29
PART XXII. OFFICE OF THE STATE AUDITOR 30
31
DIRECTED GRANTS REVIEW BY THE OFFICE OF THE STATE AUDITOR 32
SECTION 22.1. G.S. 143C-6-23 is amended by adding a new subsection to read: 33
"§ 143C-6-23. State grant funds: administration; oversight and reporting requirements. 34
… 35
(g1) Enhanced Audit Review of Directed Grants. – The following applies to directed 36
grants to non-State entities: 37
(1) Definitions. – For purposes of this subsection, the following definitions apply: 38
a. Directed grant. – Nonrecurring funds allocated by a State agency to a 39
non-State entity as directed by an act of the General Assembly. 40
(2) Review required. – Beginning with the 2026-2027 fiscal year and each fiscal 41
year thereafter, the Office of the State Auditor shall cond uct direct review of 42
directed grants to non-State entities. In carrying out this subsection, the Office 43
of the State Auditor shall conduct audits, investigations, verification audits, or 44
other examinations authorized by Article 5A of Chapter 147 of the Gen eral 45
Statutes sufficient to determine whether directed grant funds were used for 46
authorized purposes and in accordance with applicable law and grant terms. 47
(3) Scope of review. – Reviews conducted under this subsection shall extend 48
beyond confirmation that a recipient or administering State agency has 49
submitted required certifications, reports, or policies and shall include testing, 50
as the State Auditor deems appropriate, of all the following: 51
General Assembly Of North Carolina Session 2025
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a. Whether directed grant funds were used only for the purposes for 1
which they were appropriated or otherwise authorized by law. 2
b. Whether expenditures were supported by adequate documentation and 3
were properly charged to the directed grant. 4
c. Whether transactions involving officers, directors, employees, family 5
members, affiliated entities, or related parties present actual or 6
apparent conflicts of interest, self -dealing, or other misuse of public 7
funds. 8
d. Whether funds were transferred, subgranted, retained, or commingled 9
in a manner inconsistent with law, grant terms, or the purposes of the 10
appropriation. 11
e. Whether there is evidence of fraud, misrepresentation, waste, abuse, 12
or other improper governmental activity involving directed gran t 13
funds. 14
f. Whether the recipient maintained adequate internal controls to 15
safeguard directed grant funds and prevent or detect unauthorized 16
transactions. 17
(4) Selection of recipients. – Each fiscal year, the Office of the State Auditor shall 18
select directed grant recipients for review as follows: 19
a. The Office of the State Auditor shall review not less than five percent 20
(5%) of directed grant recipients with active directed grants during that 21
fiscal year. In selecting recipients for review, the Office of th e State 22
Auditor shall include recipients from multiple administering State 23
agencies and multiple grant-size tiers. 24
b. The Office of the State Auditor shall review not less than five percent 25
(5%) of recently closed directed grants selected from grants that 26
remained active or were closed out during the preceding 24 months. 27
c. The Office of the State Auditor shall employ an appropriate sampling 28
or selection methodology that is reasonable and consistent with 29
accepted auditing practices and the requirements of ( 4a) and (4b) of 30
this subsection. 31
d. The Office of the State Auditor shall review each directed grant 32
recipient identified in writing by an administering State agency or the 33
Director of the Budget upon identification of potential risks or 34
indications of improper management of funds. 35
e. Nothing in this subsection shall limit the authority of the State Auditor 36
to conduct additional reviews of directed grant recipients as otherwise 37
authorized by law. 38
(5) Direct access to information. – For reviews conducted under this subsection, 39
the Office of the State Auditor may obtain information directly from the 40
recipient or any subrecipient, contractor, affiliate, or other person or entity 41
handling directed grant funds on behalf of the recipient to the full extent 42
authorized by Article 5A of Chapter 147 of the General Statutes. The 43
administering State agency shall provide to the Office of the State Auditor, 44
upon request, copies of grant agreements, amendments, reports, payment 45
records, and other documents already in its possession relating to a selected 46
directed grant. 47
(6) Agency monitoring not sufficient. – Compliance by the recipient with 48
reporting requirements, the filing of a conflict -of-interest policy, the 49
submission of audit reports, or monitoring by the administe ring State agency 50
shall not satisfy or limit the review required by this subsection and shall not 51
General Assembly Of North Carolina Session 2025
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restrict the scope of examination undertaken by the Office of the State 1
Auditor. 2
(7) Annual report. – No later than October 15 of each year, the State Auditor shall 3
submit a report on the reviews conducted under this subsection to the Joint 4
Legislative Commission on Governmental Operations the chairs of the Senate 5
Committee on Appropriations/Base Budget, the chairs of the House 6
Appropriations Committee, and the Fiscal Research Division. The report shall 7
include all of the following: 8
a. The number of active and closed directed grant recipients and directed 9
grants eligible for review during the prior fiscal year. 10
b. The sampling and selection methodology used to select recipients and 11
grants for review. 12
c. The number and type of audits, investigations, or other examinations 13
performed. 14
d. A summary of findings, including questioned costs, unsupported 15
expenditures, internal control weaknesses, related -party transactions, 16
actual or apparent conflicts of interest, and any evidence of fraud, 17
waste, abuse, or other improper governmental activity. 18
e. The number of recipients reviewed because they were on the 19
Suspension of Funding List or were identified by an administering 20
State agency, the Office of State Budget and Management, or the 21
Director of the Budget. 22
f. Any referrals made to the Attorney General, the State Bureau of 23
Investigation, the Department of Revenue, or any other agency. 24
g. Any recommendations for statutory o r administrative changes to 25
improve oversight of directed grants. 26
(8) Public record. Notwithstanding G.S. 147-64(d), the report required by 27
subdivision (7) of this subsection is a public record pursuant to G.S. 132-1(a)." 28
29
PART XXIII. BUDGET AND MANAGEMENT 30
31
STATE FISCAL RECOVERY FUND FLEXIBILITY 2026 32
SECTION 23.1. S.L. 2025-97 reads as rewritten: 33
"… 34
"SECTION 6.9.(c) To implement subsection (b) of this section, the Director of the Budget 35
shall make nonrecurring, budget-neutral adjustments as follows: 36
(1) Reduce, on a nonrecurring basis, the 2025-2026 or 2026-2027 fiscal year net 37
General Fund appropriation for each agency receiving SFRF pursuant to this 38
section by an amount equal to the SFRF reclassified to that agency. 39
(2) Increase, on a nonrecurring basis, the net General Fund appropriation for each 40
agency from which SFRF were reclassified under this section by an amount 41
equal to the SFRF removed from that agency. 42
(3) Notwithstanding G.S. 143C-1-2(b), the net General Fund appropriations made 43
under subdivision (2) of this subsection shall be used only for the projects for 44
which SFRF were reduced under this section and shall not revert but shall 45
remain available until the earlier of project completion or June 30, 2027. 46
(4) In no event shall a project from wh ich SFRF are reclassified receive net 47
General Fund appropriations in excess of the project's unexpended SFRF 48
balance as of the date of reclassification. 49
"SECTION 6.9.(d) To reconcile project -level allocations with available SFRF balances, 50
OSBM, through NCPRO, may adjust SFRF project allocations by up to ten dollars ($10.00) per 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 119
project. Adjustments under this subsection are technical and shall not change project scope or 1
shift funds between projects. Nothing in this subsection limits or supersedes a reclas sification 2
authorized by subsection (b) of this section. 3
"SECTION 6.9.(e) No later than April 15, 2026 December 15, 2026, OSBM and NCPRO 4
shall jointly report to the Joint Legislative Commission on Governmental Operations and the 5
Fiscal Research Division on all actions taken under this section, including: 6
(1) For each agency and project meeting the revenue -loss criteria in subsection 7
(a) of this section, the project name and the amount of remaining unexpended 8
SFRF as of December 31, 2025 June 30, 2026. The report shall also identify 9
which projects are complete and have excess SFRF funds and which SFRF 10
projects need additional funds for completion. 11
(2) For each agency and project from which unexpended SFRF were reclassified, 12
the project name and the amount o f the corresponding nonrecurring net 13
General Fund appropriation provided in lieu of SFRF. (3) For each agency 14
and project receiving SFRF pursuant to the reclassification, the project name 15
and the amount of SFRF provided. The report shall also certify that all SFRF 16
were obligated on or before December 31, 2024, and that expenditures are 17
being made consistent with 31 C.F.R. Part 35 and related United States 18
Department of the Treasury guidance. 19
"SECTION 6.9.(f) The Director of the Budget shall ensure that imp lementation of this 20
section results in no change to the net General Fund appropriations in the 2025 -2026 or 21
2026-2027 fiscal year." 22
23
ADDITIONAL STATE FISCAL RECOVERY FUND FLEXIBILITY 24
SECTION 23.2.(a) Notwithstanding any provision of law to the contrary, a nd 25
subject to the conditions set out in part (b) of this section, below, the North Carolina Pandemic 26
Recovery Office (NCPRO), in consultation with the Director of the Budget, may reallocate State 27
Fiscal Recovery Funds (SFRF) appropriated by this act or any act of the General Assembly, 28
including but not limited to: 29
(a) S.L. 2021-180. 30
(b) S.L. 2021-189. 31
(c) S.L. 2022-6. 32
(d) S.L. 2022-74. 33
(e) S.L. 2023-134. 34
(f) S.L. 2024-1. 35
(g) S.L. 2024-40. 36
(h) S.L. 2024-53. 37
(i) S.L. 2024-55. 38
SECTION 23.2.(b) The funds set out in part (a) of this section may be reallocated 39
only when all of the following conditions are met: 40
(a) The appropriated funds have not been expended by September 30, 2026. 41
(b) There is a reasonable expectation that the funds will not be expended before the 42
deadline established by applicable federal law or guidance. 43
(c) The reallocation is made to support SFRF related activities authorized and receiving 44
appropriations under this act or one of the acts listed above in part (a) of this Section, and adhering 45
to Federal SFRF Expenditure Category 5 (Water, Sewer, or Broadband Infrastructure) guidance. 46
Reallocated funds shall not be used for any new activity, purpose, or program. 47
SECTION 23.2.(c) Any funds remain after the reallocation process authorized in 48
subsection (b) shall be allocated to the State Treasurer up to an amount equal to the remaining 49
unreimbursed COVID-19 related expenses incurred by the North Carolina State Health Plan for 50
Teachers and State Employees between March 3, 2021 and December 31, 2024. 51
General Assembly Of North Carolina Session 2025
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SECTION 23.2.(d) To the extent that funds reallocated pursuant to this section are 1
unappropriated, including interest accrual exceeding that which is anticipated in this act, those 2
funds are hereby appropriated and available for use pursuant to this section. 3
SECTION 23.2.(e) Reporting. – Beginning September 30, 2026, the Office of State 4
Budget and Management (OSBM) shall report to the Fiscal Research Division quarterly on the 5
reallocations made pursuant to this section in the same manner as required in S.L. 2025 -97, 6
Section 6.9.(e). 7
8
INTEREST TO SUPPORT NC PANDEMIC RECOVERY EFFORTS 9
SECTION 23.3. Any interest earned on the following is appropriated to the Office 10
of State Budget and Management (OSBM) for operations pertaining to pandemic recovery and 11
may be utilized in accordance with the requirements set out in Section 6.9 of S.L. 2025-97: 12
(a) Local Fiscal Recovery Fund, Budget Code 63009, Budget Fund 610000; 13
(b) Homeowner Assistance Fund, Budget Code 23023, Budget Fund 214150, that is 14
allowed to be retained by the State; and 15
(c) Economic Development Assistance Strategy and Tourism grant funds, Budget Code 16
23025, Budget Funds 214250 and 214251, that is allowed to be retained by the State. 17
(d) Project Fund, Budget Code 23022, Budget Fund 214102, that is allowed to be retained 18
by the state. 19
20
REMOVE DIRECTOR OF T HE BUDGET FROM APPRO VAL OF RIF SEVERANCE 21
WAGES AND RIF DISCONTINUED SERVICE RETIREMENT ALLOWANCES 22
SECTION 23.4.(a) G.S. 126-8.5(a) reads as rewritten: 23
"§ 126 -8.5. Discontinued service retirement allowance and severance wages for certain 24
State employees. 25
(a) When the Director of the Budget determines that the closing of a State institution or 26
a reduction in force will accomplish economies in the State Budget, the State employees who 27
were separated from employment as a result of the closure or reduction in force shall rece ive 28
from the last employing agency either a discontinued service retirement allowance or severance 29
wages, wages to any affected State employee, provided reemployment is not available. As used 30
in this section, "economies in the State Budget" means economies resulting from elimination of 31
a job and its responsibilities or from a lack of funds to support the job. The agency head shall 32
determine, in his or her discretion, In determining whether to pay a discontinued service 33
retirement allowance or severance wages, the Director of the Budget shall consider the 34
recommendation of the department head involved and any recommendation of after the 35
opportunity for consultation with the Director of the Office of State Budget and Management and 36
the Director of the Office of State Human Resources. Severance wages shall not be paid to an 37
employee who chooses a discontinued service retirement. Severance wages shall not be subject 38
to employer or employee retirement contributions. Severance wages shall be paid according to 39
the policies adopted by the State Human Resources Commission. 40
…." 41
SECTION 23.4.(b) This section is effective when it becomes law and applies to all 42
discontinued service retirement allowances and severance wages paid on or after that date. 43
44
ADDRESS RESPONSIBILI TIES FOR QUALIFIED E XCESS BENEFIT 45
ARRANGEMENT WHEN THE FINAL EMPLOYER OF A MEMBER IS NOT THE 46
MEMBER'S EMPLOYER FOR AVERAGE FINAL COMPENSATION 47
CALCULATIONS 48
SECTION 23.5.(a) G.S. 135-151(d1) reads as rewritten: 49
"(d1) The last employer of a payee who retires on or after August 1, 2016, and who receives 50
any supplemental benefit payment under this section shall be required to reimburse the QEBA in 51
General Assembly Of North Carolina Session 2025
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the amount of any supplemental benefit payment made to that payee. If the employer associated 1
with the payee member's last month of membership service did not report to the Retirement 2
System any compensation paid to the payee member during the period used to compute the payee 3
member's average final compensation, then that last employer of the payee shall not reimburse 4
the QEBA as described in this subsection, but instead the employer or employers who reported 5
compensation during the payee member's average final compensation period shall each reimburse 6
the QEBA in an amount equal to the employer's share of the total reimbursement required under 7
this subsection, allocated proportionally to each employer based on the total amount of 8
compensation to the payee member that each emp loyer reported during the period used to 9
compute the payee member's average final compensation. The reimbursement amount shall be 10
calculated on an annual basis every calendar year. For purposes of calculating the reimbursement 11
amount, the Board of Trustees may include a pro rata share of direct costs attributable to 12
administration of the QEBA. The total amount of reimbursement owed by The University of 13
North Carolina and UNC Health Care shall not exceed five hundred thousand dollars ($500,000) 14
annually. The Fiscal Research Division of the General Assembly shall be required to review all 15
reimbursement amounts prior to notifying an employer of the reimbursement amount owed. 16
The employer shall have 60 calendar days from the date of notification of the reimbursement 17
amount owed to pay the amount in full or the employer shall be assessed a penalty, in lieu of 18
interest, of one percent (1%) per month, or fraction thereof, that the payment is made beyond the 19
due date." 20
SECTION 23.5.(b) G.S. 128-38.10(d1) reads as rewritten: 21
"(d1) The last employer of a payee who retires on or after August 1, 2016, and who receives 22
any supplemental benefit payment under this section shall be required to reimburse the QEBA in 23
the amount of any supplemental benefit payment made to that payee. The reimbursement amount 24
shall be calculated on an annual basis every calendar year. For purposes of calculating the 25
reimbursement amount, the Board of Trustees may include a pro rata share of direct costs 26
attributable to administration of the QEBA. If the employer associated with the payee member's 27
last month of membership service did not report to the Retirement System any compensation 28
paid to the payee member during the period used to compute the payee member's average final 29
compensation, then that last employer of the payee shall not reimburse the QEBA as described 30
in this subsection, but instead the employer or employers who reported compensation during the 31
payee member's average final compensation period shall each reimburse the QEBA in an amount 32
equal to the employer's share of the total reimbursement required under this subsection, allocated 33
proportionally to each employer based on the total amount of compensation to the payee member 34
that each employer reported during the period used to compute the payee member's average final 35
compensation. The Fiscal Research Division of the General Assembly shall be required to review 36
all reimbursement amounts prior to notifying an employer of the reimbursement amount owed. 37
The employer shall have 60 calendar days from the date of notification of the reimbursement 38
amount owed to pay the amount in full or the employer shall be assessed a penalty, in lieu of 39
interest, of one percent (1%) per month, or fraction thereof, that the payment is made beyond the 40
due date." 41
SECTION 23.5.(c) This section becomes effective January 1, 2026 and applies to 42
all reimbursements assessed on or after that date under G.S. 135-151(d1) or 128 -38.10(d1) for 43
past, existing, and future retirements. 44
45
MITIGATE FEDERAL FUNDING ACTIONS 46
SECTION 23.6.(a) For the 2026 -2027 fiscal year, the Office of State Budget and 47
Management (OSBM) may use funds available in the Federal Infrastructure Match Reserve to 48
assist state agencies in mitigating the fiscal impacts of federal spending freezes, federal 49
government shutdowns, or federal spending reductions. This assistance includes, but is not 50
limited to, providing legally required personnel -related or contractual expenses resulting from 51
General Assembly Of North Carolina Session 2025
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the discontinuation or delay of federal funds that an agency cannot otherwise su pport within 1
existing resources. 2
SECTION 23.6.(b) Agencies shall submit documentation of the shortfall resulting 3
from the discontinuation or delay of federal funds to the Director of the Budget. The Office of 4
State Budget and Management (OSBM) may, at th e discretion of the Director, allocate funds 5
available to the state agency to meet current liabilities. The funds are appropriated from the 6
Federal Infrastructure Match Reserve for the purposes set out in this section, at the time the 7
Director deems such a transfer necessary. 8
SECTION 23.6.(c) To the extent possible, state agencies shall reimburse these funds 9
to OSBM. OSBM shall revert all reimbursed funds to the Federal Infrastructure Match Reserve 10
by June 30, 2027. 11
SECTION 23.6.(d) Not later than September 1, 2027, OSBM shall submit a written 12
report to the Senate Appropriations Committee on General Government and Information 13
Technology, the House of Representatives Appropriations Committee on General Government, 14
the Joint Legislative Oversight Committee o n General Government, the Joint Legislative 15
Commission on Governmental Operations, and the Fiscal Research Division which shall include 16
all of the following for each recipient of funds from OSBM: 17
(a) The name of any state agency receiving funds pursuant to in subsection (a) of this 18
section. 19
(b) The reason for the request for funds, including name of each federal program that was 20
impacted by a funding spending freeze, a federal government shutdown, or a federal spending 21
reduction, and a brief description of the impact. 22
(c) The amount of funds provided from the Federal Infrastructure Match Reserve. 23
(d) The amount of funds reimbursed to the Federal Infrastructure Match Reserve. 24
25
PAYROLL MODERNIZATION RESERVE AND OVERSIGHT BOARD 26
SECTION 23.7.(a) There is established in the General Fund a Payroll Modernization 27
Reserve (Reserve) to provide funds for the replacement of the State’s payroll and Core HR 28
systems. The State Budget Director shall reserve to the Payroll Modernization Reserve from 29
funds available in the IT Reserve the sum of twenty -five million dollars ($25,000,000) in 30
nonrecurring funds for the 2026-2027 fiscal year. Funds in the Reserve shall not revert and shall 31
remain available until expended for the purposes set forth in this section. 32
SECTION 23.7.(b) There is established the Payroll Modernization Oversight Board 33
(Board) to oversee the planning, procurement, and implementation of the replacement payroll 34
system. The Board shall consist of the following five members: 35
(1) The State Chief Information Officer, who will serve as chair. 36
(2) The State Controller. 37
(3) The State Budget Director. 38
(4) The State Treasurer. 39
(5) The Director of the Office of State Human Resources. 40
SECTION 23.7.(c) The Board shall: 41
(1) Determine the payroll functions and requirements necessary for the State’s 42
payroll system. 43
(2) Develop and issue a request for proposals (RFP) for the replacement payroll 44
system. 45
(3) Evaluate proposals and select the vendor or solution that best meets the State's 46
needs no later than July 1, 2027. 47
(4) Make all decisions by majority vote. 48
SECTION 23.7.(d) Beginning January 30, 2027, and semiannually thereafter on 49
January 30 and June 30 of each year, the Board shall report on its progress to the Joint Legislative 50
Oversight Committee on General Government. The report shall include, at a minimum, updates 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 123
on planning, procurement, implementation milestones, expenditures from the Reserve, and any 1
recommendations for legislative action. 2
3
REMOVING OBSOLETE RE PORTING REQUIREMENTS TO STREAMLINE 4
GOVERNMENT 5
SECTION 23.8.(a) The following statutes related to reporting requirements are 6
repealed: 7
(a) G.S. 150B-21.28. 8
(b) S.L. 2023-134-5.6.(j). 9
(c) G.S. 166A-19.42.(c). 10
SECTION 23.8.(b) G.S. 143C-4-6(c) reads as rewritten: 11
"(c) Fiscal Reports. – In years when the most recent enacted budget exceeds six percent 12
(6%) of State personal income, theThe Office of State Budget and Management and the Fiscal 13
Research Division of the General Assembly shall each submit an a tentative estimate of total 14
State personal income for the upcoming fiscal year to the General Assembly alongside each 15
issuance of a joint General Fund revenue forecast no later than February 1 of each year . The 16
Office and the Fiscal Research Division shall each submit a final projection of total State personal 17
income for the upcoming fiscal year to the General Assembly no later than May 1 of each year . 18
The General Assembly shall use the lower of the two final projections to calculate the limitation 19
on the size of the General Fund operating budget provided in this section." 20
SECTION 23.8.(c) G.S. 20-7.(i1) reads as rewritten: 21
"(i1) Restoration Fee. – Any person whose drivers license has been revoked pursuant to 22
the provisions of this Chapter, other than G.S. 20-17(a)(2) shall pay a restoration fee of 23
eighty-three dollars and 50 cents ($83.50). A person whose drivers license has been revoked 24
under G.S. 20-17(a)(2) shall pay a restoration fee of one hundred sixty -seven dollars and 25
twenty-five cents ($167.25). The fee shall be paid to the Division prior to the issuance to such 26
person of a new drivers license or the restoration of the drivers license. The restoration fee shall 27
be paid to the Division in addition to any and all fees which may be provided by law. This 28
restoration fee shall not be required from any licensee whose license was revoked or voluntarily 29
surrendered for medical or health reasons whether or not a medical evaluation was conducted 30
pursuant to this Chapter. The eighty -three dollars and 50 cents ($83.50) fee , and the first one 31
hundred five dollars ($105.00) of the one hundred sixty -seven dollars and twenty -five cents 32
($167.25) fee, shall be deposited in the Highway Fund. Twenty -five dollars ($25.00) of the one 33
hundred sixty-seven dollars and twenty-five cents ($167.25) fee shall be used to fund a statewide 34
chemical alcohol testing program administered by the Forensic Tests for Alcohol Branch of the 35
Chronic Disease and Injury Section of the Department of Health and Human Services. 36
Notwithstanding any other provision of law, a restoration fee assessed pursuant to this subsection 37
may be waived by the Division when (i) the restoration fee remains unpaid for more than 10 38
years from the date of assessment and (ii) the person responsible for payment of the restoration 39
fee has been issued a drivers license by the Division after the effective date of the revocation for 40
which the restoration fee is owed. The Office of State Budget and Management shall annually 41
report to the General Assembly the amount of fees deposited in the General Fund and transferred 42
to the Forensic Tests for Alcohol Branch of the Chronic Disease and Injury Section of the 43
Department of Health and Human Services under this subsection." 44
45
PART XXIV. BUDGET AN D MANAGEMENT – SPECIAL APPROPRIATIONS 46
[RESERVED] 47
48
PART XXV. OFFICE OF STATE CONTROLLER 49
50
OVERPAYMENTS AUDITS 51
General Assembly Of North Carolina Session 2025
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SECTION 25. G.S. 147-86.22(c) reads as rewritten: 1
"(c) Collection Techniques. – The State Controller, in conjunction with the Office of the 2
Attorney General, shall establish policies and procedu res to govern techniques for collection of 3
accounts receivable. These techniques may include use of credit reporting bureaus, judicial 4
remedies authorized by law, and administrative setoff by a reduction of a tax refund pursuant to 5
the Setoff Debt Collection Act, Chapter 105A of the General Statutes, or a reduction of another 6
payment, other than payroll, due from the State to a person to reduce or eliminate an account 7
receivable that the person owes the State. 8
The State Controller shall negotiate a contract with a third party to perform an audit and 9
collection process of inadvertent overpayments by State agencies to vendors as a result of pricing 10
errors, neglected rebates and discounts, miscalculated freight charges, unclaimed refunds, 11
erroneously paid excise taxes, and related errors. The third party shall be compensated only from 12
funds recovered as a result of the audit. Of the recovered funds and subject to availability, the 13
State Controller may use up to three hundred thousand dollars ($300,000) to develop and provide 14
governmental accounting education for state agency fiscal staff . Savings realized in excess of 15
costs and any funds used by the State Controller for the aforementioned purpose shall be 16
transferred from the agency to the Office of State Budget and Management and placed in a special 17
reserve account for future direction by the General Assembly. Any disputed savings shall be 18
settled by the State Controller. This paragraph does not apply to the purchase of medical services 19
by State agencies or payments used to reimburse or otherwise pay for health care services." 20
21
ELECTRONIC PAYMENT PROCESSING 22
SECTION 25.2. G.S. 147-86.22 reads as rewritten: 23
"§ 147-86.22. Statewide accounts receivable program. 24
… 25
(b) Electronic Payment. – Notwithstanding the provisions of G.S. 147-86.20 and 26
G.S. 147-86.21, this subsection applies to debts owed a community college, a local school 27
administrative unit, an area mental health, developmental disabilities, and substance abuse 28
authority, and the Administrative Office of the Courts, and to debts payable to or through the 29
office of a clerk of superior court or a magistrate, as well as to debts owed to other State agencies 30
as defined in G.S. 147-86.20. 31
The State Controller shall establish policies that allow accounts rece ivable to be payable 32
under certain conditions by electronic payment. These policies shall be established with the 33
concurrence of the State Treasurer. In addition, any policies that apply to debts payable to or 34
through the office of a clerk of superior cour t or a magistrate shall be established with the 35
concurrence of the Administrative Officer of the Courts. The Administrative Officer of the Courts 36
may also establish policies otherwise authorized by law that apply to these debts as long as those 37
policies are not inconsistent with the Controller's policies. 38
A condition of payment by electronic payment is receipt by the appropriate State agency of 39
the full amount of the account receivable owed to the State agency. A Notwithstanding the 40
provisions of this section or any other provision of law, a State agency may enter into a contract 41
with a payment processor that authorizes the processor to retain their fee for providing the 42
processing service at the time each transaction is made. The terms of any contract executed under 43
this subsection shall be approved by the State Controller with the concurren ce of the State 44
Treasurer and the Administrative Office of the Courts, as applicable. In the absence of a contract 45
with a processor to retain service fees, the State agency may charge a debtor who pays by 46
electronic payment may be required to pay any fee or charge associated with the use of electronic 47
payment. Fees fees to cover the costs incurred in accepting the payment electronically, but in no 48
event shall the debtor be required to pay a fee that is greater than four percent (4%) of the 49
electronic payment. If the State agency does not require the debtor to pay a fee associated with 50
processing electronic paymentspayments, the fee may be paid out of the General Fund and 51
General Assembly Of North Carolina Session 2025
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Highway Fund if the payment of the fee by the State is economically beneficial to the State and 1
the payment of the fee by the State has been approved by the State Controller and State Treasurer. 2
The State Controller and State Treasurer shall consult with the Joint Legislative Commission 3
on Governmental Operations before establishing policies that allow accounts receivable to be 4
payable by electronic payment and before authorizing fees associated with electronic payment to 5
be paid out of the General Fund and Highway Fund. A payment of an account receivable that is 6
made by electronic payment and is not honored by the issuer of the card or the financial institution 7
offering electronic funds transfer does not relieve the debtor of the obligation to pay the account 8
receivable. 9
… 10
(d) Annual Report. – The State Controller shall report annually to the Joint Legislative 11
Commission on Governmental Operations and the Fiscal Research Divisi on on the revenue 12
deposited into Special Reserve Account 24172 and the disbursement of that revenue." 13
14
PART XXVI. ELECTIONS [RESERVED] 15
16
PART XXVII. GENERAL ASSEMBLY [RESERVED] 17
18
PART XXVIII. GOVERNOR [RESERVED] 19
20
PART XXIX. HOUSING FINANCE AGENCY [RESERVED] 21
22
PART XXIXA. OFFICE OF STATE HUMAN RESOURCES 23
24
HUMAN CAPITAL MANAGEMENT PROJECT PHASE I IMPLEMENTATION 25
SECTION 29A.1.(a) Section 6.8(b) of S.L. 2025-97 is repealed. 26
SECTION 29A.1.(b) Section 6.8(c) of S.L. 2025-97 is repealed. 27
"… 28
"SECTION 6.8.(c) OSHR may establish one or time limited permanent positions funded by 29
this section to support the implementation and operation of the HCM system.system; any such 30
positions may begin in the 2025 -2026 fiscal year and may continue into the 2026 -2027 fiscal 31
year, but shall expire no later than June 30, 2027, and shall not be continued or converted to 32
permanent positions without further legislative authorization." 33
34
HCM PHASE I ENHANCEMENTS 35
SECTION 29A.2.(a) In implementing enhancements to Phase I of the new Human 36
Capital Management project, in order to reduce duplication of effort and increase accuracy, OSC 37
shall work with OSHR to automate a bidirectional (two-way) integration, ensuring employee data 38
is synchronized between the Workday HCM and the current Integrated HR/Payroll system. 39
40
PART XXX. DEPARTMENT OF INSURANCE 41
42
DEPARTMENT OF INSURANCE LEASE EXPENSES 43
SECTION 30.1. Section 7(a) of S.L. 2023-114 reads as rewritten: 44
"SECTION 7.(a) The General Assembly authorizes the Department of Insurance to fund, 45
with receipts or from other non -General Fund and non -State Capital and Infrastructure Fund 46
sources available to the Department, a sum not to exceed eighteen million dollars ($18,000,000) 47
to enter into a lease agreement for the temporary relocation of the Department's offices and a sum 48
not to exceed one million dollars ($1,000,000) for costs associated with the temporary relocation. 49
The lease agreement funded by the sum authorized in this subsection shall be f or a term not to 50
exceed five years, with the option to renew for two additional five-year consecutive periods. and 51
General Assembly Of North Carolina Session 2025
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shall not be renewed without prior approval from the General Assembly. The Department shall 1
complete the relocation process no later than October 15, 2023." 2
3
PART XXXI. DEPARTMEN T OF INSURANCE – INDUSTRIAL COMMISSION 4
[RESERVED] 5
6
PART XXXII. LIEUTENANT GOVERNOR [RESERVED] 7
8
PART XXXIII. MILITARY AND VETERANS AFFAIRS 9
10
CLARIFICATION OF VETERANS DEFINITIONS 11
SECTION 33.1. G.S. 143B-1213 reads as rewritten: 12
"§ 143B-1213. Definitions. 13
Except where provided otherwise, the following definitions apply in this Chapter: 14
(1) Department. – The Department of Military and Veterans Affairs. 15
(2) Secretary. – The Secretary of Military and Veterans Affairs. 16
(3) Veteran. – One of the following, as applicable. 17
a. For qualifying as a voting member of the State Board of Veterans 18
served honorably during a period of war as defined in Title 38, United 19
States Code. 20
b. For entitlement to the services of the Department of Military and 21
Veterans Affairs, a person who may be entitled to any benefits or rights 22
under the laws of the United States by reason of service in the Armed 23
Forces of the United States . under the U.S. Department of Defense 24
(Army, Marine Corps, Navy, Air Force, Space Force, National Guard) 25
and the U.S. Department of Homeland Security (Coast Guard), and the 26
reserve components thereof. 27
c. For this Chapter, unless otherwise stated "Armed Forces of the United 28
States" means the Armed Forces of the United States under the United 29
States Department of Defense (Army, Marine Corps, Navy, Air Force, 30
Space Force, National Guard) and the United States Department of 31
Homeland Security (Coast Guard), the reserve components thereof." 32
33
UPDATE NORTH CAROLIN A VETERANS HOME TRUST FUND TO R EFLECT 34
GENERAL ASSEMBLY APPROPRIATION 35
SECTION 33.2. G.S. 143B-1293 reads as rewritten: 36
"§ 143B-1293. North Carolina Veterans Home Trust Fund. 37
(a) Establishment. – A trust fund shall be established in the State treasury, for the 38
Department of Military and Veterans Affairs, to be known as the North Carolina Veterans Home 39
Trust Fund. 40
(b) Composition. – The trust fund shall consist of all funds and monies received by the 41
Veterans' Affairs Commission or the Department of Military and Vetera ns Affairs from the 42
United States, any federal agency or institution, and any other source, whether as a grant, 43
appropriation, gift, contribution, devise, or individual reimbursement, for the care and support of 44
veterans who have been admitted to a State veterans home. 45
(c) Use of Fund. – The trust fund created in subsection (a) of this section shall be used 46
by the Department of Military and Veterans Affairs to do the following: 47
(1) To pay for the care of veterans in said State veterans homes; 48
(2) To pay the general operating expenses of the State veterans homes, 49
including the payment of salaries and wages of officials and employees of 50

General Assembly Of North Carolina Session 2025
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said homes ; the Department to the extent such person nel support the 1
operations, administration, and oversight of said homes; 2
(3) To remodel, repair, construct, modernize or add improvement to buildings 3
and facilities at the homes." 4
5
AUTHORITY TO APPROVE CAPITAL PROJECTS FU NDED BY THE STATE 6
VETERANS HOME TRUST FUND 7
SECTION 33.3. G.S. 143C-8-12 reads as rewritten: 8
"§ 143C-8-12. Capital improvement projects from sources other than the General Fund. 9
… 10
(c) National Guard Projects. – Notwithstanding any other provision of this Chapter, the 11
North Carolina National Guard may approve expenditures for a capital project of the North 12
Carolina National Guard if (i) the project will be funded entirely with federal funds and (iii) any 13
operating costs associated with the project will be paid entirely with federal funds. 14
(c1) The Department of Military and Veterans Affairs – Notwithstanding any other 15
provisions of this chapter, the Department may approve State Veterans Homes capital projects 16
funded by non-general Fund monies. 17
(d) Reporting. – The Board of Governors, and the National Guard, and Department of 18
Military and Veterans Affairs shall report any expenditure made pursuant to this section to the 19
Office of State Budget and Management and to the Joint Legislative Commission on 20
Governmental Operations." 21
22
NORTH CAROLINA VETERANS CEMETERY TRUST FUND 23
SECTION 33.4. Article 14 of Chapter 143B of the General Statute is amended by 24
adding a new Section to read: 25
"§ 143B-1219. North Carolina Veterans Cemeteries Trust Fund. 26
(a) There is established the North Carolina Veterans Cemetery Trust Fund (hereinafter 27
"Fund"), a special fund within the Department of Military and Veterans Affairs. The Fund shall 28
be maintained as a special fund and shall be administered by the Department to carry out the 29
provisions of this section for the operations and maintenance of State veterans' cemeteries. Fund 30
resources may also be used to cover the projected cashflow needs of cemetery expansion projects 31
funded by grants from the U.S. Department of Veterans Affairs. Interest accruing from the 32
monies in the Fund shall be credited to the Fund. The Fund shall consist of the following sources 33
of funding: 34
(1) All interest and investment earnings received on monies in the Fund. 35
(2) Funds or monies received by the Department, the receipt of which does not 36
exclude any other source of revenue, from the U nited States, any federal 37
agency or institution, or individual reimbursement, for the support of veterans 38
cemeteries. 39
(3) Any other funds, as directed by the General Assembly. 40
(b) The Department is authorized to use up to seven hundred seventy -five thousand 41
dollars ($775,000) of the interest earned on the Fund to create up to ten positions to 42
maintain and operate the existing state veterans cemeteries. The amount allowed to 43
the Department for costs under this section may be increased as needed to ref lect 44
legislatively mandated salaryor benefit increases. 45
(c) The Department is authorized to use an additional twenty -three thousand dollars 46
($23,000) in the 2026-27 fiscal year to pay for nonrecurring costs associated with these positions 47
and maintenance costs. 48
(d) In the event annual earned interest in the Fund is insufficient to cover seven hundred 49
seventy-five thousand dollars ($775,000), the Department may withdraw additional funds from 50

General Assembly Of North Carolina Session 2025
Page 128 House Bill 1167-First Edition
the balance of the Fund so the total amount withdrawn from the balance and interest are equal to 1
seven hundred and seventy-five thousand dollars ($775,000)." 2
3
PART XXXIV. DEPARTMENT OF REVENUE 4
5
SCRAP TIRE DISPOSAL TAX 6
SECTION 34.1. G.S. 105-187.19(a) reads as rewritten: 7
"§ 105-187.19. Use of tax proceeds. 8
(a) The Secretary shall distribute the taxes collected under this Article, less the allowance 9
to the Department of Revenue for administrative expenses, in accordance with this section. The 10
Secretary may retain the cost of collection by the Department, not to exceed four hundred twenty-11
five thousand dollars ($425,000)six hundred seventy-five thousand dollars ($675,000) a year as 12
reimbursed to the Department." 13
14
WHITE GOODS DISPOSAL TAX 15
SECTION 34.2. G.S. 105-187.24 reads as rewritten: 16
"§ 105-187.24. Use of tax proceeds. 17
The Secretary shall distribute the taxes collected under this Article, less the Department of 18
Revenue's allowance for administrative expenses, in accordance with this section. The Secretary 19
may retain the Department's cost of collection, not to exceed four hundred twenty-five thousand 20
dollars ($425,000)six hundred seventy-five thousand dollars ($675,000) a year, as reimbursement 21
to the Department. 22
…." 23
24
PART XXXV. SECRETARY OF STATE [RESERVED] 25
26
PART XXXVI. TREASURER [RESERVED] 27
28
PART XXXVII. GENERAL GOVERNMENT – MISCELLANEOUS [RESERVED] 29
30
PART XXXVIII. INFORMATION TECHNOLOGY [RESERVED] 31
32
PART XXXIX. SALARIES AND BENEFITS 33
34
ELIGIBLE STATE -FUNDED EMPLOYEES AW ARDED COST-OF-LIVING 35
ADJUSTMENT/LEGISLATIVE SALARY INCREASES 36
SECTION 39.1.(a) Effective July 1, 2025, except as provided by subsection (c) of 37
this section, a person (i) whose salary is set by this Part, pursuant to the North Carolina Human 38
Resources Act or as otherwise authorized in this act and (ii) who was employed in a State-funded 39
position on June 30, 2024, is awarded a compensation adjustment as follows: 40
(1) Two percent and one-half (2.5%) effective July 1, 2025. 41
(2) As otherwise allowed or provided by law. 42
SECTION 39.1.(a1) Effective July 1, 2026, except as provided by subsection (c) of 43
this section, a person (i) whose salary is set by this Part, pursuant to the North Carolina Human 44
Resources Act or as otherwise authorized in this act and (ii) who is employed in a State -funded 45
position on June 30, 2025, is awarded a compensation adjustment as follows: 46
(1) Two percent and one-half (2.5%) effective July 1, 2026. 47
(2) As otherwise allowed or provided by law. 48
SECTION 39.1.(b) For the 2025-27 fiscal biennium, the following person s are not 49
eligible to receive the legislative salary increases provided by subsections (a) and (a1) of this 50
section: 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 129
(1) Employees of local boards of education. 1
(2) Local community college employees. 2
(3) Employees of The University of North Carolina 3
(4) Clerks of superior court compensated under G.S. 7A-101. 4
(5) Correctional employees to which Section 39.18 of this Part applies. 5
(6) Law enforcement officers to which Section 39.19.(a) of this Part applies. 6
(7) Probation and parole officers to which Section 39.20.(a) of this Part applies. 7
(8) Employees of schools operated by the Department of Health and Human 8
Services, the Department of Public Safety, and the State Board of Education 9
who are paid based on the Teacher Salary Schedule. 10
SECTION 39.1.(c) Permanent part -time employees shall receive the increase 11
authorized by this section on a prorated and equitable basis. 12
SECTION 39.1.(d) No eligible State -funded employee shall be prohibited from 13
receiving the full salary increase provided in this section solely because the employee's salary 14
after applying the legislative increase is above the maximum of the salary range prescribed by 15
the State Human Resources Commission. 16
17
STATE EMPLOYEE BONUS 18
SECTION 39.2.(a) Notwithstanding G.S. 143C-6-4, any person (i) whose salary is 19
set by Section 7A.(5 ), Section 7A.(8), Section 7A.(9) or by this Part, pursuant to the North 20
Carolina Human Resources Act, who is employed on September 30th, 2026, shall be awarded a 21
bonus for the 2026 -27 fiscal year in the amount of one thousand dollars ($1,000.00), payable 22
during the month of October 2026. 23
SECTION 39.2.(b) Employers of State employees and local education employees 24
shall provide an additional bonus of five hundred dollars ($500.00), payable during the month 25
of October 2026, to all permanent full-time State employees and local education employees who 26
are employed on September 30th, 2026, and who earn an annual salary that does not exceed 27
seventy-five thousand dollars ($75,000). 28
SECTION 39.2.(c) Notwithstanding Subsection (d) of Section 39.33, any funds 29
appropriated for bonuses in excess of the amounts required to implement the bonuses shall revert 30
and not be credited to the Pay Plan Reserve. 31
SECTION 39.2.(d) Notwithstanding G.S. 135-1(7a), the compensation bonuses 32
awarded by this section are not compensation under Article 1 of Chapter 135 of the General 33
Statutes, the Teachers' and State Employees' Retirement System. 34
SECTION 39.2.(e) The compensation bonuses awarded by this section are not part 35
of annual salary and shall be paid out separately. The compensati on bonus shall be awarded to 36
eligible permanent employees without regard to an employee's placement within the salary range, 37
including employees at the top of the salary range. The compensation bonus shall be adjusted pro 38
rata for permanent part-time employees. 39
40
GOVERNOR AND COUNCIL OF STATE 41
SECTION 39.3.(a) The salary of the Governor, as provided by G.S. 147-11(a), shall 42
remain unchanged. 43
SECTION 39.3.(b) The annual salaries for members of the Council of State, payable 44
monthly, for the 2025-27 fiscal biennium are as follows: 45
46
Council of State FY 2025-26 FY 2026-27 47
Lieutenant Governor $172,594 $176,909 48
Attorney General 172,594 176,909 49
Secretary of State 172,594 176,909 50
State Treasurer 172,594 176,909 51
General Assembly Of North Carolina Session 2025
Page 130 House Bill 1167-First Edition
State Auditor 172,594 176,909 1
Superintendent of Public Instruction 172,594 176,909 2
Agriculture Commissioner 172,594 176,909 3
Insurance Commissioner 172,594 176,909 4
Labor Commissioner 172,594 176,909 5
6
CERTAIN EXECUTIVE BRANCH OFFICIALS 7
SECTION 39.4.(a) The annual salaries, payable monthly, for the follow ing 8
executive branch officials for the 2025-27 fiscal biennium are as follows: 9
10
Executive Branch Officials FY 2025-26 FY 2026-27 11
Chairman, Alcoholic Beverage 12
Control Commission $144,365 $147,974 13
State Controller 201,022 206,048 14
Commissioner of Banks 162,028 166,079 15
Chair, Board of Review, Division 16
of Employment Security 158,931 162,904 17
Members, Board of Review, 18
Division of Employment Security 156,989 160,914 19
Chairman, Parole Commission 158,931 162,904 20
Full-Time Members of the Parole Commission 146,948 150,622 21
Chairman, Utilities Commission 180,159 184,663 22
Members of the Utilities Commission 162,028 166,079 23
Executive Director, North Carolina 24
Agricultural Finance Authority 140,590 144,105 25
State Fire Marshall 142,526 146,089 26
27
JUDICIAL BRANCH 28
SECTION 39.5.(a) The annual salaries, payable monthly, for the following judicial 29
branch officials for the 2025-27 fiscal biennium are as follows: 30
31
Judicial Branch Officials FY 2025-26 FY 2026-27 32
Chief Justice, Supreme Court $208,150 $213,354 33
Associate Justice, Supreme Court 202,747 207,816 34
Chief Judge, Court of Appeals 199,541 204,530 35
Judge, Court of Appeals 194,362 199,221 36
Judge, Senior Regular Resident Superior Court 178,606 183,071 37
Judge, Superior Court 173,353 177,687 38
Chief Judge, District Court 171,737 176,030 39
Judge, District Court 166,686 170,853 40
Chief Administrative Law Judge 148,354 152,063 41
District Attorney 171,520 175,808 42
Assistant Administrative Officer of the Courts 155,610 159,500 43
Public Defender 171,520 175,808 44
Director of Indigent Defense Services 172,779 177,098 45
SECTION 39.5.(b) The district attorney or public defender of a judicial district, with 46
the approval of the Administrative Officer of the Courts or the Commission on Indigent Defense 47
Services, respectively, shall set the salaries of assistant district attorneys or assistant public 48
defenders, respectively, in that district such that the average salaries of assistant district attorneys 49
or assistant public defenders in that district, for the 2025-27 biennium, do not exceed one hundred 50
and three thousand eight hundred thirty-one dollars ($103,831) and the minimum salary of any 51
General Assembly Of North Carolina Session 2025
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assistant district attorney or assistant public defender is at least fifty-five thousand seven hundred 1
forty-nine dollars ($55,749), effective July 1, 2025. 2
SECTION 39.5.(b1) The district attorney or public defender of a judicial district, 3
with the approval of the Administrative Officer of the Courts or the Commission on Indigent 4
Defense Services, respectively, shall set the salaries of assistant district attorneys or assistan t 5
public defenders, respectively, in that district such that the average salaries of assistant district 6
attorneys or assistant public defenders in that district, for the 2025 -27 biennium, do not exceed 7
one hundred and six thousand four hundred twenty -seven dollars ($106,427) and the minimum 8
salary of any assistant district attorney or assistant public defender is at least fifty-seven thousand 9
twenty-one dollars ($57,143), effective July 1, 2026. 10
11
CLERKS OF SUPERIOR COURT 12
SECTION 39.6.(a) Effective July 1, 2025, G.S. 7A-101(a) reads as rewritten: 13
"(a) The clerk of superior court is a full -time employee of the State and shall receive an 14
annual salary, payable in equal monthly installments, based on the number of State -funded 15
assistant and deputy clerks of cou rt as determined by the Administrative Office of Court 's 16
workload formula, according to the following schedule: 17
Assistants and Deputies Annual Salary 18
0-19 $111,726$114,519 19
20-29 123,488126,575 20
30-49 135,248138,629 21
50-99 147,010150,685 22
100+ 149,949153,698." 23
SECTION 39.6.(a1) Effective July 1, 2026, G.S. 7A-101(a) reads as rewritten: 24
"(a) The clerk of superior court is a full -time employee of the State and shall receive an 25
annual salary, payable in equal monthly installments, based on the number of State -funded 26
assistant and deputy clerks of court as determined by the Administrative Office of Court 's 27
workload formula, according to the following schedule: 28
Assistants and Deputies Annual Salary 29
0-19 $114,519$117,382 30
20-29 126,575129,739 31
30-49 138,629142,095 32
50-99 150,685154,452 33
100+ 153,698.157,540." 34
35
ASSISTANT AND DEPUTY CLERKS OF SUPERIOR COURT 36
SECTION 39.7.(a) Effective July 1, 2025, G.S. 7A-102(c1) reads as rewritten: 37
"(c1) A full-time assistant clerk or a full-time deputy clerk, and up to one full-time deputy 38
clerk serving as head bookkeeper per county, shall be paid an annual salary subject to the 39
following minimum and maximum rates: 40
Assistant Clerks and Annual Salary 41
Head Bookkeeper 42
Minimum $40,482$41,494 43
Maximum 74,79276,662 44
45
Deputy Clerks Annual Salary 46
Minimum $36,315$37,223 47
Maximum 58,740.60,209." 48
SECTION 39.7.(a1) Effective July 1, 2026, G.S. 7A-102(c1) reads as rewritten: 49
General Assembly Of North Carolina Session 2025
Page 132 House Bill 1167-First Edition
"(c1) A full-time assistant clerk or a full-time deputy clerk, and up to one full-time deputy 1
clerk serving as head bookkeeper per county, shall be paid an annual salary subject to the 2
following minimum and maximum rates: 3
Assistant Clerks and Annual Salary 4
Head Bookkeeper 5
Minimum $41,494$42,531 6
Maximum 76,66278,579 7
8
Deputy Clerks Annual Salary 9
Minimum $37,22338,154 10
Maximum 60,209.61,714." 11
12
MAGISTRATES 13
SECTION 39.8.(a) Effective July 1, 2025, G.S. 7A-171.1 reads as rewritten: 14
"§ 7A-171.1. Duty hours, salary, and travel expenses within county. 15
(a) The Administrative Officer of the Courts, after consultation with the chief district 16
judge and pursuant to the following provisions, shall set an annual salary for each magistrate: 17
(1) A full-time magistrate shall be paid the annual salary indicated in the table set 18
out in this subdivision. A full-time magistrate is a magistrate who is assigned 19
to work an average of not less than 40 hours a week during the term of office. 20
The Administrative Officer of the Courts shall designate whether a magistrate 21
is full-time. Initial appointment shall be at the entry rate. A magistrate's salary 22
shall increase to the next step every two years on the anniversary of the date 23
the magistrate was originally appointed for increases to Steps 1 through 3, and 24
every four years on the anniversary of the date the magistrate was originally 25
appointed for increases to Steps 4 through 6. 26
Table of Salaries of Full-Time Magistrates 27
Step Level Annual Salary 28
Entry Rate $47,228$48,409 29
Step 1 50,71451,982 30
Step 2 54,47555,837 31
Step 3 58,45759,918 32
Step 4 63,22864,809 33
Step 5 68,97370,697 34
Step 6 75,415.77,300." 35
SECTION 39.8.(a1) Effective July 1, 2026, G.S. 7A-171.1 reads as rewritten: 36
"§ 7A-171.1. Duty hours, salary, and travel expenses within county. 37
(a) The Administrative Officer of the Courts, after consultation with the chief district 38
judge and pursuant to the following provisions, shall set an annual salary for each magistrate: 39
(1) A full-time magistrate shall be paid the annual salary indicated in the table set 40
out in this subdivision. A full-time magistrate is a magistrate who is assigned 41
to work an average of not less than 40 hours a week during the term of office. 42
The Administrative Officer of the Courts shall designate whether a magistrate 43
is full-time. Initial appointment shall be at the entry rate. A magistrate's salary 44
shall increase to the next step every two years on the anniversary of the date 45
the magistrate was originally appointed for increases to Steps 1 through 3, and 46
every four years on the anniversary of the date the magistrate was originally 47
appointed for increases to Steps 4 through 6. 48
Table of Salaries of Full-Time Magistrates 49
Step Level Annual Salary 50
Entry Rate $48,409$49,619 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 133
Step 1 51,98253,282 1
Step 2 55,83757,233 2
Step 3 59,91861,416 3
Step 4 64,80966,429 4
Step 5 70,69772,464 5
Step 6 77,300.79,233." 6
7
LEGISLATIVE EMPLOYEES 8
SECTION 39.9.(a) Effective July 1, 2025, the annual salaries of the Legislative 9
Services Officer and of nonelected employees of the General Assembly in effect on June 30, 10
2025, shall be legislatively increased by two and one-half percent (2.5%). 11
SECTION 39.9.(a1) Effective July 1, 2026, the annual salaries of the Legislative 12
Services Officer and of nonelected employees of the General Assembly in effect on June 30, 13
2025, shall be legislatively increased by two and one-half percent (2.5%). 14
SECTION 39.9.(b) Nothing in this act limits any of the provisions of G.S. 120-32. 15
16
GENERAL ASSEMBLY PRINCIPAL CLERKS 17
SECTION 39.10.(a) Effective July 1, 2025, G.S. 120-37(c) reads as rewritten: 18
"(c) The principal clerks shall be full -time officers. Each principal clerk shall be entitled 19
to other benefits available to permanent legislative employees and shall be paid an annual salary 20
of one hundred thirty -three thousand nine hundred thirty -six dollars ($133,936) , one hundred 21
thirty-seven two hundred eighty -four ($137,284), payable monthly. Each principal clerk shall 22
also receive such additional compensation as approved by the Speaker of the House of 23
Representatives or the President Pro Tempore of the Senate, respectively, for additional 24
employment duties beyond those provided by the rules of their House. The Legislative Services 25
Commission shall review the salary of the principal clerks prior to submission of the proposed 26
operating budget of the General Assembly to the Governor and shall make appropriate 27
recommendations for changes in those salaries. Any changes enacted by the General Assembly 28
shall be by amendment to this paragraph." 29
SECTION 39.10.(a1) Effective July 1, 2026, G.S. 120-37(c) reads as rewritten: 30
"(c) The principal clerks shall be full -time officers. Each principal clerk shall be entitled 31
to other benefits available to permanent legislative employees and shall be paid an annual salary 32
of one hundred thirty seven thousand two hundred eighty-four dollars ($137,284), one hundred 33
forty thousand seven hundred sixteen dollars ($140,716), payable monthly. Each principal clerk 34
shall also receive such additional compensation as approved by the Speaker of the House of 35
Representatives or the President Pro Tempore of the Senate, respectively, for additional 36
employment duties beyond those provided by the rules of their House. The Legislative Services 37
Commission shall review the salary of the principal clerks prior to submission of the proposed 38
operating budget of the General Assembly to the Governor and shall make appropriate 39
recommendations for changes in those salaries. Any changes enacted by the General Assembly 40
shall be by amendment to this paragraph." 41
42
SERGEANTS-AT-ARMS AND READING CLERKS 43
SECTION 39.11.(a) Effective July 1, 2025, G.S. 120-37(b) reads as rewritten: 44
"(b) The sergeant-at-arms and the reading clerk in each house shall be paid a salary of five 45
hundred twenty -eight dollars ($528) five hundred forty -one dollars ($541) per week plus 46
subsistence at the same daily rate provided for members of the General Assembly, plus mileage 47
at the rate provided for members of the General Assembly for one round trip only from their 48
homes to Raleigh and return. The sergeants -at-arms shall serve during sessions of the General 49
Assembly and at such time prior to the convening of, and subsequent to adjournment or recess 50
General Assembly Of North Carolina Session 2025
Page 134 House Bill 1167-First Edition
of, sessions as may be authorized by the Legislative Services Commission. The reading clerks 1
shall serve during sessions only." 2
SECTION 39.11.(a) Effective July 1, 2026, G.S. 120-37(b) reads as rewritten: 3
"(b) The sergeant-at-arms and the reading clerk in each house shall be paid a salary of five 4
hundred forty-one dollars ($541) five hundred fifty-five dollars ($555) per week plus subsistence 5
at the same daily rate provided for members of the General Assembly, plus mileage at the rate 6
provided for members of the General Assembly for one round trip only from their homes to 7
Raleigh and return. The sergeants -at-arms shall serve during sessions of the General Assembly 8
and at such time prior to the convening of, and subsequent to adjournment or recess of, sessions 9
as may be authorized by the Legislative Services Commission. The reading clerks shall serve 10
during sessions only." 11
12
COMMUNITY COLLEGES 13
SECTION 39.12.(a) Community college personnel shall receive the following 14
cost-of-living adjustments: 15
(1) Effective July 1, 2025, the State Board of Community Colleges shall provide 16
community college faculty and non -faculty personnel with an 17
across-the-board salary increase in the amount of two and one -half percent 18
(2.5%). 19
(2) Effective July 1, 2026, the State Board of Community Colleges shall provide 20
community college faculty and non -faculty personnel with an 21
across-the-board salary increase in the amount of two and one -half percent 22
(2.5%). 23
SECTION 39.12.(b) The minimum salaries for nine -month, full -time curriculum 24
community college faculty for the 2025-2027 fiscal biennium are as follows: 25
Education Level FY 2025-26 FY 2026-27 26
Vocational Diploma/Certificate or Less $44,198 $45,303 27
Associate Degree or Equivalent 44,813 45,933 28
Bachelor's Degree 47,479 48,666 29
Master's Degree or Education Specialist 49,845 51,091 30
Doctoral Degree 53,255 54,586 31
SECTION 39.12.(c) No full-time faculty member shall earn less than the minimum 32
salary for his or her education level. The pro rata hourly rate of the minimum salary for each 33
education level shall be used to determine the minimum salary for part-time faculty members. 34
35
UNIVERSITY OF NORTH CAROLINA SYSTEM 36
SECTION 39.13.(a) Effective for the 2025-27 fiscal biennium, the annual salaries 37
of University of North Carolina SHRA employees shall be increased as provided by Section 39.1 38
of this act. 39
SECTION 39.13.(b) For the 2025 -27 fiscal biennium, the Board of Governors of 40
The University of North Carolina may provide EHRA employees a salary increase pursuant to 41
the policies adopted by the Board. Funds for EHRA compensation increases may be used for any 42
one or more of the following purposes: (i) merit p ay, (ii) across the board increases, (iii) 43
recruitment bonuses, (iv) retention increases, and (v) any other compensation increase pursuant 44
to those policies. 45
SECTION 39.13.(c) The Board of Governors of The University of North Carolina 46
shall make a report on the use of compensation increase and bonus funds to the General Assembly 47
by no later than March 1 of each year of the biennium. 48
49
CORRECTIONAL OFFICER S/YOUTH COUNSELOR TE CHNICIANS/YOUTH 50
SERVICES BEHAVIORAL SPECIALISTS – SALARY SCHEDULE 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 135
SECTION 39.14.(a) State employees serving as correctional officers in the 1
Department of Adult Correction shall be compensated at a specific pay rate on the basis of a 2
salary schedule determined according to the duration of the employee's correctional officer work 3
experience. 4
SECTION 39.14.(a1) State employees serving in the Department of Public Safety, 5
Division of Juvenile Justice and Delinquency Prevention, shall be compensated at a specific pay 6
rate set on the basis of a salary schedule determined according to the duration of the employee's 7
work experience, as follows: 8
(1) Youth Counselor Technicians shall be paid under the Correctional Officer I 9
salary schedule. 10
(2) Youth Behavioral Specialists shall be paid under the Correctional Officer 11
salary schedule. 12
(3) Youth Coun selors shall be paid under the Correctional Officer III salary 13
schedule. 14
SECTION 39.14.(b) The following annual salary schedule applies under subsections 15
(a) and (a1) of this section for the 2025-2027 fiscal biennium, effective for on July 1, 2025: 16
17
FY 2025-26 FY 2026-27 18
Experience COI COII COIII COI COII COIII 19
0 $41,383 $42,745 $45,714 $43,452 $44,882 $48,000 20
1 $44,278 $45,736 $48,915 $46,492 $48,023 $51,361 21
2 $46,937 $48,529 $51,851 $49,284 $50,955 $54,444 22
3 $49,283 $50,905 $54,443 $51,747 $53,450 $57,165 23
4 $51,253 $52,941 $56,620 $53,816 $55,588 $59,451 24
5 $52,792 $54,528 $58,319 $55,432 $57,254 $61,235 25
6+ $53,848 $55,619 $59,486 $56,540 $58,400 $62,460 26
27
STATE LAW ENFORCEMENT OFFICER SALARY SCHEDULE 28
SECTION 39.15.(a) Law enforcement officers of the State Bureau of Investigation, 29
Alcohol Law Enforcement, and State Capitol Police shall be compensated pursuant to an 30
experience-based salary schedule and shall be compensated based on the officer's respective 31
work experience pursuant to the salary schedule in subsection (b) of this section. 32
SECTION 39.15.(b) The following annual salary schedule applies under subsection 33
(a) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 2026, for 34
each respective fiscal year: 35
36
Years of Experience FY 2025-26 FY 2026-27 37
0 58,825 61,766 38
1 62,649 65,781 39
2 66,722 70,058 40
3 71,059 74,612 41
4 75,678 79,462 42
5 80,597 84,627 43
6+ 85,836 90,128 44
45
STATE HIGHWAY PATROL/SALARY SCHEDULE/INCREASE 46
SECTION 39.16.(a) Law enfor cement officers of the State Highway Patrol 47
compensated pursuant to an experience-based salary schedule shall be compensated based on the 48
officer's respective work experience pursuant to the salary schedule in subsection (b) of this 49
section. 50
General Assembly Of North Carolina Session 2025
Page 136 House Bill 1167-First Edition
SECTION 39.16.(b) The following annual salary schedule applies under subsection 1
(a) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 2026, for 2
each respective fiscal year: 3
4
Years of Experience FY 2025-26 FY 2026-27 5
0 60,500 63,525 6
1 64,433 67,655 7
2 68,620 72,051 8
3 73,081 76,735 9
4 77,831 81,723 10
5 82,889 87,033 11
6+ 88,277 92,691 12
13
PROBATION AND PAROLE OFFICERS/JUVENILE C OURT COUNSELORS – 14
SALARY SCHEDULE 15
SECTION 39.17.(a) Probation and parole officers shall be compensated pursuant to 16
the experience -based salary schedule based on the officer 's respective work experience, as 17
established in subsection (b) of this section. 18
SECTION 39.17.(a1) State employees serving in the De partment of Public Safety, 19
Division of Juvenile Justice and Delinquency Prevention, as Juvenile Court Counselors shall be 20
compensated under the probation and parole officer salary schedule. 21
SECTION 39.17.(b) The following annual salary schedule applies under subsection 22
(a) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 2026, for 23
each respective fiscal year: 24
25
Years of Experience FY 2025-26 FY 2026-27 26
0 48,374 49,946 27
1 51,518 53,192 28
2 54,869 56,652 29
3 58,434 60,333 30
4 62,233 64,256 31
5 66,278 68,432 32
6+ 70,586 72,880 33
34
STATE AGENCY TEACHERS 35
SECTION 39.18.(a) Employees of schools operated by the Department of Health 36
and Human Services, the Department of Public Safety, and the State Board of Education who are 37
paid on the Teacher Salary Schedule shall be paid as authorized by Section 8.1 of this act. 38
SECTION 39.18.(b) Employees of the School of Science and Mathematics of The 39
University of North Carolina who are paid pursuant to a salary schedule adopted by the North 40
Carolina School of Science and Math Board of Trustees shall be paid in accordance with the 41
schedule adopted by the Board. 42
43
ALL STATE -SUPPORTED PERSONNEL/FLEXIBLE A DMINISTRATION OF 44
COST-OF-LIVING ADJUSTMENTS 45
SECTION 39.19.(a) The cost-of-living adjustments authorized by this act: 46
(1) For the 2025-2026 fiscal year, shall be paid effective on July 1, 2025, and do 47
not apply to persons separated from service due to resignation, dismissal, 48
reduction in force, death, or retirement or whose last workday is prior to June 49
30, 2025. 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 137
(2) For the 2026-2027 fiscal year, shall be paid effective on July 1, 2026, and do 1
not apply to persons separated from service due to resignation, dismissal, 2
reduction in force, death, or retirement or whose last workday is prior to June 3
30, 2026. 4
SECTION 39.19.(b) The Director of the Budget is granted flexibility to administer 5
the compensation increases enacted by this act. 6
SECTION 39.19.(c) The State employer contribution rates enacted by this act for 7
retirement and related benefits may be deemed by the Director of the Budget for administrative 8
purposes to become effective after July 1 of the applicable fiscal year to provide flexibility in the 9
collection and reconciliation of salary -related contributions as required by law, provided the 10
estimated amount contributed to any affected employee benefit trust equals the amount that 11
would have been contributed to the employee benefit trust if the enacted employer contribution 12
rates had been effective on July 1 of the applicable fiscal year. 13
SECTION 39.19.(d) This section applies to all employees paid from State funds, 14
whether or not subject to or exempt from the North Carolina Human Resources Act, including 15
employees of public schools, community colleges, and The University of North Carolina. 16
SECTION 39.19.(e) Notwithstanding any provision of this Part governing 17
cost‑of‑living adjustments, the salary increases and salary schedule adjustments autho rized for 18
law enforcement officers, correctional officers, probation and parole officers, youth counselors, 19
juvenile court counselors, healthcare techs, and nurses may be applied to both filled and vacant 20
positions. These increases shall not be limited to employees employed on a specific date. 21
22
MOST STATE EMPLOYEES 23
SECTION 39.20.(a) Unless otherwise expressly provided by this part, the annual 24
salaries in effect for the following persons on June 30, 2025, and June 30, 2026, shall be 25
legislatively increased as provided by Section 39.1 of this act: 26
(1) Permanent, full -time State officials and persons whose salaries are set in 27
accordance with the State Human Resources Act. 28
(2) Permanent, full-time State officials and persons in positions exempt from the 29
State Human Resources Act. 30
(3) Permanent, part-time State employees. 31
(4) Temporary and permanent hourly State employees. 32
33
USE OF FUNDS APPROPRIATED FOR COST-OF-LIVING ADJUSTMENT/BENEFIT 34
INCREASES 35
SECTION 39.21.(a) The Office of State Budget and Management shall ensure that 36
the appropriations made in this act for cost-of-living adjustments and employee benefits are used 37
only for these purposes. 38
SECTION 39.21.(b) If the Director of the Budget determines that funds appropriated 39
to a State agency for mandated salary increases and employee benefits exceed the amount 40
required by that agency for those purposes, the Director may reallocate those funds to other State 41
agencies that received insufficient funds for required cost-of-living and benefit increases. 42
SECTION 39.21 .(c) Funds appropriated for cost -of-living adjustments and 43
employee benefit increases may not be used to adjust the budgeted salaries of vacant positions, 44
or to provide salary increases in excess of those required by the General Assembly except to 45
increase the budgeted salary of any position to the minimum of the position's salary range. 46
SECTION 39.21.(d) Any funds appropriated for cost -of-living adjustment and 47
employee benefit increases or minimum of salary range adjustments in excess of the amounts 48
required to implement the increases shall be credited to the Pay Plan Reserve. 49
SECTION 39.21.(e) No later than March 1 of each year of the biennium, the Office 50
of State Budget and Management shall report to the Joint Legislative Commission on 51
General Assembly Of North Carolina Session 2025
Page 138 House Bill 1167-First Edition
Governmental Operations on the expenditure of funds for legislatively mandated salary increases 1
and employee benefits. This report shall include at least the following information for each State 2
agency: 3
(1) The total amount of funds that the agency received for legislatively mandated 4
salary increases and employee benefits. 5
(2) The total amount of funds transferred from the agency to other State agencies 6
pursuant to subsection (b) of this section. This section of the report shall 7
identify the amounts transferred to each recipient State agency. 8
(3) The total amount of funds used by the agency for legislatively mandated salary 9
increases and employee benefits. 10
(4) The amount of funds used pursuant so subsection (c) of this section. 11
12
SALARY-RELATED CONTRIBUTIONS 13
SECTION 39.22.(a) Section 3.6.(b) of Session Law 2025-89 reads a rewritten: 14
"SECTION 3.6.(b) Effective July 1, 2025, May 1, 2026 the State's employer contribution 15
rates budgeted for retirement, health, and related benefits as a percentage of covered salaries for 16
the 2025 -2026 fiscal year for teachers and State employees, State law enforcement officers 17
(LEOs), the University and Community Colleges Optional Retirement Programs (ORPs), the 18
Consolidated Judicial Retirement System (CJRS), and the Legislative Retirement System (LRS) 19
are as set forth below: 20
Teachers State ORPs CJRS LRS 21
and State LEOs 22
Employees 23
Retirement 17.14%21.52%17.14%21.52% 6.84% 37.73%49.23% 18.26%27.02% 24
Health 7.33% 7.33% 7.33% 7.33% 7.33% 25
Disability 0.07% 0.07% 0.07% 0.00% 0.00% 26
Death 0.13% 0.13% 0.00% 0.00% 0.00% 27
NC 401(k) 0.00% 5.00% 0.00% 0.00% 0.00% 28
29
Total Contribution 30
Rate 24.67%29.41%29.67%34.41%14.24% 45.06%56.92% 25.59%34.71% 31
The rate for health includes two and four -tenths percent (2.40%) for the Public Employee 32
Health Benefit Fund and four and ninety-three hundredths percent (4.93%) for the Retiree Health 33
Benefit Fund." 34
SECTION 39.22.(b) Notwithstanding G.S. 135-8(d)(3a), effective July 1, 2026, the 35
State's employer contribution rates budgeted for retirement and related benefits as a percentage 36
of covered salaries for the 2025 -26 fiscal year for teachers and State employees, State law 37
enforcement officers (LEOs), the University and Community Colleges Optional Retirement 38
Programs (ORPs), the Consolidated Judicial Retirement System (CJRS), and the Legislative 39
Retirement System (LRS) are as set forth below: 40
Teachers 41
and State State 42
Employees LEOs ORPs CJRS LRS 43
Retirement 17.87% 17.87% 6.84% 42.11% 19.40% 44
Disability 0.07% 0.07% 0.07% 0.00% 0.00% 45
Death 0.13% 0.13% 0.00% 0.00% 0.00% 46
Retiree Health 7.69% 7.69% 7.69% 7.69% 7.69% 47
NC 401(k) 0.00% 5.00% 0.00% 0.00% 0.00% 48
49
Total Contribution 50
Rate 25.76% 30.76% 14.60% 49.80% 27.09% 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 139
The rate for health includes two and two -tenths percent (2.20%) for the Public Employee 1
Health Benefit Fund and fiv e and forty-nine hundredths percent (5.49%) for the Retiree Health 2
Benefit Fund. 3
SECTION 39.22.(c) Effective July 1, 2026, the annual employer contributions for 4
the 2026-2027 fiscal year, payable monthly, by the State to the North Carolina State Health Plan 5
for Teachers and State Employees for each covered employee is a maximum of eight thousand 6
nine hundred twenty-five dollars ($8,925). 7
8
PROVIDE SUPPLEMENT F OR RETIREES OF THE T EACHERS' AND STATE 9
EMPLOYEES' RETIREMEN T SYSTEM, THE CONSOL IDATED JUDICIAL 10
RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT SYSTEM 11
SECTION 39.23.(a) G.S. 135-5 is amended by adding new subsections to read: 12
"… 13
(aaaa) After May 1, 202 6, but on or before June 30 , 20 26, a onetime cost of living 14
supplement payment shall be made to or on account of beneficiaries who are living as of May 1, 15
2026, and whose retirement commenced on or before May 1, 2026. The payment shall be two 16
and one-half percent (2.5%) of the beneficiary's annual retirement allowance payable as of May 17
1, 2026, and shall not be prorated for date of retirement commencement. If the beneficiary dies 18
before the payment is made, then the payment shall be payable to the member's legal 19
representative. No benefici ary shall be deemed to have acquired a vested right to any future 20
supplemental payments. 21
(bbbb) After September 1, 2026, but on or before October 31, 2026, a onetime cost of living 22
supplement payment shall be made to or on account of beneficiaries who are living as of 23
September 1, 2025, and whose retirement commenced on or before September 1, 2025. The 24
payment shall be two and one -half percent (2 .5%) of the beneficiary's annual retirement 25
allowance payable as of September 1, 2025, and shall not be prorated for date of retirement 26
commencement. If the beneficiary dies before the payment is made, then the payment shall be 27
payable to the member's legal representative. No beneficiary shall be deemed to have acquired a 28
vested right to any future supplemental payments. 29
…." 30
SECTION 39.23.(b) G.S. 135-65 is amended by adding a new subsection to read: 31
"… 32
(ll) After May 1, 2026 , but on or before June 30 , 202 6, a onetime cost of living 33
supplement payment shall be made to or on account of beneficiaries who are living as of May 1, 34
2026, and whose retirement commenced on or before May 1, 2026. The payment shall be two 35
and one-half percent (2.5%) of the beneficiary's annual retirement allowance payable as of May 36
1, 2026, and shall not be prorated for date of retirement commencement. If the beneficiary dies 37
before the payment is made, then the payment shall be payable to the member's legal 38
representative. No beneficiary shall be deemed to have acquired a vested right to any future 39
supplemental payments. 40
(mm) After September 1, 2026, but on or before October 31, 2026, a onetime cost of living 41
supplement payment shall be made to or on account of beneficiaries who are living as of 42
September 1, 2025, and whose retirement commenced on or before September 1, 2025. The 43
payment sh all be two and one -half percent (2 .5%) of the beneficiary's annual retirement 44
allowance payable as of September 1, 2025, and shall not be prorated for date of retirement 45
commencement. If the beneficiary dies before the payment is made, then the payment shall be 46
payable to the member's legal representative. No beneficiary shall be deemed to have acquired a 47
vested right to any future supplemental payments." 48
SECTION 39.23.(c) G.S. 120-4.22A is amended by adding a new subsection to read: 49
"… 50
General Assembly Of North Carolina Session 2025
Page 140 House Bill 1167-First Edition
(ff) In accordance with subsection (a) of this section, after May 1, 2026, but on or before 1
June 30, 2026, a onetime cost of living supplement payment shall be made to or on account of 2
beneficiaries who are living as of May 1, 2026, and whose retirement commenced on or be fore 3
May 1, 2026. The payment shall be two and one-helf percent (2.5%) of the beneficiary's annual 4
retirement allowance payable as of May 1, 2026, and shall not be prorated for date of retirement 5
commencement. If the beneficiary dies before the payment is made, then the payment shall be 6
payable to the member's legal representative. No beneficiary shall be deemed to have acquired a 7
vested right to any future supplemental payments. 8
(gg) In accordance with subsection (a) of this section, after September 1, 202 6, but on or 9
before October 31, 202 6, a onetime cost of living supplement payment shall be made to or on 10
account of beneficiaries who are living as of September 1, 2025, and whose retirement 11
commenced on or before September 1, 2025. The payment shall be tw o and one-half percent 12
(2.5%) of the beneficiary's annual retirement allowance payable as of September 1, 2025, and 13
shall not be prorated for date of retirement commencement. If the beneficiary dies before the 14
payment is made, then the payment shall be pay able to the member's legal representative. No 15
beneficiary shall be deemed to have acquired a vested right to any future supplemental 16
payments." 17
18
PART XL. CAPITAL 19
20
GENERAL FUND CAPITAL APPROPRIATIONS/INTRODUCTION 21
SECTION 40.1. The appropriations made by the 2026 General Assembly for capital 22
improvements are for constructing, repairing, or renovating State buildings, utilities, and other 23
capital facilities, for acquiring sites for them where necessary, and for acquiring buildin gs and 24
land for State government purposes. 25
26
ADJUSTMENTS TO THE STATE CAPITAL AND INFRASTRUCTURE FUND 27
SECTION 40.2.(a) G.S. 143C-3-5(b) reads as rewritten: 28
"§ 143C-3-5. Budget recommendations and budget message. 29
… 30
(b) Odd-Numbered Years. – In odd-numbered years the budget recommendations shall 31
include the following components: 32
(1) A Recommended State Budget setting forth goals for improving the State with 33
recommended expenditure requirements, funding sources, and performance 34
information for each State government program and for each proposed capital 35
improvement. The Recommended State Budget may be presented in a format 36
chosen by the Director, except that the Recommended State Budget shall 37
clearly distinguish program base budget requirements, program reducti ons, 38
program eliminations, changes in program fund sources, program expansions, 39
and new programs, and shall explain all proposed capital improvements in the 40
context of the Six -Year Capital Improvements Plan and as required by 41
G.S. 143C-8-6. 42
(1a) The Govern or's Recommended State Budget shall include a base budget, 43
which shall be presented pursuant to subdivision (2) of this subsection. 44
(2) A Recommended Base Budget showing, for each budget code and purpose or 45
program in State government, accounting detail co rresponding to the 46
Recommended State Budget. 47
a. The Recommended Base Budget shall employ the North Carolina 48
Accounting System Uniform Chart of Accounts adopted by the State 49
Controller to show both uses and sources of funds and shall display in 50
separate parallel columns all of the following: (i) actual expenditures 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 141
and receipts for the most recent fiscal year for which actual 1
information is available, (ii) the certified budget for the preceding 2
fiscal year, (iii) the currently authorized budget for the preceding fiscal 3
year, (iv) program base budget requirements for each fiscal year of the 4
biennium, (v) proposed expenditures and receipts for each fiscal year 5
of the biennium, and (vi) proposed increases and decreases. 6
b. The Recommended Base Budget shall include detailed information on 7
recommended expenditures for capital improvements as required by 8
G.S. 143C-8-6. 9
c. The Recommended Base Budget shall include accurate projections of 10
receipts, expenditures, and fund balances. Estimated receipts, 11
including tuition collected by university or community college 12
institutions, shall be adjusted to reflect actual collections from the 13
previous fiscal year, unless the Director recommends a change that 14
will result in collections in the budget year that differ from prior yea r 15
actuals, or the Director otherwise determines there is a more 16
reasonable basis upon which to accurately project receipts. If receipts 17
are projected to decrease, the corresponding expenditure shall be 18
decreased in a like amount. Revenue and expenditure de tail provided 19
in the Budget Support Document shall be no less detailed than the two-20
digit level in the North Carolina Accounting System Uniform Chart of 21
Accounts as prescribed by the State Controller. 22
d. The Recommended Base Budget shall clearly identify a ll proposed 23
expenditures supported by existing or proposed appropriations, 24
including statutory appropriations. 25
(3) A recommended Current Operations Appropriations Act that makes 26
appropriations for each fiscal year of the upcoming biennium for the operating 27
and capital expenses of all State agencies as contained in the Recommended 28
State Budget. 29
(4) The biennial State Information Technology Plan as outlined in Part 2 of 30
Article 15 of Chapter 143B of the General Statutes to be consistent in 31
facilitating the goals outlined in the Recommended State Budget. 32
(5) A list of budget adjustments made during the prior fiscal year pursuant to 33
G.S. 143C-6-4 that are included in the proposed base budget for the upcoming 34
fiscal year. The list of budget adjustments shall identify the revision number, 35
revision type, revision title, the purpose or programs affected, and the amount 36
of funds moving between the purpose or programs. 37
(6) The Governor's Recommended State Budget shall include a transfer to the 38
Savings Reserve of fifteen percent (15%) of the estimated growth in State tax 39
revenues that are deposited in the General Fund for each fiscal year of the 40
upcoming biennium. This subdivision applies only if, and to the extent that, 41
the balance of the Savings Reserve remains below the recommended Savings 42
Reserve balance developed pursuant to G.S. 143C-4-2(f). 43
(7) The Governor's Recommended State Budget shall include a transfer to the 44
State Capital and Infrastructure Fund of four percent (4%) of the estimated net 45
State tax revenues that are deposited in the General Fund for each fiscal year 46
of the upcoming biennium. 47
…." 48
SECTION 40.2.(b) G.S. 143C-4-3.1(b) reads as rewritten: 49
"§ 143C-4-3.1. State Capital and Infrastructure Fund. 50
… 51
General Assembly Of North Carolina Session 2025
Page 142 House Bill 1167-First Edition
(b) Creation and Source of Funds. – The State Capital and Infrastructure Fund (the Fund) 1
is established as a special fund in the General Fund to be administered by the Office of State 2
Budget and Management to carry out the provisions of this section. With the exception of debt 3
service obligations, appropriations from the Fund may be administered by other State agencies 4
as deemed necessary by the Office of State Budget and Management. Interest and investment 5
earnings received on monies in the Fund shall be credited to the Fund. The Fund shall consist of 6
the following additional sources: 7
(1) The following amounts transferred from the General Fund at the beginning of 8
the applicable fiscal year: 9
a. For the 2021 -2022 fiscal year, the sum of one billion three hundred 10
million dollars ($1,300,000,000). 11
b. For the 2022 -2023 fiscal year, the sum of one billion three hundred 12
sixty-five million five hundred thousand dollars ($1,365,500,000). 13
c. For the 2023 -2024 fiscal year, the sum of one billion four hundred 14
twelve million five hundred ninety-two thousand five hundred dollars 15
($1,412,592,500). 16
d. For the 2024 -2025 fiscal year, the sum of one billion four hundred 17
sixty-one million three hundred thirty -three thousand two hundred 18
thirty-eight dollars ($1,461,333,238). 19
e. For the 2025 -2026 fiscal year, the sum of one billion one hundred 20
twenty million dollars ($1,120,000,000). 21
f. For each fiscal year after the 2025‑2026 fiscal year, the transfer shall 22
be increased three and one‑half percent (3.5%) over the amount 23
required under this subdivision for the preceding fiscal year. For each 24
fiscal year after the 2025-2026 fiscal year, the transfer shall be equal 25
to the greater of the sum sufficient amount needed for annual debt 26
service, ongoing projects, and personnel costs funded by the Fund less 27
the cash balance in the Fund and anticipated interest earnings, or zero. 28
…." 29
30
CAPITAL APPROPRIATIONS/STATE CAPITAL AND INFRASTRUCTURE FUND 31
SECTION 40.3. This subsection authorizes the capital projects listed in the 32
Committee Report, and appropriates funding from the State Capital and Inf rastructure Fund to 33
the Office of State Budget and Management for the 2026 -27 fiscal year based upon projected 34
cash flow needs for the authorized projects. The amounts authorized in this subsection represent 35
the maximum amounts of funding from the State Ca pital and Infrastructure Fund that may be 36
expended on each project. An additional action by the General Assembly is required to increase 37
the maximum authorization for any of the projects listed. 38
39
CAPITAL IMPROVEMENT & REPAIRS AND RENOVATIONS APPROPRIATIONS 40
SECTION 40.3.(a) The following agency capital improvement projects have been 41
assigned a project code for reference to allocations in this Part, past allocations, and for intended 42
project support by the General Assembly for future fiscal years: 43
44
Agency Capital Improvement Project Project Code 45
Department of Agriculture and Consumer Services 46
Raleigh State Farmers Market–Improvements DACS23-3 47
D-6 HQ (Cumberland Co.)–Maintenance Shop Replacement DACS23-7 48
Research Stations–New Maintenance Shop Facilities DACS23-8 49
Piedmont Research Station–Bridge DACS23-9 50
Research Stations–Multipurpose Facilities DACS23-10 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 143
NCFS–New County Offices, Region 3 DACS23-11 1
2
Department of Natural and Cultural Resources 3
Fort Fisher Aquarium–Aquarium Expansion DNCR21-5 4
NC Museum of History–Expansion DNCR21-13 5
NC Museum of Art at Winston-Salem/SECCA DNCR23-2 6
Zoo– 7
New Aviary DNCR23-1 8
Modular Staff Offices DNCR26-1 9
Park Security and Safety DNCR26-2 10
State Parks– 11
Access Areas DNCR26-3 12
Stone Mountain New Visitor Center DNCR26-4 13
State Historic Sites– 14
Maintenance and Service Facilities DNCR26-5 15
African American Monument at the State Capitol DNCR26-6 16
17
Department of Health and Human Services 18
Walter B. Jones–New Medical Office Bldg. DHHS23-1 19
Broughton Hospital–New Maintenance & Warehouse Facility DHHS23-2 20
Cherry Hospital–New Maintenance Bldg. DHHS23-3 21
O'Berry Neuro-Medical Treatment Center DHHS26-1 22
NC State Laboratory DHHS26-2 23
Raleigh Medical Examiner's Office Expansion DHHS26-3 24
25
Department of Environmental Quality 26
Water Resource Development Grant– 27
Tar-Pamlico Flood Mitigation DEQ26-1 28
Carolina Beach Storm Mitigation DEQ26-2 29
Kure Beach Storm Mitigation DEQ26-3 30
Wrightsville Beach Storm Mitigation DEQ26-4 31
Ocean Isle Storm Mitigation DEQ26-5 32
Holden Beach Storm Mitigation DEQ26-6 33
Oak Island Storm Mitigation DEQ26-7 34
B. Everette Jordan Reservoir DEQ26-8 35
State and Local Projects DEQ26-9 36
Environmental Quality Program DEQ26-10 37
38
Department of Administration 39
State Government Executive Headquarters DOA22-1 40
Department of Instruction Building Renovation DOA22-3 41
Service Campus DOA23-1 42
State Agency Lease DOA23-2 43
Archdale Building Demolition DOA23-3 44
Caswell Square Demolition DOA23-4 45
Parking Deck–Wilmington Street DOA23-5 46
47
Department of Adult Correction 48
Institution Roof Systems49
DAC26-50
1 51
General Assembly Of North Carolina Session 2025
Page 144 House Bill 1167-First Edition
Institution Interior Life Safety Fire Alarm Systems1
DAC26-2
2 3
HVAC Enhancements4
DAC26-5
3 6
7
Department of Public InstructionNorth Carolina School for the Deaf 8
NC School for the Deaf 9
Superintendent's House DPI25-1 10
McCord Student Union Building Renovation NCSD26-1 11
12
Eastern North Carolina School for the Deaf 13
Eagles Hall Renovation ENCSD26-1 14
Vestal Hall and McAdams Hall Life Safety Upgrades ENCSD26-2 15
16
Governor Morehead School 17
Boiler Plant Replacement GMS26-1 18
19
Department of Public Instruction 20
Center for the Advancement of Teaching– 21
Ocracoke Building Expansion DPI26-1 22
Cullowhee Residence Halls Renovation DPI26-2 23
24
Department of Insurance 25
Office of State Fire Marshal 26
Land Development & Training Center DOI21-1 27
28
Department of Public Safety 29
Samarcand– 30
Live Fire Training Building DPS21-2 31
Safer Schools Training Academy DPS21-5 32
State Highway Patrol– 33
Viper Building DPS21-6 34
Auditorium DPS23-3 35
Training Academy Facilities Enhancement–Phases 3-6 DPS23-4 36
Cadet Dormitory 1 DPS23-7 37
Juvenile Justice– 38
Richmond YDC DPS21-1 39
New Youth Detention Center DPS23-1 40
Cabarrus–New Modular Office DPS23-6 41
National Guard– 42
NCNG Matching Fund NG23-1 43
Ballentine Building NG23-2 44
Constable Building NG23-3 45
Rocky Mount Complex/MILCON NG23-4 46
Special Forces Complex NG23-5 47
Louisburg Readiness Center NG23-9 48
Statewide Standby Generators NG26-1 49
Kinston Readiness Center NG26-2 50
Morganton Readiness Center NG26-3 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 145
1
State Bureau of Investigation 2
Logistics Building–Phase 2 SBI26-1 3
Data Center Security Improvements SBI26-2 4
5
Department of Military and Veterans Affairs 6
Fayetteville State Veterans Home DMVA26-1 7
8
General Assembly 9
Education Campus Project10
NCGA21-11
3 12
Education Campus Parking Deck13
NCGA23-14
1 15
16
Department of Transportation 17
North Carolina Global TransPark Authority– 18
Aircraft Maintenance Repair & Overhaul Facility TRAN23-1 19
20
The University of North Carolina 21
Appalachian State University– 22
Peacock Hall/Business23
UNC/ASU21-24
1 25
Innovation Campus26
UNC/ASU21-27
2 28
Hickory Campus29
UNC/ASU22-30
1 31
Walker Hall –Interior Renovation32
UNC/ASU23-33
1 34
University of North Carolina at Charlotte– 35
Smith Hall–Comprehensive Renovation UNC/CLT23-1 36
Colvard Hall–Comprehensive Renovation UNC/CLT23-2 37
University of North Carolina at Chapel Hill– 38
Gardner Hall–Comprehensive Renovation UNC/CH23-1 39
Elizabeth City State University– 40
Sky Bridge UNC/ECS21-2 41
Infrastructure Repairs–Phase 3 UNC/ECS23-1 42
Jenkins Hall/Dixon Hall–Labs/Classroom/Bldg. Renovation UNC/ECS23-2 43
Safety & Security UNC/ECS25-1 44
East Carolina University– 45
Brody School of Medicine UNC/ECU21-1 46
Howell Science Building North–Comprehensive Renovation UNC/ECU23-1 47
Leo Jenkins Building/Health Sciences–Comprehensive Renovation UNC/ECU23-2 48
Medical Examiner Office UNC/ECU23-3 49
Fayetteville State University– 50
Butler Targeted Renovation UNC/FSU23-1 51
General Assembly Of North Carolina Session 2025
Page 146 House Bill 1167-First Edition
H.L. Cook Building Renovation UNC/FSU23-2 1
North Carolina Agricultural & Technical State University– 2
Marteena Hall–Renovation, Phase 2 UNC/A&T23-1 3
Health and Human Sciences Bldg. UNC/A&T23-2 4
North Carolina Central University– 5
Dent Building–Comprehensive Renovation UNC/NCC23-1 6
Edmonds Classroom Building–Comprehensive Renovation UNC/NCC23-2 7
University Theater Renovation UNC/NCC23-3 8
North Carolina State University– 9
Mann Hall–Renovation, Phase 2 UNC/NCS23-1 10
Dabney Hall–Renovation, Phase 2 UNC/NCS23-2 11
Polk Hall–Renovation, Phase 2 UNC/NCS23-3 12
Veterinary School–Large Animal Hospital UNC/NCS23-4 13
Engineering Classroom Building UNC/NCS23-5 14
Advanced Research & Test Reactor UNC/NCS23-6 15
Poe Hall UNC/NCS25-1UNC/NCS24-1 16
North Carolina School of Science and Math– 17
Durham Campus 18
Renovation of Residence Halls UNC/SSM23-2 19
Academic Commons Addition UNC/SSM23-4 20
Temporary Housing UNC/SSM25-1 21
University of North Carolina at Asheville– 22
Lipinsky Hall–Comp. Modernization/Addition UNC/AVL23-1 23
Carol Belk Theatre UNC/AVL25-1 24
University of North Carolina at Charlotte 25
Smith Hall–Comprehensive Renovation UNC/CLT23-1 26
University of North Carolina at Greensboro– 27
Moore Building–Renovation UNC/GBO23-1 28
University of North Carolina at Pembroke– 29
Health Sciences Center UNC/PEM21-1 30
Givens Performing Arts Center UNC/PEM23-1 31
University of North Carolina School of the Arts– 32
Stevens Center Renovation–Phase 2 UNC/SA23-1 33
New High School Residence Hall UNC/SA23-2 34
University of North Carolina at Wilmington– 35
Cameron Hall–Comprehensive Renovation/Expansion UNC/WIL23-1 36
Kenan Auditorium–Comprehensive Renovation/Expansion UNC/WIL23-2 37
DeLoach Hall–Modernization UNC/WIL23-3 38
Health Education/I.S.A.T. Building UNC/WIL23-4 39
Western Carolina University– 40
Replacement Engineering Building41
UNC/WCU23-42
1 43
Winston-Salem State University– 44
K.R. Williams Auditorium UNC/WSS21-1 45
Eller Hall–Renovation & Elevator Addition UNC/WSS23-1 46
Pegram Hall–Renovation & Elevator Addition UNC/WSS23-2 47
PBS North Carolina UNC/PBS23-1 48
UNC Board of Governors– 49
UNC Lease Funds UNC/BOG21-1 50
NC Care Health Clinics UNC/BOG23-1 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 147
NC Care Hospital Investment UNC/BOG23-2 1
Children's Hospital UNC/BOG23-3 2
Systems Office–Project Management Personnel UNC/BOG25-1 3
4
Repairs and Renovations–The University of North Carolina UNC/R&R21 5
Repairs and Renovations–State Agencies (non-UNC) R&R21 6
SCIF-Related Personnel7
PERS28
1 9
Wildlife Resources Commission–Setzer Hatchery Revision WRC23-1 10
SECTION 40.3.(b) This subsection authorizes the following capital projects in the 11
2025-2027 fiscal biennium based upon projected cash flow needs for the authorized projects. The 12
authorizations provided in this subsection r epresent the maximum amount of funding from the 13
State Capital and Infrastructure Fund that may be expended on each project and do not reflect 14
authorizations from other non-State Capital and Infrastructure Fund sources. An additional action 15
by the General A ssembly is required to increase the maximum authorization for any of the 16
projects listed: 17
Capital Improvements– 18
State Capital and Previous New/Updated 19
Infrastructure Fund Project Authorization Project Authorization 20
DEQ26-1 N/A $8,000,000 21
DEQ26-2 N/A 3,320,250 22
DEQ26-3 N/A 6,257,230 23
DEQ26-4 N/A 1,889,462 24
DEQ26-5 N/A 1,976,154 25
DEQ26-6 N/A 125,000 26
DEQ26-7 N/A 400,000 27
DEQ26-8 N/A 437,994 28
DEQ26-9 N/A 6,000,000 29
DEQ26-10 N/A 4,000,000 30
DHHS23-1 1,352,000 2,652,000 31
DHHS23-2 5,983,000 17,519,339 32
DHHS23-3 5,405,000 18,803,000 33
DHHS26-1 N/A 24,848,348 34
DHHS26-2 N/A 6,000,000 35
DHHS26-3 N/A 41,128,337 36
DNCR21-5 45,000,000 52,000,00 37
DNCR23-2 15,000,000 19,400,000 38
DNCR26-1 N/A 5,800,000 39
DNCR26-2 N/A 5,300,000 40
DNCR26-3 N/A 8,082,500 41
DNCR26-4 N/A 10,662,000 42
DNCR26-5 N/A 11,500,000 43
DNCR26-6 N/A 5,000,000 44
DAC26-1 N/A 49,321,016 45
DAC26-2 N/A 60,464,040 46
DAC26-3 N/A 12,480,000 47
NCSD26-1 N/A 7,500,000 48
ENCSD26-1 N/A 21,500,000 49
ENCSD26-2 N/A 9,700,000 50
GMS26-1 N/A 8,405,180 51
General Assembly Of North Carolina Session 2025
Page 148 House Bill 1167-First Edition
NCGA21-3 $320,000,000 $331,300,000341,400,00 1
DPI25-1 N/A 2,500,000 2
DPI26-1 N/A 13,905,882 3
DPI26-2 N/A 10,000,000 4
DPS21-1 10,702,952 14,168,707 5
DPS21-2 1,831,000 4,265,320 6
DPS21-5 4,170,000 40,390,000 7
DPS21-6 7,139,374 12,741,749 8
DPS23-3 35,000,000 63,785,000 9
DPS23-6 690,000 1,349,000 10
DPS23-7 43,336,785 84,103,000 11
DPS23-3 35,000,000 53,466,000 12
DPS23-7 43,336,785 72,572,000 13
NG23-1 24,000,000 28,000,000 14
NG23-2 12,500,000 13,300,000 15
NG23-3 16,428,582 18,678,582 16
NG26-1 N/A 5,000,000 17
NG26-2 N/A 8,800,000 18
NG26-3 N/A 6,600,000 19
SBI26-1 N/A 33,459,000 20
SBI26-2 N/A 3,318,000 21
DMVA26-1 N/A 10,000,000 22
DOA22-1 88,000,000 01,400,000 23
DOA23-1 33,744,000 33,171,600 24
DOA23-5 45,000,000 57,200,000 25
UNC/ASU21-1 40,000,000 45,000,000 26
UNC/ASU21-2 54,000,000 74,000,000 27
UNC/ECS21-2 2,500,000 7,500,000 28
UNC/ECS25-1 N/A 12,000,000 29
UNC/NCC23-2 12,999,424 19,499,424 30
UNC/NCS23-1 30,000,000 40,000,000 31
UNC/NCS23-6 3,000,000 16,000,000 32
UNC/NCS24-1 5,000,000 185,000,000 33
UNC/AVL23-1 26,150,000 30,150,000N/A 34
UNC/AVL25-1 N/A 3,000,000 35
UNC/SSM23-2 28,988,042 43,988,042 36
UNC/SSM25-1 N/A 2,180,000 37
UNC/PEM23-1 61,000,000 131,004,985 38
UNC/WIL24-123-4 8,000,000 83,000,000 39
UNC/WCU23-1 95,300,000 157,900,000 40
UNC/BOG23-2 150,000,000 0 41
UNC/BOG23-3 319,746,392 216,246,392 42
UNC/BOG25-1 N/A 4,000,000 43
44
SIX-YEAR INTENDED PROJECT ALLOCATION SCHEDULE 45
SECTION 40.4. It is the intent of the General Assembly to fund capital improvement 46
projects on a cash flow basis and to plan for future project funding based upon projected 47
availability in the State Capital and Infrastructure Fund. Nothing in this section shall be construed 48
(i) to appropriate funds or (ii) as an obligation by the General Assembly to appropriate funds for 49
the projects listed in future years. The following schedule lists capital improvement projects that 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 149
will begin or be completed in fiscal years outside of the 2025-2027 fiscal biennium and estimated 1
amounts (in thousands) needed for completion of those projects: 2
3
Project Code FY25-26 FY26-27 FY27-28 FY28-29 FY29-30 FY30-31 4
5
PERS21 3,154.9 3,154.9 3,154.9 3,154.9 3,154.9 3,154.9 6
UNC/R&R21 200,000 300,000 200,000 200,000 200,000 200,000 7
R&R21 200,000 300,000 200,000 200,000 200,000 200,000 8
DACS23-3 N/A 2,000 4,000 4,000 N/A N/A 9
DACS23-7 N/A 4,000 N/A N/A N/A N/A 10
DACS23-8 N/A 2,000 1,000 1,000 1,000 N/A 11
DACS23-9 N/A 750 N/A N/A N/A N/A 12
DACS23-10 N/A 2,000 2,000 2,200 N/A N/A 13
DACS23-11 N/A 1,500 1,500 N/A N/A N/A 14
DEQ26-1 N/A 4,000 4,000 N/A N/A N/A 15
DEQ26-2 N/A 3,320.25 N/A N/A N/A N/A 16
DEQ26-3 N/A 3,128.62 3,128.62 N/A N/A N/A 17
DEQ26-4 N/A 1,889.46 N/A N/A N/A N/A 18
DEQ26-5 N/A 1,976.15 N/A N/A N/A N/A 19
DEQ26-6 N/A 125 N/A N/A N/A N/A 20
DEQ26-7 N/A 400 N/A N/A N/A N/A 21
DEQ26-8 N/A 437.99 N/A N/A N/A N/A 22
DEQ26-9 N/A 3,000 3,000 N/A N/A N/A 23
DEQ26-10 N/A 2,000 2,000 N/A N/A N/A 24
DNCR21-5 N/A 20,000 20,000 N/A N/A N/A 25
DNCR21-13 86,800 30,950 N/A N/A N/A N/A 26
DNCR23-1 N/A 30,000 24,000 N/A N/A N/A 27
DNCR23-2 N/A 4,400 N/A N/A N/A N/A 28
DNCR26-1 N/A 1,000 4,800 N/A N/A N/A 29
DNCR26-2 N/A 5,300 N/A N/A N/A N/A 30
DNCR26-3 N/A 8,082.5 N/A N/A N/A N/A 31
DNCR26-4 N/A 1,000 9,662 N/A N/A N/A 32
DNCR26-5 N/A 2,000 9,500 N/A N/A N/A 33
DNCR26-6 N/A 5,000 N/A N/A N/A N/A 34
DHHS23-1 N/A 1,300 N/A N/A N/A N/A 35
DHHS23-2 N/A 5,768.17 5,768.17 N/A N/A N/A 36
DHHS23-3 N/A 13,398 N/A N/A N/A N/A 37
DHHS26-1 N/A 12,424.17 12,424.17 N/A N/A N/A 38
DHHS26-2 N/A 6,000 N/A N/A N/A N/A 39
DHHS26-3 N/A 13,709.45 13,709.45 13,709.45 N/A N/A 40
DOA22-1 N/A 1,400 N/A N/A N/A N/A 41
DOA22-3 N/A N/A 21,000 N/A 24,000 N/A 42
DOA23-1 N/A 3,000 15,000 15,171.6 N/A N/A 43
DOA23-2 N/A 800 N/A N/A N/A N/A 44
DOA23-3 N/A N/A N/A 11,000 N/A N/A 45
DOA23-4 N/A N/A 15,000 N/A N/A N/A 46
DOA23-5 N/A 5,000 23,000 23,000 6,200 N/A 47
DOI21-1 N/A 13,750 N/A N/A N/A N/A 48
DAC26-1 N/A 10,000 10,000 29,321.02 N/A N/A 49
DAC26-2 N/A 30,000 30,464.04 N/A N/A N/A 50
DAC26-3 N/A 12,480 N/A N/A N/A N/A 51
General Assembly Of North Carolina Session 2025
Page 150 House Bill 1167-First Edition
DPS21-1 N/A 3,465.76 N/A N/A N/A N/A 1
DPS21-2 N/A 2,434.32 N/A N/A N/A N/A 2
DPS21-5 N/A 27,100 9,120 N/A N/A N/A 3
DPS21-6 N/A 5,602.38 N/A N/A N/A N/A 4
DPS23-1 N/A 10,000 29,850 N/A N/A N/A 5
DPS23-3 N/A 28,785 28,785 1,815 N/A N/A 6
DPS23-4 N/A N/A N/A 19,000 48,500 77,600 7
DPS23-6 N/A 659 N/A N/A N/A N/A 8
DPS23-7 N/A 40,766.22 18,501.55 18,501.55 N/A N/A 9
NG23-1 N/A 4,000 6,000 N/A N/A N/A 10
NG23-4 N/A 6,500 N/A N/A N/A N/A 11
NG23-5 N/A N/A 800 4,000 3,200 N/A 12
NG23-9 N/A 3,000 N/A N/A N/A N/A 13
NG26-1 N/A 3,000 2,000 N/A N/A N/A 14
NG26-2 N/A 800 8,000 N/A N/A N/A 15
NG26-3 N/A 600 6,000 N/A N/A N/A 16
SBI26-1 N/A 6,234 13,612.5 13,612.5 N/A N/A 17
SBI26-2 N/A 472 2,846 N/A N/A N/A 18
DMVA26-1 N/A 10,000 N/A N/A N/A N/A 19
NCSD26-1 N/A 7,500 N/A N/A N/A N/A 20
ENCSD26-1 N/A 2,150 9,675 9,675 N/A N/A 21
ENCSD26-2 N/A 970 4,365 4,365 N/A N/A 22
GMS26-1 N/A 8,405.18 N/A N/A N/A N/A 23
DPI26-1 N/A 1,905.88 2,000 5,000 5,000 N/A 24
DPI26-2 N/A 250 500 1,250 8,000 N/A 25
TRAN23-1 125,000 50,000 N/A N/A N/A N/A 26
NCGA21-3 65,250 5,050 5,050 N/A N/A N/A 27
NCGA23-1 26,000 16,250 N/A N/A N/A N/A 28
UNC/ASU21-2 N/A 10,000 10,000 N/A N/A N/A 29
UNC/ASU22-1 N/A 11,350 13,050 N/A N/A N/A 30
UNC/ASU23-1 N/A 11,700 4,500 N/A N/A N/A 31
UNC/CLT23-1 N/A 12,600 9,900 9,900 N/A N/A 32
UNC/CLT23-2 N/A N/A 4,500 N/A 15,000 25,500 33
UNC/CH23-1 N/A N/A 2,500 10,000 N/A 10,000 34
UNC/ECU21-1 60,000 85,742.7 12,003.64 12,003.64 N/A N/A 35
UNC/ECU23-1 N/A 13,800 13,800 13,800 N/A N/A 36
UNC/ECU23-2 N/A N/A 1,890 N/A 10,000 7,010 37
UNC/ECU23-3 N/A 8,750 N/A N/A N/A N/A 38
UNC/PEM21-1 30,500 24,400 4,250 N/A N/A N/A 39
UNC/PEM23-1 N/A N/A 32,150 22,750 30,000 40,005 40
UNC/ECS21-2 N/A 5,000 N/A N/A N/A N/A 41
UNC/ECS23-1 N/A 827 N/A N/A N/A N/A 42
UNC/ECS23-2 N/A N/A 1,250 N/A 11,250 N/A 43
UNC/FSU23-1 N/A N/A 2,075 N/A 12,000 6,675 44
UNC/FSU23-2 N/A 5,500 N/A N/A N/A N/A 45
UNC/A&T23-1 N/A N/A N/A N/A 5,335 N/A 46
UNC/A&T23-2 N/A 5,335 30,041.25 30,041.25 30,041.25 30,041.25 47
UNC/NCC23-1 N/A 2,000.42 8,866 N/A N/A N/A 48
UNC/NCC23-2 N/A 650 8,774.74 8,774.74 N/A N/A 49
UNC/NCC23-3 N/A 2,975 4,675 N/A N/A N/A 50
UNC/NCS23-1 N/A 10,000 N/A N/A N/A N/A 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 151
UNC/NCS23-2 24,000 28,000 20,000 N/A N/A N/A 1
UNC/NCS23-3 N/A 18,900 12,600 12,600 12,600 N/A 2
UNC/NCS23-4 N/A 35,000 21,250 21,250 21,250 21,250 3
UNC/NCS23-5 5,000 N/A 35,000 67,000 80,000 13,000 4
UNC/NCS24-1 N/A 25,048.75 38,737.81 38,737.81 38,737.81 38,737.81 5
UNC/SSM23-2 3,000 4,800 11,719.02 11,719.02 N/A N/A 6
UNC/SSM23-4 1,000 N/A 9,000 N/A N/A N/A 7
UNC/AVL23-1 N/A 11,767.5 5,230 N/A N/A N/A 8
UNC/CLT23-1 N/A 12,600 9,900 9,900 N/A N/A 9
UNC/GBO23-1 N/A 8,470 13,310 N/A N/A N/A 10
UNC/SA23-1 22,950 10,200 N/A N/A N/A N/A 11
UNC/SA23-2 N/A N/A 2,450 8,575 N/A 13,475 12
UNC/WIL23-1 N/A 7,725 14,160 14,160 N/A N/A 13
UNC/WIL23-2 N/A 5,200 14,240 N/A N/A N/A 14
UNC/WIL23-3 N/A N/A 3,000 4,860 N/A N/A 15
UNC/WIL23-4 N/A 7,500 16,875 16,875 16,875 16,875 16
UNC/WIL24-1 N/A N/A 29,644 23,723 21,633 N/A 17
UNC/WCU23-1 N/A 6,260 37,410 37,410 37,410 37,410 18
UNC/WSS21-1 N/A 14,650 N/A N/A N/A N/A 19
UNC/WSS23-1 N/A N/A N/A N/A 1,080 5,140 20
UNC/WSS23-2 N/A N/A N/A N/A 1,600 8,000 21
UNC/PBS23-1 N/A 17,325 9,075 9,075 9,075 N/A 22
UNC/BOG21-1 3,750 3,750 N/A N/A N/A N/A 23
UNC/BOG23-1 N/A 105,000 N/A N/A N/A N/A 24
UNC/BOG23-3 N/A 103,500 N/A N/A N/A N/A 25
UNC/BOG25-1 1,000 1,000 1,000 1,000 N/A N/A 26
WRC23-1 N/A 6,000 N/A N/A N/A N/A 27
28
NON-GENERAL FUND/NON-SCIF CAPITAL PROJECT AUTHORIZATIONS 29
SECTION 40.5. The General Assembly authorizes the following capital projects to 30
be funded with receipts or from other non-General Fund and non-State Capital and Infrastructure 31
Fund sources available to the appropriate department: 32
Amount of Non-General Fund/Non-SCIF 33
Name of Project Funding Authorized 34
FY 2026-2027 35
Department of Natural and Cultural Resources 36
Jennette's Pier Aquarium– 37
Solar Covered Walkway $450,000 38
Roanoke Island Aquarium– 39
Invertebrate Tank $500,000 40
Pine Knoll Shores Aquarium– 41
Invertebrate Tank $2,000,000 42
NC Zoo– 43
Elephant Shelters & Barn Bollard Repair $2,500,000 44
State Historic Sites– 45
House in the Horseshoe– 46
Alston House Rehabilitation $445,000 47
Department of Agriculture and Consumer Services 48
Umstead Research Station Beef Program Buildout $2,500,000 49
Department of Military and Veterans Affairs 50
Eastern Carolina State Veterans Cemetery Expansion $2,138,450 51
General Assembly Of North Carolina Session 2025
Page 152 House Bill 1167-First Edition
Western Carolina State Veterans Cemetery Expansion $1,954,150 1
Department of Public Safety 2
Alcoholic Beverage Control– 3
ABC Warehouse Repairs $1,150,000 4
Wildlife Resources Commission 5
Game Land Improvements Morganton Depot Dam $1,086,881 6
D7 Storage Building $400,000 7
Caswell Shooting Range Renovation $3,850,000 8
Shooting Ranges Renovations $4,000,000 9
Ransom Road Depot $10,000,000 10
Land Acquisition $30,000,000 11
WRC Game Land Improvements $6,000,000 12
McKinney Lake Hatchery Building Replacement $1,300,00 13
Table Rock Hatchery Residence $640,000 14
New Tillery Office Depot $1,500,000 15
Inland Fish District 2 Storage Building $840,000 16
Butner Lab and Office Building $1,900,000 17
Caswell Depot Expansion $100,000 18
19
TOTAL AMOUNT OF NON-GENERAL 20
FUND/NON-SCIF CAPITAL PROJECTS 21
AUTHORIZED $75,254,481 22
23
INCREASE DOLLAR THRE SHOLDS FOR DEFINITIO N OF CAPITAL 24
IMPROVEMENT 25
SECTION 40.6. G.S. 143C-1-1(d) reads as rewritten: 26
"§ 143C‑1‑1. Purpose and definitions. 27
… 28
(d) Definitions. – The following definitions apply in this Chapter: 29
… 30
(5) Capital improvement. – A term that includes real property acquisition, new 31
construction or rehabilitation of existing facilities, and repairs and renovations 32
over one hundred fifty thousand dollars ($100,000) ($150,000) in value. 33
…." 34
35
INCREASE DOLLAR THRE SHOLD FOR FORMAL BID DING OF CAPITAL 36
PROJECTS 37
SECTION 40.7.(a) G.S. 143-129 reads as rewritten: 38
"§ 143‑129. Procedure for letting of public contracts. 39
(a) Bidding Required. No construction or repair work requiring the estimated expenditure 40
of public money in an amount equal to or more than one million five hundred thousand dollars 41
($500,000)($1,500,000) or purchase of apparatus, supplies, materials, or equipment requiring an 42
estimated expenditure of public money in an amount equal to or more than ninety thousand 43
dollars ($90,000) may be performed, nor may any contract be awarded therefor, by any board or 44
governing body of the State, or of any institution of t he State government, or of any political 45
subdivision of the State, unless the provisions of this section are complied with; provided that 46
the University of North Carolina and its constituent institutions may award contracts for 47
construction or repair work that requires an estimated expenditure of less than one million five 48
hundred thousand dollars ($500,000) ($1,500,000) without complying with the provisions of this 49
section. 50
…." 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 153
SECTION 40.7.(b) G.S. 143-64.34 reads as rewritten: 1
"§ 143-64.34. Exemption of certain projects. 2
State capital improvement projects under the jurisdiction of the State Building Commission, 3
capital improvement projects of the University of North Carolina, and community college capital 4
improvement projects, where the estimated expenditure of public money is less than one million 5
five hundred thousand dollars ($500,000) ($1,500,000) are exempt from the provisions of this 6
article." 7
SECTION 40.7.(c) G.S. 143-128(g) reads as rewritten: 8
"§ 143‑128. Requirements for certain building contracts. 9
… 10
(g) Exceptions. – This section shall not apply to: 11
(1) The purchase and erection of prefabricated or relocatable buildings or portions 12
thereof, except that portion of the work which must be performed at the 13
construction site. 14
(2) The erection, construction, alteration, or repair of a building when the cost 15
thereof is three hundred thousand dollars ($300,000) or less. 16
(3) The erection, construction, alteration, or repair of a building by The University 17
of North Carolina or its cons tituent institutions when the cost thereof is five 18
hundred thousand dollars ($500,000) or less. 19
…." 20
21
UNC CAPITAL PROJECT MANAGEMENT FLEXIBILITY 22
SECTION 40.8. G.S. 143C-4-3.1(e) reads as rewritten: 23
"§ 143C-4-3.1. State Capital and Infrastructure Fund. 24
… 25
(e) Use of Funds. – Monies in the Fund shall first be used to meet the debt service 26
obligations supported by the General Fund. In addition to meeting the debt service obligations 27
supported by the General Fund, monies in the Fund may be used for the following purposes: 28
… 29
(5) Up to 5% of the funds allocated for projects at the University of North 30
Carolina authorized under subsection (1) and (2) of this section may be used 31
by the University of North Carolina and its constituent institutions to provide 32
time-limited support for construction management personnel. 33
…." 34
35
DEPARTMENT OF ADULT CORRECTION CAPITAL PROJECT ALLOWABLE USE 36
SECTION 40.9. Notwithstanding the Committee Report referenced in Section 40.2 37
of this act or any other provision of law to the contrary, the allocation to the Department of Adult 38
Correction for project code DAC 23 -1 Stun Fencing, may also be used for fire alarm and fire 39
suppression systems replacement at eight facilities. 40
41
DEPARTMENT OF MILITA RY AND VETERANS AFFA IRS CAPITAL PROJECTS 42
CONSULTATION REQUIREMENT 43
SECTION 40.10. G.S. 143C-8-12 reads as rewritten: 44
"§ 143C-8-12. Capital improvement projects from sources other than the General Fund. 45
(a) University Projects. – Notwithstanding any other provision of this Chapter, the Board 46
of Governors of The University of North Carolina may approve any of the following: 47
(1) Expenditures to plan a capital improvement project of The University of North 48
Carolina, the planning for which is to be funded entirely with non‑General 49
Fund and non‑State Capital and Infrastructure Fund monies. 50
General Assembly Of North Carolina Session 2025
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(2) Expenditures for a capital improvement project of The University of North 1
Carolina that is to be funded and operated entirely with non‑General Fund and 2
non‑State Capital and Infrastructure Fund monies. 3
(3) A change in the scope of any previously approved capital improvement project 4
of The University of North Carolina provided that both the project and change 5
in scope are funded entirely with non‑General Fund and non‑State Capital and 6
Infrastructure Fund monies. 7
Nothing in this subsection shall be construed to prohibit expenditures for planning for a 8
project that has been authorized by an act of the General Assembly and funded with an allocation 9
from the State Capital and Infrastructure Fund. 10
(b) Carryforward Funds. – For purposes of this section, the term "non‑General Fund and 11
non‑State Capital and Infrastructure Fund monies" includes funds carried forward from one fiscal 12
year to another pursuant to G.S. 116-30.3 and G.S. 116-30.3B. These funds shall only be used 13
for projects listed in G.S. 143C-8-13(a). 14
(c) National Guard Projects. – Notwithstanding any other provision of this Chapter, the 15
North Carolina National Guard may approve expenditures for a capital project of the North 16
Carolina National Guard if (i) the project will be funded entirely with federal funds and (ii) any 17
operating costs associated with the project will be paid entirely with federal funds. 18
(d) Department of Military and Veterans Affairs P rojects - Notwithstanding any other 19
provision in this Chapter, the Department of Military and Veterans Affairs may approve 20
expenditures for a capital project of the Department if the project will be funded entirely with 21
non-General Funds. 22
(d)(e) Reporting. – The Board of Governors , the Department of Military and Veterans 23
Affairs, and the National Guard shall report any expenditure made pursuant to this section to the 24
Office of State Budget and Management and to the Joint Legislative Commission on 25
Governmental Operations." 26
27
PART XLI. TRANSPORTATION 28
29
CASH FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND APPROPRIATIONS 30
SECTION 41.1.(a) Subsections (b) and (c) of Section 41.1 of S.L. 2023 -134 are 31
repealed. 32
SECTION 41.1.(b) The General Assembly authorizes and certifies anticipated 33
revenues for the Highway Fund as follows: 34
For Fiscal Year 2027-2028 $ 3,495 million 35
For Fiscal Year 2028-2029 $ 3,697 million 36
For Fiscal Year 2029-2030 $ 3,750 million 37
For Fiscal Year 2030-2031 $ 3,811 million 38
For Fiscal Year 2031-2032 $ 3,878 million. 39
SECTION 41.1.(c) The General Assembly autho rizes and certifies anticipated 40
revenues for the Highway Trust Fund as follows: 41
For Fiscal Year 2027-2028 $ 2,648 million 42
For Fiscal Year 2028-2029 $ 2,750 million 43
For Fiscal Year 2029-2030 $ 2,815 million 44
For Fiscal Year 2030-2031 $ 2,893 million 45
For Fiscal Year 2031-2032 $ 2,973 million. 46
SECTION 41.1.(d) The Department of Transportation, in collaboration with the 47
Office of State Budget and Management, shall develop a 10 -year revenue forecast. The 10-year 48
revenue forecast developed under this subsection s hall be used (i) to develop the five -year cash 49
flow estimates included in the biennial budgets, (ii) to develop the Strategic Transportation 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 155
Improvement Program, and (iii) by the Department of the State Treasurer to compute 1
transportation debt capacity. 2
3
CAPITAL, REPAIRS, AND RENOVATIONS 4
SECTION 41.2.(a) For the 2026 -27 fiscal year, the funds appropriated in this act 5
from the Highway Fund to the Department of Transportation for capital, repairs, and renovations 6
shall be used as follows: 7
8
Capital – Highway Fund FY 2026-27 9
Jones and Wake County Maintenance Yards Relocation $14,100,000 10
DMV High Need Driver License Office Expansion / Replacement $9,513,813 11
12
SECTION 41.2.(b) The Governor and General Assembly anticipate appropriating 13
the following additional funds in the 2027-29 fiscal biennium to complete the projects set out in 14
subsection (a) of this section: 15
16
Capital – Highway Fund FY 2027-28 FY 2028-29 17
Jones and Wake County Maintenance Yards Relocation $58,500,000 $19,500,000 18
DMV High Need Driver License Office 19
Expansion / Replacement $9,513,813 20
21
TRANSPORTATION EMERGENCY RESERVE 22
SECTION 41.3.(a) Section 1H.1 of S.L. 2024-57 reads as rewritten: 23
"SECTION 1H.1. Of the funds appropriated to the Department of Transportation, the sum 24
of one hundred twenty-five million dollars ($125,000,000) from the Transportation Emergency 25
Reserve shall be used for repair and reconstruction of transportation infrastructure in the affected 26
area. Notwithstanding G.S. 136-44.2E(b) and G.S. 136 -44.2E(f)(1), in the discretion of the 27
Secretary of Transportation, the required transfer of funds from the Highway Fund to the 28
Transportation Reserve may be delayed or suspended until July 30, 2027December 31, 2028. No 29
other provision of G.S. 136-44.2E is affected by this section." 30
SECTION 41.3.(b) Section 1B.1.(b) of S.L. 2025-92 is repealed. 31
32
AMEND SAFETY INSPECTION FEE 33
SECTION 41.4. G.S. 20-183.7 reads as rewritten: 34
"§ 20 -183.7. Fees for performing an inspection and issuing an electronic inspection 35
authorization to a vehicle; use of civil penalties. 36
(a) Fee Amount. – When a fee applies to an inspection of a vehicle or the issuance of an 37
electronic inspection authorization, the fee must be collected. The following fees apply to an 38
inspection of a vehicle and the issuance of an electronic inspection authorization: 39
40
Type Inspection Authorization 41
Safety Only $12.75 $ .85$2.00 42
Emissions and Safety 23.75 6.25. 43
44
The fee for performing an inspection of a vehicle applies when an inspection is performed, 45
regardless of whether the vehicle passes the inspection. The fee for an electronic inspection 46
authorization applies when an electronic inspection authorization is issued to a vehicle. The fee 47
for inspecting after-factory tinted windows shall be ten dollars ($10.00), and the fee applies only 48
to an inspection performed with a light meter after a safety inspection mechanic determined that 49
the window had after-factory tint. A safety inspection mechanic shall not inspect an after-factory 50
General Assembly Of North Carolina Session 2025
Page 156 House Bill 1167-First Edition
tinted window of a vehicle for which the Division has issued a medical exception permit pursuant 1
to G.S. 20-127(f). 2
A vehicle that is inspected at an inspection station and fails the inspection is entitled to be 3
reinspected at the same station at any time within 60 days of the failed inspection without paying 4
another inspection fee. 5
The inspection fee for an emissions and safety inspection set out in this subsection is the 6
maximum amount that an inspection station or an inspection mechanic may charge for an 7
emissions and safety inspection of a vehicle. An inspection station or an inspection mechanic 8
may charge the maximum amount or any lesser amount for an emissions and safety inspection 9
of a vehicle. The inspection fee for a safety only inspection set out in this subsection may not be 10
increased or decreased. The authorization fees set out in this subsection may not be increased or 11
decreased. 12
(b) Self-Inspector. – The fee for an inspection does not apply to an inspection performed 13
by a self-inspector. The fee for issuing an electronic inspection authorization to a vehicle applies 14
to an inspection performed by a self-inspector. 15
(c) Fee Distribution. – Fees collected for electronic inspection authorizations are payable 16
to the Division of Motor Vehicles. The amount of each fee listed in the table bel ow shall be 17
credited to the Highway Fund, the Volunteer Rescue/EMS Fund established in G.S. 58-87-5, the 18
Rescue Squad Workers' Relief Fund established in G.S. 58-88-5, and the Division of Air Quality 19
of the Department of Environmental Quality: 20
Recipient Safety Only Electronic Emissions and Safety 21
Authorization Electronic Authorization 22
Highway Fund .551.43 5.30 23
Volunteer Rescue/EMS Fund .18 .18 24
Rescue Squad Workers' Relief Fund .12 .12 25
Division of Air Quality .00 .27 .65 26
…" 27
28
FERRY CAPITAL SPECIAL FUND 29
SECTION 41.5. G.S. 136.82.(d) reads as rewritten: 30
"(d) Use of Toll Proceeds. – The Department of Transportation shall deposit the proceeds 31
from tolls collected on North Carolina Ferry System routes and route -generated receipts 32
authorized under subsection (f) of this section to fund codes within the Ferry Capital Special 33
Fund for each of the Highway Divisions in which system terminals are located and fares are 34
earned. For the purposes of this subsection, fares are earned based on the terminals from which 35
a passenger trip originates and terminates. Commuter pass receipts shall be deposited 36
proportionately to each fund code based on the distribution of trips originating and terminating 37
in each Highway Division. The proceeds deposited to each fund code shall be used exclusively 38
for prioritized North Carolina Ferry System ferry passenger vessel replacement projects in the 39
Division in which the proceeds are earned. Proceeds deposited to each fund code may be used to 40
fund ferry passenger vessel replacement projects or supplement funds allocated for ferry 41
passenger vessel replacement projects approved in the Transportation Improvement Program, to 42
fund vessel maintenance related to U.S. Coast Guard required Cr edit Dry Docks, and to fund 43
vessel system retrofits and upgrades to extend the serviceable life of a vessel." 44
45
AUTHORIZE CARRYFORWARD OF FERRY FUNDS 46
SECTION 41.7. G.S. 136.82.(h) reads as rewritten: 47
"Transfer of Funds. – Notwithstanding G.S. 136-44.2(f), G.S. 136-44.2(f1), and any other 48
provision of law to the contrary, beginning with the 2021-2022 fiscal year, no later than 45 days 49
after the first day of the fiscal year, the Department of Transportation shall transfer from the 50
Highway Fund to the Ferry Systemwide fund code within the Ferry Capital Special Fund al l 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 157
unexpended and unencumbered funds appropriated to the Ferry Division's budget from the prior 1
fiscal year. Any funds categorized as unencumbered shall be deposited in the Ferry Systemwide 2
fund code. Any funds categorized as encumbered shall be deposited into a specified fund code 3
for encumbrances." 4
5
ELIGIBLE USES OF FERRY FEDERAL FORMULA FUNDS 6
SECTION 41.8. G.S. 136.189.11.(c) reads as rewritten: 7
"(c) Funds With Alternate Criteria. – The following federal program activities shall be 8
included in the applicable category of the Transportation Investment Strategy Formula set forth 9
in subsection (d) of this section but shall not be subject to the prioritization criteria set forth in 10
that subsection: 11
… 12
(6) Ferry boat replacements and preservation." 13
14
AUTHORIZE ELECTRONIC PAYMENT TRANSACTION FEES FOR FERRIES 15
SECTION 41.9. G.S. 136.82 is amended by adding a new subsection to read: 16
"(b3) Transaction Fee Authorized for Electronic Payment. – When the Department of 17
Transportation accepts electronic payment, as that term is defined in G.S. 147-86.20, for any toll 18
or fee authorized under this Article, thr Department may add a transaction fee to each electronic 19
payment transaction to offset the service charge the Department pays for electronic payment 20
service. The transaction fee authorized under this subs ection shall not exceed two percent (2%) 21
of the electronic payment." 22
23
REALLOCATE SOUTH DOCK STACKING LANES APPROPRIATION 24
SECTION 41.10 Notwithstanding the Committee Report described in Section 43.2 25
of S.L. 2023-134 or any other provision of law, the sum of one million five hundred thousand 26
dollars ($1,500,000) in nonrecurring funds for the 2023 -2024 fiscal year allocated to build 27
stacking lanes and a concrete barrier on NC 12 at the South Dock Ferry Terminal on Ocr acoke 28
shall instead be used for ramp rehabilitation on the South Dock Ferry Terminal to address safety 29
and reliability concerns. 30
31
PART XLII. FINANCE PROVISIONS 32
33
MAINTAIN PERSONAL INCOME TAX RATE 34
SECTION 42.1.(a) G.S. 105-153.7(a) reads as rewritten: 35
"§ 105-153.7. Individual income tax imposed. 36
(a) Tax. – A tax is imposed for each taxable year on the North Carolina taxable income 37
of every individual. The tax shall be levied, collected, and paid annually. Except as otherwise 38
provided in subsection (a1) of this section, t The tax is a percentage of the taxpayer's North 39
Carolina taxable income computed as follows: 40
Taxable Years Beginning Tax 41
In 2022 4.99% 42
In 2023 4.75% 43
In 2024 4.5% 44
In 2025 4.25% 45
After 2025 3.99%." 46
SECTION 42.1.(b) G.S. 105-153.7.(a1) is repealed. 47
SECTION 42.1.(c) This section is effective for taxable years beginning on or after 48
January 1, 2026. 49
50
MAINTAIN COMPETITIVE CORPORATE INCOME TAX RATE 51
General Assembly Of North Carolina Session 2025
Page 158 House Bill 1167-First Edition
SECTION 42.2.(a) G.S. 105-130.3 reads as rewritten: 1
"§ 105-130.3. Corporations 2
A tax is imposed on the State net income of every C Corporation doing business in this State. 3
An S Corporation is not subject to the tax levied in this section. The tax is a percentage of the 4
taxpayer's State net income computed as follows: 5
Taxable Years Beginning Tax 6
In 2025 2.25% 7
In 2026 After 2025 2%2%." 8
In 2028 1% 9
After 2029 0%. 10
SECTION 42.2.(b) This section is effective for taxable years beginning on or after 11
January 1, 2026. 12
13
ENACT BACK TO SCHOOL SALES AND USE TAX HOLIDAY 14
SECTION 42.3.(a) Part 3 of Article 5 of Chapter 105 of the General Statutes is 15
amended by adding a new section to read: 16
"§ 105-164.13G. Educational sales and use tax holiday. 17
(a) The state and local taxes imposed by this Article do not apply to the following items 18
of tangible personal property if sold between 12:01 AM on the first Friday of August and the 19
11:59PM the following Sunday: 20
(1) Clothing with a sales price of one hundred dollars ($100.00) or less per item. 21
(2) School supplies with a sales price of one hundred dollars ($100.00) or less per 22
item. 23
(3) Computers with a sales price of seven hundred and fifty dollars ($750) or less 24
per item. 25
(3a) Computer supplies with a sales price of two hundred fifty dollars ($250.00) or 26
less per item. 27
(b) The exemption allowed by this section does not apply to the following: 28
(1) Sales of clothing accessories or equipment. 29
(2) Sales of protective equipment. 30
(3) Sales of furniture. 31
(4) Sales of an item for use in a trade or business. 32
(5) Rentals. 33
(c) Hold Harmless. – The p urpose of this section is to hold county and municipal 34
governments harmless for the revenue losses resulting from the sales tax holiday established in 35
this section (a) of this section. The amount each county may receive is determined as follows: 36
(1) Distribution Amount. – The distribution amount is nine million three hundred 37
thousand ($9,300,000) for the fiscal year beginning July 1, 202 6. For fiscal 38
years beginning on or after July 1, 202 7, the distribution amount is equal to 39
the amount for the prece ding year multiplied by 3.5% and rounded to the 40
nearest one hundred thousand dollars ($100,000). 41
(2) County Allocation. – The Secretary shall, in October of each fiscal year, 42
allocate to each taxing county the distribution amount on a per capita basis as 43
calculated in G.S. 105 -486(a). For the purposes of this section, “taxing 44
county” means a county that levies the first one -half cent (1/2¢) local sales 45
and use tax under Article 40 of this Chapter." 46
SECTION 42.3(b) This section is effective for fiscal years beginning on or after July 47
1, 2026. 48
49
ENACT WORKING FAMILIES TAX CREDIT 50
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 159
SECTION 42.4.(a) G.S. 105-151.31 is reenacted as it existed immediately before its 1
expiration and reads as rewritten: 2
"§ 105-151.31. Earned IncomeWorking Families Tax Credit 3
(a) Credit. An individual who claims for the taxable year an earned income tax credit 4
under section 32 of the Code is allowed a credit against the tax imposed by this Part equal to a 5
percentage ten percent (10%) of the amount of credit the individual qualified for under section 6
32 of the Code. A nonresident or part-year resident who claims the credit allowed by this section 7
must reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105 8
134.5(b) or (c)G.S. 105.153.4(b) or (c), as appropriate. The percentage is as follows: 9
(1) For taxable year 2013, four and one-half percent (4.5%). 10
(2) For all other taxable years, five percent (5%). 11
(b) Credit Refundable. If the credit allowed by this section exceeds the amount of tax 12
imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary 13
must refund the excess to the taxpayer. The refundable excess is governed by the provisions 14
governing a refund of an overpayment by the taxpayer of the tax imposed in thi s Part. Section 15
3507 of the Code, Advance Payment of Earned Income Credit, does not apply to the credit 16
allowed by this section. In computing the amount of tax against which multiple credits are 17
allowed, nonrefundable credits are subtracted before refundable credits. 18
(c) Sunset. – this section is repealed for taxable years beginning on or after January 1, 19
2014." 20
SECTION 42.4.(b) This section is effective for taxable years beginning on or after 21
January 1, 2026. 22
23
REENACT MODIFIED CHILD AND DEPENDENT CARE TAX CREDIT 24
SECTION 42.5.(a) G.S. 105-151.11 is reenacted as it existed immediately before its 25
expiration, is recodified as G.S. 105-153.11, and reads as rewritten: 26
"§ 105-151.11. Credit for child care and certain employment-related expenses. 27
(a) Credit. – A person who is allowed a credit against federal income tax for a percentage 28
of employment-related expenses under section 21 of the Code shall be allowed as a credit against 29
the tax imposed by this Part an amount equal to the applicable percentage thirty percent (30%) 30
of the amount of the credit provided for in Section 21 of the Code Code, except as reduced by 31
the percentage reduction in subsection (c), which is claimed and allowed pursuant to the Internal 32
Revenue Code. To claim the credit allowed by this section, the taxpayer must provide with the 33
tax return the information required by the Secretary of Revenue. 34
(a1) Applicable Percentage. - For employment-related expenses that are incurred only with 35
respect to one or more dependents who are seven years old or older and are not physically or 36
mentally incapable of caring for themselves, the applicable percentage is the appropriate 37
percentage in the column labeled "Percentage A" in the table below, based on the taxpayer's 38
adjusted gross income determined under the Code. For employment -related expenses with 39
respect to any other qualifying individual, the applicable percentage is the appropriate percentage 40
in the column labeled "Percentage B" in the table below, based on the taxpayer's adju sted gross 41
income determined under the Code. 42
Filing Status Adjusted Gross Income Percentage A Percentage B 43
Head of Up to $20,000 9% 13% 44
Household 45
Over $20,000 8% 11.5% 46
up to $32,000 47
48
Over $32,000 7% 10% 49
50
Surviving 51
General Assembly Of North Carolina Session 2025
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Spouse or 1
Joint Return Up to $25,000 9% 13% 2
3
Over $25,000 4
up to $40,000 8% 11.5% 5
6
Over $40,000 7% 10% 7
8
Single Up to $15,000 9% 13% 9
10
Over $15,000 11
up to $24,000 8% 11.5% 12
13
Over $24,000 7% 10% 14
15
Married 16
Filing 17
Separately Up to $12,500 9% 13% 18
19
Over $12,500 20
up to $20,000 8% 11.5% 21
22
Over $20,000 7% 10% 23
(b) Employment Related Expenses. – The amount of employment -related expenses for 24
which a credit may be claimed may not exceed three thousand dollars ($3,000) if the taxpayer's 25
household includes one qualifying individual, as defined in section 21(b)(1) of the Code, and 26
may not exceed six thousand dollars ($6,000) if the taxpayer's household includes more than one 27
qualifying individual. The amount of employment -related expenses for which a credit may be 28
claimed is reduced by the amount of employer-provided dependent care assistance excluded from 29
gross income. 30
(c) Phaseout. – The credit allowed by this section shall be reduced by a percentage listed 31
below, rounded to the nearest percentage point, based on the taxpayer’s adjusted gross income 32
as calculated under the Code: 33
34
Filling Status For AGI Exceeding Percentage Reduction 35
Married, filing jointly $150,000 The lesser of 100% or 36
[(Taxpayer’s AGI - $150,000) / $50,000] 37
Head of Household $112,500 The lesser of 100% or 38
[(Taxpayer’s AGI - $112,500) / $37,500] 39
Single or Married, The lesser of 100% or 40
Filing Separately $75,000 [(Taxpayer’s AGI - $75,000) / $25,000] 41
(c)(d) Limitations. – A nonresident or part -year resident who claims the c redit allowed by 42
this section shall reduce the amount of the credit by multiplying it by the fraction calculated under 43
G.S. 105-134.5(b) or (c), G.S. 105-153.4(b) or (c), as appropriate. No credit shall be allowed 44
under this section for amounts deducted in calculating North Carolina taxable income. The credit 45
allowed by this section may not exceed the amount of tax imposed by this Part for the taxable 46
year reduced by the sum of all credits allowable, except for payments of tax made by or on behalf 47
of the taxpayer. 48
(e) Credit Refundable. – If the credit allowed by this section exceeds the amount of tax 49
imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary 50
must refund the excess to the taxpayer. The refundable excess is governed by the provisions 51
General Assembly Of North Carolina Session 2025
House Bill 1167-First Edition Page 161
governing a refund of an overpayment by the taxpayer of the tax imposed in this Part . In 1
computing the amount of tax against which multip le credits are allowed, nonrefundable credits 2
are subtracted before refundable credits." 3
SECTION 42.5.(b) This section is effective for taxable years beginning on or after 4
January 1, 2026. 5
6
INCREASE THE STANDARD DEDUCTION 7
SECTION 42.6.(a) G.S. 105-153.5(a)(1) reads as rewritten: 8
"(1) Standard deduction amount. – The standard deduction amount is zero for a 9
person who is not eligible for a standard deduction under section 63 of the 10
Code. For all other taxpayers, the standard deduction amount is equal to the 11
amount listed in the table below based on the taxpayer's filing status: 12
Filing Status Standard Deduction 13
Married, filing jointly/surviving spouse $25,500$26,500 14
Head of Household 19,12519,875 15
Single 12,75013,250 16
Married, filing separately 12,750.13,250. " 17
SECTION 42.6.(b) This section is effective for taxable years beginning on or after 18
January 1, 2027. 19
20
PART XLIII. MISCELLANEOUS 21
22
STATE BUDGET ACT APPLIES 23
SECTION 43.1. The provisions of the State Budget Act, Chapter 143C of the 24
General Statutes, are reenacted and shall remain in full force and effect and are incorporated in 25
this act by reference. 26
27
APPROPRIATIONS LIMITATIONS AND DIRECTIONS APPLY 28
SECTION 43.2. Except where expressly repealed or amended by this act, the 29
provisions of any legislation enacted during the 2025 Regular Session of the General Assembly 30
affecting the State budget shall remain in effect. 31
32
MOST TEXT APPLIES ONLY TO THE 2026-2027 FISCAL YEAR 33
SECTION 43.3. Except for statutory changes or other provisions that clearly indicate 34
an intention to have effects beyond the 2026 -2027 fiscal year, the textual provisions of this act 35
apply only to funds appropriated for, and activities occurring during, the 2026 -2027 fiscal 36
biennium. 37
38
EFFECT OF HEADINGS 39
SECTION 43.4. The headings to the Parts, Subparts, and sections of this act are a 40
convenience to the reader and are for reference only. The headings do not expand, limit, or define 41
the text of this act, except for effective dates referring to a Part or Subpart. 42
43
SEVERABILITY CLAUSE 44
SECTION 43.5. If any section or provision of this act is declared unconstitutional 45
or invalid by the courts, it does not affect the validity of this act as a whole or any part other than 46
the part so declared to be unconstitutional or invalid. 47
48
EFFECTIVE DATE 49
SECTION 43.6. Except as otherwise provided, this act is effective July 1, 2026. 50