Continuing Budget Operations.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025

SESSION LAW 2025-89
HOUSE BILL 125

*H125-v-5*
AN ACT TO IMPLEMENT VARIOUS BUDGETARY AD JUSTMENTS AND TO MAK E
OTHER CHANGES IN THE BUDGET OPERATIONS OF THE STATE.

The General Assembly of North Carolina enacts:

PART I. APPROPRIATIONS

BASE BUDGET AND OTHER APPROPRIATIONS
SECTION 1.1. State funds, as defined in G.S. 143C-1-1(d)(25), are appropriated for
each year of the 2025 -2027 fiscal biennium to all budget codes listed in the Governor's
Recommended Base Budget for the 2025 -2027 fiscal biennium, as submitted pursuant to
G.S. 143C-3-5, up to the amounts specified, and as adjusted by the General Assembly in this act
or in another act of the General Assembly.

AGRICULTURAL DISASTER CROP LOSS PROGRAM TECHNICAL CORRECTION
SECTION 1.2. Section 2A.3(a)(1)a. of S.L. 2025-26 reads as rewritten:
"a. Twenty-five million dollars ($25,000,000) for the Agricultural
Disaster Crop Loss Program (Program) established in Section 2D.1 of
S.L. 2025-2. These funds shall only be used for verifiable losses of
farm infrastructure, as that term is defined in Section 2D.1(g) 2D.2(g)
of S.L. 2025-2, in the affected area. These funds are not subject to the
Commissioner of Agriculture's discretion under Section 2D.1(h)
2D.2(h) of S.L. 2025 -2. The reporting requirements of the Program
apply to these funds. The Department of Agriculture may apply these
funds to existing applicants who have applied for farm infrastructure
losses in the affected area prior to the date this act becomes law and
shall open a new application period for these funds."

DISASTER FUNDING
SECTION 1.3.(a) Statewide Agricultural Disaster Crop Loss Funding. – The State
Controller shall transfer from the Stabilization and Inflation Reserve to the Department of
Agriculture and Consumer Services (Department) the sum of one hundred forty -two million
dollars ($142,000,000) in nonrecurring funds for the 2025 -2026 fiscal year for the Agricultural
Disaster Crop Loss Program (Program), established in Section 2D.2(a) of S.L. 2025 -2, for
verifiable losses from an agricultural disaster in 2024. The funds trans ferred in this subsection
are appropriated for the 2025-2026 fiscal year to the Department for the Program.
SECTION 1.3.(b) Funding Requirements. – Funds allocated to the Program under
this section shall be subject to all requirements of Section 2D.2 of S .L. 2025 -2, except for
subsection (h) of that section. The Department of Agriculture and Consumer Services shall
include these funds in the reporting requirements set forth in Section 2D.2(i) of S.L. 2025-2.

DISASTER FUNDING DIRECTIVES AND RESTRICTIONS

Page 2 Session Law 2025-89 House Bill 125
SECTION 1.4.(a) Receipt of Allocations. – A recipient of State funds under Section
1.3 of this Part shall use best efforts and take all reasonable steps to obtain alternative funds that
cover the losses or needs for which the State funds are provided, including funds from insurance
policies in effect and available federal aid. State funds paid under Section 1.3 of this Part are
declared to be excess over funds received by a recipient from the settlement of a claim for loss
or damage covered under the recipie nt's applicable insurance policy in effect or federal aid.
Where a recipient is an institution of higher education or a non -State entity, the requirement
regarding alternative funds and the calculation of alternative funds received under this subsection
includes seeking private donations to help cover the losses or needs for which State funds are
provided. An agency awarding State funds for disaster relief shall include a notice to the recipient
of the requirements of this subsection.
SECTION 1.4.(b) Remittance of Funds. – If a recipient obtains alternative funds
pursuant to subsection (a) of this section, the recipient shall remit the funds to the State agency
from which the State funds were received. A recipient is not required to remit any amount in
excess of the State funds provided to the recipient under Section 1.3 of this Part. The State agency
shall transfer these funds to the Savings Reserve.
SECTION 1.4.(c) Contract Requirements. – Any contract or other instrument
entered into by a recipient for r eceipt of funds under Section 1.3 of this Part shall include the
requirements set forth in subsections (a) and (b) of this section.
SECTION 1.4.(d) Limitation on Powers of Governor. – The Governor may not use
the funds described in Section 1.3 of this Part to make budget adjustments under G.S. 143C-6-4
or to make reallocations under G.S. 166A-19.40(c). Nothing in Section 1.3 or 1.4 of this Part
shall be construed to prohibit the Governor from exercising the Governor's authority under these
statutes with respect to funds other than those described in Section 1.3 of this Part.
SECTION 1.4.(e) Directive. – The Governor shall ensure that funds allocated in
Section 1.3 of this Part are expended in a manner that does not adversely affect any person's or
entity's eligibility for federal funds that are made available, or that are anticipated to be made
available, as a result of natural disasters. The Governor shall also, to the extent practicable, avoid
using State funds to cover costs that will be, or likely will be, covered by federal funds.
SECTION 1.4.(f) Continuation of Allocation Reporting Requirements. – OSBM
shall add the appropriations and allocations provided for in Section 1.3 of this Part to the
reporting requirements set forth in Section 4.1(g) of S.L. 2025-2.
SECTION 1.4.(g) Continuation of State Auditor Oversight. – The Office of the
Governor of North Carolina shall continue the reporting requirements set forth in Section 4.2 of
S.L. 2025-2 for funds described in Section 1.3 of this Part. The State A uditor shall include all
funds appropriated and allocated under Section 1.3 of this Part in their report to the Joint
Legislative Commission on Governmental Operations and include the expenditure of these funds
in the public dashboard as set forth in Sections 4.2(c) and (d) of S.L. 2025-2.

PART II. TRANSFERS, REDUCTIONS, ADJUSTMENTS, AND OFFSETS

PART II-A. EDUCATION

EDUCATION LOTTERY FU ND ALLOCATIONS AND A DJUSTMENTS TO
APPROPRIATIONS FROM THE ESCHEAT FUND
SECTION 2A.1.(a) The allocations made from the Education Lottery Fund for the
2025-2027 fiscal biennium are as follows:
FY 2025-2026 FY 2026-2027
Noninstructional Support Personnel $385,914,455 $385,914,455
Prekindergarten Program 78,252,110 78,252,110
Public School Building Capital Fund 100,000,000 100,000,000

House Bill 125 Session Law 2025-89 Page 3
Needs-Based Public School Capital Fund 258,252,612 258,252,612
Public School Repair & Renovation 50,000,000 50,000,000
Scholarship Reserve Fund for Public Colleges
and Universities 17,748,769 17,748,769
Children of Wartime Veterans Scholarship 11,070,964 11,070,964
School Transportation 182,193,702 186,033,702
TOTAL ALLOCATION $1,083,432,612 $1,087,272,612

SECTION 2A.1.(b) The funds appropriated to the Longleaf Commitment
Community College Grant Program (Budget Co de 16012) from the Escheat Fund are reduced
for each year of the 2025 -2027 fiscal biennium by the sum of twelve million three hundred
seventy-five thousand dollars ($12,375,000) in recurring funds.
SECTION 2A.1.(c) The funds appropriated to the Children o f Wartime Veterans
Scholarship (Budget Code 16012) from the Escheat Fund are reduced for each year of the
2025-2027 fiscal biennium by the sum of eleven million seventy thousand nine hundred
sixty-four dollars ($11,070,964) in recurring funds.
SECTION 2A.1.(d) There is appropriated from the Escheat Fund to the Need-Based
Scholarship for Public Colleges and Universities program (UNC Budget Code 16012) the sum
of ninety -eight million four hundred eighteen thousand five hundred twelve dollars
($98,418,512) in recurring funds for each year of the 2025-2027 fiscal biennium.
SECTION 2A.1.(e) The funds appropriated to the Need -Based Scholarship for
Public Colleges and Universities program (UNC Budget Code 16012) are reduced by
seventy-four million nine hundred se venty-two thousand five hundred forty -eight dollars
($74,972,548) in recurring funds for each year of the 2025-2027 fiscal biennium.
SECTION 2A.1.(f) The funds appropriated to the Department of Public Instruction
for the State Public School Fund (Budget C ode 13510, Budget Fund 101180) for school
transportation are reduced by the sum of one hundred sixty million eight hundred seven thousand
six hundred twelve dollars ($160,807,612) in recurring funds for the 2025 -2026 fiscal year and
reduced by the sum of o ne hundred sixty -four million six hundred forty -seven thousand six
hundred twelve dollars ($164,647,612) in recurring funds for the 2026-2027 fiscal year.

INDIAN GAMING EDUCATION REVENUE FUND
SECTION 2A.2.(a) The a llocations made from the Indian Gaming Education
Revenue Fund for the 2025-2027 fiscal biennium are as follows:
FY 2025-2026 FY 2026-2027
Textbooks and Digital Resources $10,000,000 $10,000,000
Classroom Materials Allotment 15,500,000 3,500,000
Total Appropriation $25,500,000 $13,500,000

SECTION 2A.2.(b) The funds appropriated to the Department of Public Instruction
for the Classroom Materials/Instructional Supplies/Equipment allotment are reduced by the sum
of two million five hundred thousand dollars ($2,500,000) in recurring funds for each year of the
2025-2027 fiscal biennium and twelve million dollars ($12,000,000) in nonrecurring funds for
the 2025-2026 fiscal year.

CIVIL PENALTY AND FORFEITURE FUND
SECTION 2A.3.(a) The allocations made from the Civil Penalty and Forfeiture Fund
for the 2025-2027 fiscal biennium are as follows:
FY 2025-2026 FY 2026-2027
School Technology Fund $18,000,000 $18,000,000
Drivers Education 31,493,768 31,493,768

Page 4 Session Law 2025-89 House Bill 125
State Public School Fund 186,041,640 166,041,640
Total Appropriation $235,535,408 $215,535,408

SECTION 2A.3.(b) The funds appropriated to the Department of Public Instruction
for the State Public School Fund are reduced by the sum of twenty million dollars ($20,000,000)
in nonrecurring funds for the 2025-2026 fiscal year.

COMMUNITY COLLEGES N URSING F ACULTY SALARY ADJUST MENT
REDUCTION
SECTION 2A.4. The funds appropriated to the Community Colleges System Office
for Nursing Faculty Salary Adjustments (Budget Code 16800, Budget Fund 105414) are reduced
for each year of the 2025 -2027 fiscal biennium by th e sum of one million one hundred
twenty-three thousand six hundred fifty -nine dollars ($1,123,659) in recurring funds. These
reductions align the appropriated amount with the actual amount expended for salary adjustments
for nursing faculty pursuant to Section 39.23 of S.L. 2023-134.

COMMUNITY COLLEGE ENROLLMENT GROWTH ADJUSTMENT
SECTION 2A.5. There is appropriated from the General Fund to the Community
Colleges System Office for each year of the 2025-2027 fiscal biennium the recurring sums of (i)
ninety-four million nine hundred thirty -five thousand two hundred sixty -seven dollars
($94,935,267) in total requirements and (ii) nineteen million nine hundred thirty-six thousand six
hundred sixty -four dollars ($19,936,664) in receipts. Appropriations pursuant to this section
result in a total net appropriation of seventy-four million nine hundred ninety-eight thousand six
hundred three dollars ($74,998,603) in recurring funds and shall be used to account for an
increase in enrollment at community colleges in the State.

WILSON COMMUNITY COLLEGE BIOLOGICS
SECTION 2A.5A. There is appropriated from the General Fund to the Community
Colleges System Office the sum of ten million dollars ($10,000,000) in nonrecurring funds for
the 2025 -2026 fiscal year to provide fun ds to Wilson Community College to support the
operation of the biologics training center.

RECEIPT ADJUSTMENTS AND GENERAL FUND RED UCTIONS FOR THE
DEPARTMENT OF PUBLIC INSTRUCTION
SECTION 2A.6.(a) Receipts for the Department of Public Instruction to the State
Public School Fund are increased for the 2025 -2026 fiscal year by the sum of forty -one million
three hundred fifty -eight thousand sixteen dollars ($41,358,016) and for the 2026 -2027 fiscal
year by the sum of five million fourteen thousand two hundred fourteen dollars ($5,014,214).
The net General Fund appropriation to the Department of Public Instruction for each year of the
2025-2027 fiscal biennium for the State Public School Fund is reduced by an amount equal to
these increases in receipts. The increases in receipts are as follows:
(1) State Public School Fund (Budget Code 13510, Budget Fund 101180). – For
the 2025 -2026 fiscal year, one million three hundred fifty -eight thousand
sixteen dollars ($1,358,016) in recurring funds. For the 2026-2027 fiscal year,
five million fourteen thousand two hundred fourteen dollars ($5,014,214) in
recurring funds. These funds reflect the transfer of sales and use tax proceeds
from the Department of Revenue to the State Public School Fund, as
established in S.L. 2005-276.
(2) State Public School Fund (Budget Code 13510, Budget Fund 101180). – For
the 2025-26 fiscal year, forty million dollars ($40,000,000) in nonrecurring

House Bill 125 Session Law 2025-89 Page 5
funds to reflect a transfer of funds from the State Textbook Fund (Budget
Code 73510, Budget Fund 700100).
SECTION 2A.6.(b) The funds appropriated to the Department of Public Instruction
are reduced for the 2025 -2026 fiscal year by the sum of nine million one hundred twenty -two
thousand one hundred eighty-four dollars ($9,122,184) and for the 2026-2027 fiscal year by the
sum of nine million one hundred twenty -two thousand one hundred eighty -four dollars
($9,122,184), as follows:
(1) Reduced-Price Meal Copays (Budget Code 13510, Budget Fund 101180). –
For each year of the 2025 -2027 fiscal biennium, thr ee million dollars
($3,000,000) in recurring funds to offset copays for reduced -price school
meals to match actual expenditures.
(2) Small Specialty High Schools (Budget Code 13510, Budget Fund 101180). –
For each year of the 2025 -2027 fiscal biennium, one million eight hundred
seventeen thousand nine hundred sixty-eight dollars ($1,817,968) in recurring
funds to eliminate funds for small specialty high schools, an initiative that
previously supported a school-within-a-school model.
(3) Learn and Earn (Budget Code 13510, Budget Fund 101180). – For each year
of the 2025 -2027 fiscal biennium, one million dollars ($1,000,000) in
recurring funds to eliminate funds for virtual cooperative innovative high
schools, which existed under a previous version of the State's dual enrollment
program but are now part of the Career and College Promise program.
(4) Plasma Games (Budget Code 13510, Budget Fund 101060). – For each year
of the 2025-2027 fiscal biennium, one million eight hundred thousand dollars
($1,800,000) in r ecurring funds to eliminate funds for the Department's
contract with Plasma Games, Inc., which provides science, technology,
engineering, and math (STEM) focused educational software in STEM and
career and technical education classes.
(5) Beginnings (Budget Code 13510, Budget Fund 101191). – For each year of
the 2025-2027 fiscal biennium, one million five hundred four thousand two
hundred sixteen dollars ($1,504,216) in recurring funds to eliminate funding
for Beginnings for Parents of Children Who are Deaf or Hard of Hearing, Inc.,
a nonprofit that provides outreach and support for parents and families of
children who are deaf or hard of hearing.

PUBLIC SCHOOLS ENROLLMENT AND TECHNICAL ADJUSTMENTS
SECTION 2A.7. There is appropriated from the General Fund to the Department of
Public Instruction the sum of one hundred four million two hundred forty -eight thousand six
hundred twenty-four dollars ($104,248,624) in recurring funds in each year of the 2025 -2027
fiscal biennium for changes in average salaries, sp ecial population headcounts, supplemental
funding in low-wealth counties, and other technical adjustments.

MAINTAIN COVERAGE OF COPAYS FOR REDUCED-PRICE SCHOOL MEALS
SECTION 2A.8.(a) G.S. 115C-264 is amended by adding a new subsection to read:
"(a1) Local boards of education operating school nutrition programs shall provide school
meals at no cost to students who qualify for reduced -price meals under the federal National
School Lunch Program or School Breakfast Program. If funds from alternate sources are
insufficient to provide school meals at no cost to students who qualify for reduced -price meals,
the Department of Public Instruction may use funds appropriated to the State Aid for Public
Schools Fund for this purpose. For the purposes of this section, "school meal" includes school
lunch and, if the local board of education participates in the School Breakfast Program, school
breakfast."

Page 6 Session Law 2025-89 House Bill 125
SECTION 2A.8.(b) Section 7.58 of S.L. 2023-134 is repealed.

REPEAL PLASMA GAMES PROGRAM
SECTION 2A.9. Section 7.69 of S.L. 2023-134, as amended by Section 2.8F of S.L.
2024-1, is repealed.

REPEAL BEGINNINGS REPORT
SECTION 2A.10. Subsection (b) of Section 7.28 of S.L. 2023-134 is repealed.

UNIFORM EDUCATION REPORTING SYSTEM
SECTION 2A.10A. There is appropriated from the General Fund to the Department
of Public Instruction the sum of nine million four hundred thousand dollars ($9,400,000) in
recurring funds for each year of the 2025 -2027 fiscal biennium to increase funding for the
Uniform E ducation Reporting System, which supports multiple software platforms, for costs
associated with transitioning to a new student information system.

YANCEY COUNTY SCHOOLS BUDGET ADJUSTMENT
SECTION 2A.10B.(a) Section 2A.3(c)(1) of S.L. 2025-26 reads as rewritten:
"(1) Twenty-five million dollars ($25,000,000) to disburse to Yancey County for
total rebuilds of destroyed public school infrastructure and buildings damaged
by Hurricane Helene. To qualify for these funds, public school units must have
sought ins urance coverage and have infrastructure damaged that is not
reimbursable under federal aid prior to application, if applicable. The county
shall ensure that funds do not duplicate funds received from insurance for the
same purposes.allocate to Yancey Count y Schools for constructing new or
upgrading existing school facilities."
SECTION 2A.10B.(b) This section is effective retroactively to June 27, 2025.

GENERAL FUND REDUCTIONS FOR THE UNIVERSITY OF NORTH CAROLINA
SECTION 2A.11. The funds appropriated to the Board of Governors of The
University of North Carolina are reduced for the 2025 -2026 fiscal year by the sum of three
million six hundred twenty-five thousand dollars ($3,625,000) and for the 2026-2027 fiscal year
by the sum of three million six hundred twenty-five thousand dollars ($3,625,000), as follows:
(1) Longleaf Commitment Community College Grant Program (Budget Code
16012). – For each year of the 2025 -2027 fiscal biennium, one hundred
twenty-five thousand dollars ($12 5,000) in recurring funds to eliminate the
Longleaf Commitment Community College Grant Program, which provided
a two-year need-based grant to community college students who graduated
high school during the 2022-2023 school year. There are no students eligible
for the program in the 2025-2027 fiscal biennium.
(2) Graduate Tuition Waiver (Budget Code 16011). – For each year of the
2025-2027 fiscal biennium, three million five hundred thousand dollars
($3,500,000) in recurring funds for nonresident graduate tuition waivers.

FUNDS FOR NC PROMISE TUITION PLAN
SECTION 2A.12. There is appropriated from the General Fund to the Board of
Governors of The University of North Carolina the sum of nine million five hundred thousand
dollars ($9,500,000) in recurring funds for each year of the 2025-2027 fiscal biennium to account
for increased enrollment of undergraduate resident and nonresident students receiving reduced
tuition rates under the NC Promise Tuition Plan pursuant to G.S. 116-143.11 at Elizabeth City

House Bill 125 Session Law 2025-89 Page 7
State University, Fayetteville State University, the University of North Carolina at Pembroke,
and Western Carolina University.

UNC BUILDING RESERVES
SECTION 2A.13. There is appropriated from the General Fund to the Board of
Governors of The University of North Carolina the following amounts to support the operation
and maintenance of completed capital projects at North Carolina State University, the University
of North Carolina at Chapel Hill, and the North Carolina School of Science and Mathematics:
(1) For each year of the 2025-2027 fiscal biennium, the sum of two million eight
hundred sixty-seven thousand two hundred twenty -two dollars ($2,867,222)
in recurring funds.
(2) For the 2025-2026 fiscal year, the sum of five hundred sixteen thousand six
hundred sixty-four dollars ($516,664) in nonrecurring funds.

PART II-B. HEALTH AND HUMAN SERVICES

NC LOAN REPAYMENT PROGRAM (NC LRP) REDUCTION
SECTION 2B.1. The funds appropriated for the 2025 -2027 fiscal biennium to the
Department of Health and Human Services, Division of Central Management and Support, for
the North Carolina Loan Repayment Program are reduced by the sum of two million dollars
($2,000,000) in recurring funds for each year of the 2025-2027 fiscal biennium.

FUNDING OFFSET FOR CHILD CARE SUBSIDY
SECTION 2B.2. The funds appropriated for each year of the 2025 -2027 fiscal
biennium to the Department of Health and Human Services, Division of Child Development and
Early Education, for the Child Care Subsidy program shall be reduced by the sum of eight million
dollars ($8,000,000) in recurring General Fund appropriations, which shall be offset with receipts
from the federal Temporary Assistance for Needy Families (TANF) block grant for each year of
the 2025-2027 fiscal biennium currently budgeted for Work First Family Assistance.

REPEAL THE MENTAL HEALTH AND SUBSTANCE USE TASK FORCE RESERVE
FUND
SECTION 2B.3.(a) Section 12F.3 of S.L. 2016-94 is repealed.
SECTION 2B.3.(b) The Department of Health and Human Services, Division of
Mental Health, Developmental Disabilities, and Substance Use Services (DMH/DD/SUS), shall
transfer the Mental Health and Substance Use Task Force Reserve Fund's entire unrestricted fund
balance, less any obligations for services provided in the 2024 -2025 fiscal year, to the
DMH/DD/SUS General Fund (Budget Code 14460) for single -stream funding. The funds
appropriated for the 2025-2026 fiscal year to DMH/DD/SUS for single -stream funding shall be
reduced by an equivalent amount not less than forty-one million eight hundred sixteen thousand
three hundred fifty-one dollars ($41,816,351) in nonrecurring funds. Any funds remaining in the
Mental Health and Substance Use Task Force Reserve Fund for obligations for services provided
in the 2024 -2025 fiscal year shall be transferred to the DMH/ DD/SUS General Fund (Budget
Code 14460) and shall not revert.
SECTION 2B.3.(c) The funds appropriated for each year of the 2025 -2027 fiscal
biennium to DMH/DD/SUS for the Mental Health and Substance Use Task Force Reserve Fund
shall be reduced by ten million dollars ($10,000,000) in recurring funds.
SECTION 2B.3.(d) Departmental receipts appropriated from the Mental Health and
Substance Use Task Force Reserve Fund to DMH/DD/SUS to provide funding for the
non-federal share of the Projects for Assistance in Transitions from Homelessness (PATH) grant

Page 8 Session Law 2025-89 House Bill 125
are reduced by the sum of four hundred sixty thousand dollars ($460,000) in recurring funds for
each year of the 2025-2027 fiscal biennium.
SECTION 2B.3.(e) There is appropriated from the General Fund to DMH/DD/SUS
the sum of four hundred sixty thousand dollars ($460,000) in recurring funds for each year of the
2025-2027 fiscal biennium. These funds shall be used to offset the reduction in departmental
receipts for funding the non-federal share of the PATH grant authorized in subsection (d) of this
section.
SECTION 2B.3.(f) Departmental receipts appropriated from the Mental Health and
Substance Use Task Force Reserve Fund to the Department of Health and Human Services,
Division of Child and Family Well -Being, for Child Case Management are reduced by the sum
of four million eight hundred seventy -five thousand dollars ($4,875,000) in recurring funds for
each year of the 2025-2027 fiscal biennium.
SECTION 2B.3.(g) There is appropriated from the General Fund to the Department
of Health and Human Services, Division of Child and Family Well -Being, the sum of three
million four hundred forty -seven thousand two hundred five dollars ($3,447,205) in recurring
funds for each year of the 2025-2027 fiscal biennium. These funds shall be used to partially offset
the reduction in departmental receipts for Child Case Management authorized by subsection (f)
of this section.

THREE-WAY BED CONTRACTS FUNDING REDUCTION
SECTION 2B.4. The funds appropriated for each year of the 2025 -2027 fiscal
biennium to the Department of Health and Human Services, Division of Mental Health,
Developmental Disabilities, and Substance Use Services, for inpatient psychiatric treatment at
local community hospitals (three -way bed contracts) shall be reduced by fifteen million six
hundred seventy-five thousand two hundred five dollars ($15,675,205) in recurring funds. This
amount is equivalent to the savings attributable to NC Health Works.

SINGLE-STREAM FUNDING REDUCTION
SECTION 2B.5.(a) The funds appropri ated for each year of the 2025 -2027 fiscal
biennium to the Department of Health and Human Services, Division of Mental Health,
Developmental Disabilities, and Substance Use Services (DMH/DD/SUS), for single -stream
funding shall be reduced by eighteen milli on five hundred sixty -two thousand six hundred
forty-five dollars ($18,562,645) in recurring funds.
SECTION 2B.5.(b) During each year of the 2025 -2027 fiscal biennium, each
LME/MCO shall offer at least the same level of service utilization as during the 2024-2025 fiscal
year across the LME/MCO's catchment area. This requirement shall not be construed to require
LME/MCOs to authorize or maintain the same level of services for any specific individual whose
services were paid for with single -stream funding. F urther, this requirement shall not be
construed to create a private right of action for any person or entity against the State of North
Carolina or the Department of Health and Human Services or any of its divisions, agents, or
contractors and shall not be used as authority in any contested case brought pursuant to Chapter
108C or 108D of the General Statutes.

STATE-COUNTY SPECIAL ASSISTANCE BUDGET SURPLUS REDUCTIONS
SECTION 2B.6.(a) Surplus Reduction of General Fund Appropriations. – The funds
appropriated from the General Fund for the 2025 -2027 fiscal biennium to the Department of
Health and Human Services, Division of Social Services, for the State-County Special Assistance
Program authorized by Part 3 of Article 2 of Chapter 108A of the General Statutes (SA Program)
are reduced by the sum of eight million six hundred forty -seven thousand two dollars
($8,647,002) in nonrecurring funds for the 2025-2026 fiscal year and by the sum of two million

House Bill 125 Session Law 2025-89 Page 9
two hundred fifty thousand dollars ($2,250,000) in nonrecurri ng funds for the 2026-2027 fiscal
year.
SECTION 2B.6.(b) Surplus Reduction of Nonrecurring Departmental Receipts. –
Departmental receipts budgeted by the Department of Health and Human Services, Division of
Social Services, for the SA Program are reduced by the sum of seven hundred fifty thousand
dollars ($750,000) in nonrecurring funds for the 2025 -2026 fiscal year and by the sum of two
million two hundred fifty thousand dollars ($2,250,000) in nonrecurring funds for the 2026-2027
fiscal year.

TALC SETTLEMENT OFFSET
SECTION 2B.7.(a) As used in this section, "Talc Settlement funds" means funds
received by the State as a beneficiary of the final consent judgment resolving the case, State of
North Carolina, ex rel. Joshua H. Stein, Attorney General, Plaintiff v. Johnson & Johnson,
Defendant, in the General Court of Justice, Superior Court Division, Wake County, and any other
funds received by the State as a result of a settlement, as defined in G.S. 114-2.4A, relating to
claims regarding deceptive marketing about the safety and purity o f products containing talcum
powder.
SECTION 2B.7.(b) There is transferred from the Talc Settlement funds available
within the North Carolina Department of Justice (Budget Code 23600/Budget Fund 202295) to
the Department of Health and Human Services, Division of Public Health, the sum of seven
million nine hundred five dollars ($7,000,905) in nonrecurring funds for the 2025 -2026 fiscal
year and the sum of thirteen million four hundred seventy -five thousand three hundred
ninety-four dollars ($13,475,394) in nonrecurring funds for the 2026 -2027 fiscal year. Fu nds
transferred pursuant to this subsection are appropriated for the fiscal year in which they are
transferred.
SECTION 2B.7.(c) The funds appropriated for the 2025-2027 fiscal biennium to the
Department of Health and Human Services, Division of Public He alth, are reduced by the sum
of seven million nine hundred five dollars ($7,000,905) in nonrecurring funds for the 2025-2026
fiscal year and by the sum of thirteen million four hundred seventy-five thousand three hundred
ninety-four dollars ($13,475,394) i n nonrecurring funds for the 2026 -2027 fiscal year. The
Department of Health and Human Services, Division of Public Health, shall offset the reductions
authorized by this subsection with the Talc Settlement funds transferred and appropriated to the
Department of Health and Human Services, Division of Public Health, by subsection (b) of this
section.

RECOVERY OF OVERAPPR OPRIATION TO THE HEA LTH ADVANCEMENT
RECEIPTS SPECIAL FUND
SECTION 2B.8.(a) The Department of Health and Human Services, Division of
Health Benefits (DHB), shall transfer the sum of nineteen million three hundred two thousand
dollars ($19,302,000) in nonrecurring funds for the 2025 -2026 fiscal year from the Health
Advancement Receipts Special Fund (Budget Code 24448) to the DHB General Fund ( Budget
Code 14445).
SECTION 2B.8.(b) The funds appropriated for the 2025 -2026 fiscal year to the
Department of Health and Human Services, Division of Health Benefits (DHB), to support the
Medicaid program shall be reduced by nineteen million three hundred two thousand dollars
($19,302,000) in nonrecurring funds.

COUNTY ADMINISTRATIO N REIMBURSEMENT SYST EM REPLACEMENT
TEMPORARY REDUCTION
SECTION 2B.9. The funds appropriated for the 2025 -2026 fiscal year to the
Department of Health and Human Services, Divis ion of Social Services, for the operations and

Page 10 Session Law 2025-89 House Bill 125
maintenance of a new County Administration Reimbursement System (CARS), which was
anticipated to have been implemented in the 2024-2025 fiscal year but has not yet occurred, shall
be reduced by the sum of one million five hundred seventy -eight thousand nine hundred five
dollars ($1,578,905) in nonrecurring funds for the 2025-2026 fiscal year.

MEDICAID REBASE AND MANAGED CARE ADMINISTRATION
SECTION 2B.10. There is appropriated from the General Fund to the Depa rtment
of Health and Human Services, Division of Health Benefits, the sum of six hundred million
dollars ($600,000,000) in recurring funds and associated receipts for each year of the 2025-2027
fiscal biennium. These funds shall be used to adjust Medicaid funding to account for projected
changes in enrollment, enrollment mix, service and capitation costs, and federal match rates, as
well as the implementation of the Children and Families Specialty Plan in December 2025 or for
contracts needed to operate the State's Medicaid managed care program.

CHARITY CARE EXEMPTION FOR CERTAIN QUALIFIED URBAN AMBULATORY
SURGICAL FACILITIES
SECTION 2B.11.(a) G.S. 131E-147.5, as enacted by Section 3.2(c) of S.L. 2023-7,
reads as rewritten:
"§ 131E -147.5. Charity care req uirement for qualified urban ambulatory surgical
facilities; annual report.
(a) The percentage of each qualified urban ambulatory surgical facility's total earned
revenue that is attributed to self -pay and Medicaid revenue shall be equivalent to at least f our
percent (4%), calculated as follows: the Medicare allowable amount for self -pay and Medicaid
surgical cases minus all revenue earned from self -pay and Medicaid cases, divided by the total
earned revenues for all surgical cases, divided by the total earned revenues for all surgical cases
performed in the facility for procedures for which there is a Medicare allowable fee.
(b) Each qualified urban ambulatory surgical facility shall annually report to the
Department in the manner prescribed by the Departme nt the percentage of the facility's earned
revenue that is attributed to self -pay and Medicaid revenue, as calculated in accordance with
subsection (a) of this section.
(c) Qualified a mbulatory surgical facilities in counties with a population greater than
125,000 that were licensed prior to November 21, 2025, are exempt from these requirements."
SECTION 2B.11.(b) This section becomes effective November 21, 2025.

GROSS PREMIUM TAX OFFSET CHANGES
SECTION 2B.12.(a) Article 8B of Chapter 105 of the General Statutes is amended
by adding a new section to read:
"§ 105-228.5C. Transfer to Health Advancement Receipts Special Fund.
Each fiscal year, the Secretary of Revenue shall transfer at the beginning of each quarter from
the State insurance tax net collections received by the Department of Revenue under this Article
to the State Treasurer for the Health Advancement Receipts Special Fund, the gross premiums
tax offset amount, as defined in G.S. 108A-147.12, and adjusted as provided in this sec tion. If
the gross premiums offset amount under G.S. 108A-147.12 for the applicable quarter is negative,
the amount to be transferred under this section for the applicable quarter shall be zero, and the
negative amount of gross premiums tax offset for the applicable quarter shall be applied to the
amount to be transferred under this section in future quarters until the negative amount has been
fully reconciled. The Office of State Budget and Management shall calculate the amount of the
gross premiums tax offset, as defined in G.S. 108A-147.12, and any adjustments to that amount
required by this section and shall certify the amount for the Secretary of Revenue that is required
to transfer each quarter using data in the North Carolina Financial System."
SECTION 2B.12.(b) G.S. 108A-147.11 reads as rewritten:

House Bill 125 Session Law 2025-89 Page 11
"§ 108A-147.11. Health advancement reconciliation adjustment component.
(a) The health advancement reconciliation adjustment component is a positive or
negative dollar amount equal to the actual nonfederal expenditures for the quarter that is two
quarters prior to the current quarter minus the sum of the following specified amounts:
(1) The presumptive service cost component calculated under G.S. 108A-147.5
for the quarter that is two quarters prior to the current quarter.
(2) The positive or negative gross premiums tax offset amount calculated under
G.S. 108A-147.12(b).amount transferred during the current quarter by the
Department of Revenue to the State Treasurer for the Health Advancemen t
Receipts Special Fund under G.S. 105-228.5C.
(3) The HASP health advancement component calculated under G.S. 108A-147.6
for the quarter that is two quarters prior to the current quarter.
…."
SECTION 2B.12.(c) G.S. 143C-9-10 reads as rewritten:
"§ 143C-9-10. Health Advancement Receipts Special Fund.
(a) Creation. – The Health Advancement Receipts Special Fund is established as a
nonreverting special fund in the Department of Health and Human Services.
(b) Source of Funds. – Each State fiscal quarter, the Department of Health and Human
Services shall deposit in the Health Advancement Receipts Special Fund an amount of funds
equal to the total nonfederal receipts for health advancement calculated under
G.S. 108A-147.3(b) for that quarter, minus the State retention component under G.S. 108A-147.8
for that quarter, and plus the positive or negative gross premiums tax offset amount calculated
under G.S. 108A-147.12(b) for that quarter.amount transferred by the Department of Revenue to
the State Treasurer for the Health Advancement Receipts Special Fund under G.S. 105-228.5C.
(c) Use of Funds. – The Department of Health and Human Services shall use funds in the
Health Advancement Receipts Special Fund only for the purposes described in
G.S. 108A-147.13."
SECTION 2B.12.(d) Section 1.6(d) of S.L. 2023-7 expires on June 30, 2025.
SECTION 2B.12.(e) As a result of the changes in this section, the appropriation to
the Department of Health and Human Services, Division of Health Benefits, in this act is reduced
by the s um of twenty -two million two hundred sixty -one thousand dollars ($22,261,000) in
recurring funds for each year of the 2025-2027 fiscal biennium.
SECTION 2B.12.(f) Subsection (b) of this section is effective on the first day of the
next assessment quarter after this act becomes law and applies to assessments imposed on or after
that date.

ACCOUNTING FOR MEDICAID RECEIVABLES AS NONTAX REVENUE
SECTION 2B.13.(a) The Department of Health and Human Services, Division of
Health Benefits (DHB), receivables reser ved at the end of the 2025 -2026 and 2026-2027 fiscal
years shall, when received, be accounted for as nontax revenue for each of those fiscal years. The
treatment under this section of any revenue derived from federal programs shall be in accordance
with the requirements specified in the Code of Federal Regulations, Title 2, Part 225.
SECTION 2B.13.(b) For the 2025-2026 fiscal year, the Department of Health and
Human Services shall deposit from its revenue one hundred seventy -one million four hundred
thousand dollars ($171,400,000) with the Department of State Treasurer to be accounted for as
nontax revenue. For the 2026 -2027 fiscal year, the Department of Health and Human Services
shall deposit from its revenues one hundred nine million dollars ($109,000,00 0) with the
Department of State Treasurer to be accounted for as nontax revenue. These deposits shall
represent the return of advanced General Fund appropriations, nonfederal revenue, fund
balances, or other resources from State -owned and State -operated ho spitals that are used to
provide indigent and nonindigent care services. The return from State-owned and State-operated

Page 12 Session Law 2025-89 House Bill 125
hospitals to the Department of Health and Human Services shall be made from nonfederal
resources in the following manner:
(1) The Univer sity of North Carolina Hospitals at Chapel Hill shall make the
following deposits:
a. For the 2025-2026 fiscal year, the amount of thirty -one million three
hundred sixty-five thousand three hundred five dollars ($31,365,305).
b. For the 2026-2027 fiscal year, the amount of thirty -one million three
hundred sixty-five thousand three hundred five dollars ($31,365,305).
(2) All State -owned and State -operated hospitals, other than the University of
North Carolina Hospitals at Chapel Hill, that specialize in psyc hiatric care
shall annually deposit an amount equal to the amount of the payments from
DHB for uncompensated care.

PART II-C. AGRICULTURE AND NATURAL AND ECONOMIC RESOURCES

SUNDAY OPENING STATE HISTORIC SITE PILOT PROGRAM
SECTION 2C.1.(a) Program Established. – Funds appropriated in this section to the
Department of Natural and Cultural Resources (Department) for the Sunday Opening State
Historic Site Pilot Program (Program) shall be used by the Department to open and operate the
following State Historic Sites on Sundays during each site's peak season:
(1) Bentonville Battlefield.
(2) Brunswick Town/Fort Anderson.
(3) Charlotte Hawkins Brown Museum.
(4) Fort Fisher.
(5) Governor Charles B. Aycock Birthplace.
(6) Historic Bath.
(7) Historic Edenton.
(8) Historic Halifax.
(9) North Carolina State Capitol.
(10) Reed Gold Mine.
(11) Roanoke Island Festival Park.
(12) Somerset Place.
(13) Thomas Day State Historic Site.
SECTION 2C.1.(b) Notice. – The Department shall publish, update, or provide
notice of the new operating hours pursuant to the Program established in subsection (a) of this
section.
SECTION 2C.1.(c) Reports. – The Department shall submit the following reports to
the Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources:
(1) By October 1, 2026, an interim report with (i) actual costs by site during the
2025-2026 fiscal year, (ii) Sunday visitation numbers by site during the
2025-2026 fiscal year, and (iii) preliminary recommendations.
(2) By April 1, 2027, a n interim report with any funding recommendations the
Department has for the upcoming biennium.
(3) By October 1, 2027, a final report on the implementation of the Program.
SECTION 2C.1.(d) Appropriation. – There is appropriated from the General Fund
to t he Department of Natural and Cultural Resources the nonrecurring sum of one hundred
fourteen thousand dollars ($114,000) in each year of the 2025-2027 fiscal biennium to implement
and fund the Sunday Opening State Historic Site Pilot Program in accordance with this section.

ECONOMIC DEVELOPMENT PROJECT FUNDS

House Bill 125 Session Law 2025-89 Page 13
SECTION 2C.2.(a) Provided the Economic Investment Committee (EIC) awards a
Job Development Investment Grant for a qualifying transformative project for an airplane
manufacturer in Guilford County, the re is appropriated from the Stabilization and Inflation
Reserve established in Section 2.2(q) of S.L. 2022 -74 to the Department of Commerce
(Department) the sum of one hundred eighteen million one hundred thousand dollars
($118,100,000) in nonrecurring fun ds for the 2025 -2026 fiscal year to be allocated for
acquisitions and improvements at the project site as provided in this section. For a term of years
the Department, in its discretion, deems appropriate, a recipient to whom funds are allocated
under this section that uses the funds, in whole or in part, to acquire or improve land (other than
water and sewer improvements) may not (i) sell or otherwise encumber the land or improvement
(other than utility and access easements and road rights-of-way) or (ii), absent the consent of the
EIC, lease the land or improvement; any such lease must require the land or improvement to be
used by the business for the purposes set out in the agreement.
For purposes of this section, the definitions of G.S. 143B-437.51 apply and a
"qualifying transformative project" is a transformative project for which the Department enters
into a binding contract with the business that requires, over a period of time not to exceed the
base period, that the business invests at least four bil lion five hundred million dollars
($4,500,000,000) in private funds and creates at least 14,000 eligible positions with an average
annual wage of at least eighty-nine thousand three hundred forty dollars ($89,340). The contract
constitutes a continuing obligation of the State and the business benefitted by the funds allocated
for improving the project site. The contract must (i) include all of the performance criteria,
remedies, and other safeguards required by the Department to secure the State's benefit d erived
from improvements to the airport funded by this section and (ii) require the business to repay an
appropriate, proportionate amount of costs incurred by the State, or reimbursement paid to the
business, for improvement of the airport for any failure by the business to meet and maintain the
applicable performance criteria on which the cost incurred or reimbursement paid was based.
Provided the requirements of the contract continue to be met, it is the intent of the General
Assembly to appropriate the sum of one hundred thirty -three million nine hundred thousand
dollars ($133,900,000) in nonrecurring funds for the 2026-2027 fiscal year and additional funds
in future acts in the aggregate amount of one hundred ninety-eight million dollars ($198,000,000)
over the following four succeeding fiscal years to support the qualifying transformative project.
With respect to funds allocated to the Piedmont Triad Airport Authority (Authority), the
Authority may contract for the design and construction using any deli very method it deems
appropriate, and the Department shall pay the costs of the design and construction to the
Authority or shall reimburse the Authority for the costs of the design and construction from the
funds allocated under this subsection. If it deems it appropriate, the Authority may authorize, in
writing, the business who operates the improvements to contract for the design and construction
of the improvements, and the Department or the Authority, if delegated by the Department, shall
pay the costs of the design and construction to the business or shall reimburse the business for
the costs of the design and construction from the funds allocated under this subsection. For
purposes of this subsection, neither the Authority nor the business shall be su bject to the
provisions of Article 3D of Chapter 143 of the General Statutes or Article 8 of Chapter 143 of
the General Statutes.
The funds appropriated for the 2025-2026 fiscal year in this section shall be allocated
to, and used, as follows:
(1) Fifteen million dollars ($15,000,000) to the Piedmont Triad Airport Authority
(Authority) for the acquisition of up to 150 acres of land (i) needed at
Piedmont Triad International Airport (Airport) (ii) to be owned by the
Authority for the project. If fund s allocated pursuant to this subdivision
exceed the amount necessary for the purpose of this subdivision, the

Page 14 Session Law 2025-89 House Bill 125
Department may reallocate the surplus for purposes authorized in subdivision
(2) of this subsection.
(2) Forty-five million dollars ($45,000,000) to the Authority for site analysis,
engineering, grading, site preparation, site work, and access road and taxiway
construction not otherwise provided for in this section that is needed at the
Airport for the project. If funds allocated pursuant to this su bdivision exceed
the amount necessary for the purposes of this subdivision, the Department
may reallocate the surplus for the purpose authorized in subdivision (1) of this
subsection.
(3) Seven million nine hundred thousand dollars ($7,900,000) to the Department
of Transportation for roadwork needed at the airport for the project.
Notwithstanding any other provision of law, the Department of Transportation
is authorized to utilize Progressive Design Build, Construction Management
General Contractor, or any other procurement methodology to contract for the
delivery of improvements for which funds are provided in this subdivision.
(4) Five million dollars ($5,000,000) to the City of Greensboro for water and
sewer infrastructure improvements needed to support the project.
(5) Ten million two hundred thousand dollars ($10,200,000) to the Authority for
the following:
a. Renovation costs of, and capital improvements to, an existing airport
hub to (i) render it suitable for the project and (ii) be owned by the
Authority.
b. Offsets for costs required by the Federal Aviation Administration.
(6) Thirty-five million dollars ($35,000,000) to the Authority for the following
costs related to construction of a facility for manufacturing, research, and
development to be owned by the Authority for the project: (i) costs for general
conditions, construction administration, construction of the substructure and
shell of the facility, building services, and mechanical systems, (ii) contractor
fees, and (iii) fees for permitting, inspections, and related administrative costs.
SECTION 2C.2.(b) On September 1 of each year funds appropriated for the airport
remain unexpended until all funds have been expended, the Department shall report on the use
of such funds to the House of Repres entatives and the Senate committee or subcommittee
responsible for base budget and appropriations, to the Joint Legislative Economic Development
and Global Engagement Oversight Committee, to the Joint Legislative Commission on
Governmental Operations, and to the Fiscal Research Division. The report shall include, at a
minimum, an executive summary of the performance of the business; the performance criteria,
remedies, and safeguards required by the Department for the funds; a description of the current
status of the project; the amount that was paid in the prior fiscal year; the purpose for which the
amount was paid; the total amount that has been paid; and any encumbrance allowed on the land
or an improvement on the land, including any lease.

PART II-D. JUSTICE AND PUBLIC SAFETY

ADDRESS PAC FUND SHORTFALL
SECTION 2D.1. There is appropriated from the General Fund to the Administrative
Office of the Courts, Office of Indigent Defense Services, the sum of ten million dollars
($10,000,000) in nonrecurring funds for the 2025-2026 fiscal year to be deposited into the Private
Assigned Counsel (PAC) Fund and used for the purposes of that Fund.

SUPPORT NORTH CAROLINA NATIONAL GUARD READINESS CENTERS

House Bill 125 Session Law 2025-89 Page 15
SECTION 2D.2.(a) There is appropriated from the General Fund to the Department
of Public Safety, North Carolina National Guard, the sum of four hundred twenty -one thousand
five hundred forty-four dollars ($421,544) in recurring funds beginning in the 2025 -2026 fiscal
year and five million two hundred sixty-six thousand dollars ($5,266,000) in nonrecurring funds
in the 2025 -2026 fiscal year to be used to support the opening of the McLeansville Readiness
Center, scheduled to open in January 2026.
SECTION 2D.2.(b) There is appropriated from the General Fund to the Department
of Public Safety, North Carolina National Guard, the sum of four hundred thousand dollars
($400,000) in nonrecurring funds in the 2025 -2026 fiscal year to be used for furniture, fixtures,
equipment, and other needs to support the opening of the North Wilkesboro Readiness Center.

PART II-E. GENERAL GOVERNMENT

DIVISION OF ACCOUNTABILITY, VALUE, AND EFFICIENCY
SECTION 2E.2.(a) This section shall be known as "The Division of Accountability,
Value, and Efficiency (DAVE) Act."
SECTION 2E.2.(b) The State Auditor shall establish the Division of Accountability,
Value, and Efficiency (Division) within the Department of the State Auditor. The powers and
duties of the Division shall be to effectuate the assessment and recommendations required by this
section, and the State Auditor shall organize and administer the Division in such a manner as the
State Auditor may deem necessary to conduct the Division's work accordingly.
SECTION 2E.2.(c) No later than October 1, 2025, every State agency shall report
to the Division both of the following:
(1) An explanation of how the agency, including each division or office within
that agency, utilizes public monies to execute its powers and duties under law.
(2) A description of all positions within that agency that have remained vacant for
six months or more as of the effective date of this section. The description
shall include the original position vacancy dates, the dates of any postings or
repostings of the positions, and an explanation for the length of the vacancies.
SECTION 2E.2.(d) The Division shall assess the continued need for each State
agency and the vacant positions within each agency. The assessment shall be based on a review
of the reports submitted pursuant to this section and any other information the Division deems
relevant. In gathering and assessing relevant information, the Division may consult with the Joint
Legislative Commission on Governmental Operations. The Division may also employ
individuals to utilize artificial intelligence and other appropriate tools for the purpose of
examining any of the following with respect to State agencies and their budgets:
(1) Amounts spent, including the entities receiving funds and the intended
purpose of the amounts spent.
(2) The effectiveness of any amount spent in achieving the intended purpose of
that spending.
(3) Duplicative spending.
(4) Any other factor demonstrating the fiscal soundness or effectiveness of the
State agency or lack thereof.
SECTION 2E.2.(e) No later than December 31, 2025, the Division shall report the
results of the assessment conducted pursuant to this section to the General Assembly. The
Division's report shall include, at minimum, recommendations on both of the following:
(1) Any State agencies, or any divisions or offices within a State agency, that
should be dissolved based on the Division's assessment.
(2) Any State agency positions that should be eliminated based on the Division's
assessment.

Page 16 Session Law 2025-89 House Bill 125
SECTION 2E.2.(f) The Division, in its discretion, may annually require any or all
State agencies to submit a report with the information required by this section, may reassess this
information on an annual basis in accordance with this section, and may report the results of the
assessment to the General Assembly.
SECTION 2E.2.(g) Subsections (a) through (g) of this section are effective when
they become law and expire December 31, 2028, at which time the Division shall terminate.
SECTION 2E.2.(h) There is appropriated from the General Fund to the Office of
the State Auditor the sum of six million dollars ($6,000,000) in recurring funds for each fiscal
year of the 2025-2027 fiscal biennium to provide funds for up to 45 positions, including salaries
and benefits, within the Division.

SBE EXEMPT POSITIONS/FUNDS
SECTION 2E.3.(a) There is appropriated from the General Fund to the State Board
of Elections the sum of one million one hundred ninety-three thousand nine hundred seventy-nine
dollars ($1,193,979) in recurring funds for each fiscal year of the 2025 -2027 fiscal biennium to
provide funds for the following seven new exempt positions, including salaries, benefits, and
operating costs:
(1) Administrative Officer III.
(2) Agency General Counsel II.
(3) Agency HR Director II.
(4) Assistant General Counsel II.
(5) Internal Auditor.
(6) Legislative Affairs Manager.
(7) Public Information Manager.
SECTION 2E.3.(b) G.S. 126-5 reads as rewritten:
"§ 126-5. Employees subject to Chapter; exemptions.
…
(c14) Notwithstanding any provision of this Chapter to the contrary, each Council of State
agency and agency, the Office of the State Controller Controller, and the Executive Director of
the State Board of Elections has the sole authority to set the salary of its exempt policymaking
and exempt managerial positions within the minimum rates, and the maximum rates plus ten
percent (10%), established by the State Human Resources Commission under G.S. 126-4(2).
…
(d)(1) Exempt Positions in Cabinet Department. – Subject to this Chapter, which is
known as the North Carolina Human Resources Act, the Governor may designate a total of 425
exempt positions throughout the following departments and offices:
…
(2) Exempt Positions in Council of State Departments and Offices and Offices,
the Office of the State Controller. Controller, and the State Board of Elections.
– The Secretary of State, the Auditor, the Treasurer, the Attorney General, the
Superintendent of Public Instruction, the Commissioner of Agriculture, the
Commissioner of Insurance, the Labor Commissioner, and the State
Controller Controller, and the Execu tive Director of the State Board of
Elections may designate exempt positions. The number of exempt
policymaking positions in each department headed by an elected department
head listed in this subdivision is limited to 25 exempt policymaking positions
or two percent (2%) of the total number of full -time positions in the
department, whichever is greater. The number of exempt managerial positions
is limited to 25 positions or two percent (2%) of the total number of full-time
positions in the department, whichever is greater. The number of exempt
policymaking positions designated by the Superintendent of Public Instruction

House Bill 125 Session Law 2025-89 Page 17
is limited to 70 exempt policymaking positions or two percent (2%) of the
total number of full -time positions in the department, whichever is greater.
The number of exempt managerial positions designated by the Superintendent
of Public Instruction is limited to 70 exempt managerial positions or two
percent (2%) of the total number of full -time positions in the department,
whichever is greater. The total number of exempt positions, policymaking and
managerial, designated by the Office of the State Controller is limited to 10.
The total number of exempt positions designated by the Executive Director of
the State Board of Election s is limited to the following seven positions:
Agency Human Relations Director II, Agency General Counsel II, Assistant
General Counsel II, Public Information Manager, Legislative Affairs
Manager, Internal Auditor, and Administrative Officer III.
…
(4) Vacancies. – In the event of a vacancy in the Office of Governor, the office of
a member of the Council of State, or the Office of the State Controller,
Controller, or the Executive Director of the State Board of Elections, the
person who succeeds to or is appointed or elected to fill the unexpired term
shall make designations in a letter to the Director of the Office of State Human
Resources, the Speaker of the House of Representatives, and the President of
the Senate within 180 days after the oath of office is administered to that
person.
…."

SBE LITIGATION FUNDS
SECTION 2E.4. There is appropriated from the General Fund to the State Board of
Elections the sum of one million five hu ndred thousand dollars ($1,500,000) in nonrecurring
funds for the 2025 -2026 fiscal year for future litigation needs. These funds shall not revert on
June 30, 2026, but shall remain available until expended.

SBE SOFTWARE MODERNIZATION AND DIT PROCUREMENT EXEMPTION
SECTION 2E.5.(a) There is appropriated from the Information Technology Reserve
in the General Fund, as established in Section 2.2(h) of S.L. 2021 -180, to the State Board of
Elections the sum of fifteen million dollars ($15,000,000) in nonrecurrin g funds for the
2025-2026 fiscal year to be used to complete the State Election Information Management System
(SEIMS) upgrade and the campaign finance software upgrade.
SECTION 2E.5.(b) The State Board of Elections shall develop and issue a request
for proposal for the Statewide Elections Information Management System Modernization Project
Plan.

PART II-F. TRANSPORTATION

DMV DRIVER LICENSE EXAMINER POSITIONS
SECTION 2F.1.(a) There is appropriated from the Highway Fund to the Department
of Transportation (i) the sum of one million two hundred two thousand four hundred eight dollars
($1,202,408) in recurring funds to create 40 additional full-time equivalent (FTE) Driver License
Examiner I and II positions in the 2025 -2026 fiscal year and (ii) the sum of t wo million nine
hundred ninety thousand three hundred sixty -seven dollars ($2,990,367) in recurring funds to
create 21 additional FTE Driver License Examiner I and II positions in the 2026-2027 fiscal year.
SECTION 2F.1.(b) In addition to the funds approp riated in this section, the
Department may use existing funds in Personal Services and Purchased Services to fund the
positions authorized by this section. Notwithstanding any other provision of law to the contrary,

Page 18 Session Law 2025-89 House Bill 125
the Department may reclassify temporary or vacant positions to create the new positions
authorized by this section. Any reclassification pursuant to this section shall be in accordance
with the classification system established by the State Human Resources Commission.

NEW DMV OFFICE LOCATIONS
SECTION 2F.2.(a) There is appropriated from the Highway Fund to the Department
of Transportation (i) the sum of one million eight hundred thirty -six thousand two hundred
twenty-three dollars ($1,836,223) in recurring funds in the 2025-2026 fiscal year, (ii) the sum of
eleven million four hundred seventy-one thousand nine hundred sixty-six dollars ($11,471,966)
in nonrecurring funds in the 2025-2026 fiscal year, and (iii) the sum of two million seven hundred
fifty-four thousand three hundred thirty -four doll ars ($2,754,334) in recurring funds in the
2026-2027 fiscal year to be used as follows:
(1) To establish new Division of Motor Vehicle (DMV) Offices in: (i) Brunswick
County, (ii) Cabarrus County, (iii) the Town of Fuquay -Varina in Wake
County, and (iv) the Town of Garland in Sampson County.
(2) To create 24 full-time equivalent (FTE) positions in the 2025-2026 fiscal year
and 12 additional FTE positions in the 2026 -2027 fiscal year within the new
offices established pursuant to subdivision (1) of this subsection.
SECTION 2F.2.(b) No later than October 1, 2025, the DMV is directed to execute
contracts that provide for the operation of the new DMV offices established pursuant to
subsection (a) of this section. No later than December 1, 2025, the DMV shall report to the Joint
Legislative Transportation Oversight Committee and the Fiscal Research Division on the terms
of the contracts required by this subsection, including the staffing, capital, and operational needs
of the new offices.

PART II-G. MISCELLANEOUS REDUCTIONS AND ADJUSTMENTS

VACANT POSITION FLEXIBILITY
SECTION 2G.1.(a) Reduction. – By October 1 of each year of the 2025-2027 fiscal
biennium, State agencies shall eliminate positions that remain vacant at the end of the 2024-2025
fiscal year to achieve the following General Fund budgeted reductions in each of those years:
FY 2025-2026 FY 2026-2027
Department of Public Instruction ($1,848,573) ($1,848,573)
Department of Environmental Quality (2,263,924) (2,933,529)
Department of Information Technology (1,395,442) (1,395,442)

SECTION 2G.1.(b) Report. – Each State agency with vacant position reductions
shall report to the Fiscal Research Division by December 1 of each year of the 2025-2027 fiscal
biennium on the actions taken to achieve the budgeted reduction for vacant position eliminations
for that fiscal year. The report shall include a list of each position eliminated, identified by
position number, title, and the amount of salary and fringe benefits associated with the position.

PART III. SALARY AND BENEFITS

APPROPRIATIONS TO SUPPORT EMPLOYEE BENEFITS
SECTION 3.1.(a) There is appropriated from the General Fund the sum of one
hundred ninety-seven million five hundred sixty-three thousand one hundred thirty-three dollars
($197,563,133) in recurring funds for the 2025 -2026 fiscal year for the costs associated with
employee benefits under this Part to be allocated as follows:

Entity 2025-2026

House Bill 125 Session Law 2025-89 Page 19
Community College
System Office $14,764,787
Department of Public
Instruction $115,396,268
The University of
North Carolina $29,004,662
DHHS – Aging $29,565
DHHS – Central Management
and Support $579,908
DHHS – Child and Family
Well-Being $210,995
DHHS – Child Development
and Early Education $20,753
DHHS – Emp. & Indp. For People
With Disabilities $183,191
DHHS – Health Benefits $179,279
DHHS – Health Service
Regulation $217,526
DHHS – Mental Health/Dev. Disabl./
Substance Use Services $3,058,301
DHHS – Public Health $328,668
DHHS – Services for the Blind/Deaf/
Hard of Hearing $40,656
DHHS – Social Services $133,842
Dept. of Agriculture and
Consumer Services $1,040,071
Dept. of Commerce $100,151
Dept. of Env. Quality $467,885
Dept. of Labor $192,841
Dept. of Natural and
Cultural Resources $1,417,897
Wildlife Resources Comm. $127,659
Administrative Office
of the Courts $7,190,260
Indigent Defense Services $804,451
Department of Adult Correction $14,023,748
Department of Justice $487,366
Dept. of Public Safety $3,739,834
State Bureau of Investigation $386,113
Dept. of Administration $280,982
Office of Admin. Hearings $51,890
Auditor $120,639
Office of Budget and
Management $69,769
Controller $187,916
Board of Elections $58,423
General Assembly $668,256
Office of the Governor $43,365
Office of State Human Resources $62,816
Industrial Commission $88,658
Dept. of Insurance $305,601

Page 20 Session Law 2025-89 House Bill 125
Office of State Fire Marshal $70,864
Office of the Lt. Governor $9,462
Dept. of Military and Veteran
Affairs $65,673
Department of Revenue $705,590
Secretary of State $139,199
Treasurer – Other Retirement Plans/
Benefit Requirements $350,000
Dept. of Information
Technology $157,353
SECTION 3.1.(b) There is appropriated from the Highway Fund to the Department
of Transportation for the costs associated providing for employee benefits in accordance with
this Part the sum of eight million four hundred seventy -seven thousand twenty -seven dollars
($8,477,027) in recurring funds for the 2025-2026 fiscal year.
SECTION 3.1.(c) State funds, as defined in G.S. 143C-1-1(d)(25), are appropriated
for each year of the 2025-2027 fiscal biennium, as agency receipts up to the amounts needed to
implement the provisions of this Part for each year of the 2025-2027 fiscal biennium.

TRANSFERS TO SUPPORT THE PROVISIONS OF THIS PART
SECTION 3.2. There is transferred from the Insurance Regulator y Fund in the
Department of Insurance to the General Fund the sum of three hundred ninety-four thousand two
hundred fifty-nine dollars ($394,259) in recurring funds for the 2025-2026 fiscal year.

AUTHORIZATIONS RELATED TO COMPENSATION OF STATE EMPLOYEES AND
PUBLIC SCHOOL PERSONNEL
SECTION 3.3. Notwithstanding subdivisions (5) and (6) of G.S. 143C-5-4(b),
during the period of continuing budget authority that begins July 1, 2025, all of the following
apply:
(1) State employees subject to G.S. 7A-102(c), 7A -171.1, 143B -1714, or any
other statutory salary schedule, are authorized to move up on salary schedules
and receive applicable automatic step increases.
(2) State employees, including those exempt from the classification and
compensation rules established by the State Human Resources Commission,
are authorized to receive automatic step increases, annual, performance, merit,
bonuses, and other applicable increments.
(3) Sections 39.16, 39.17, and 39.18 of S.L. 2023-134, and Section 39.15 of S.L.
2023-134, as amended by Section 8.2 of S.L. 2024 -1, shall remain in effect,
notwithstanding any limitation to the 2023-2025 fiscal biennium.
(4) Public school employees paid on the teacher salary schedule, the principal
salary schedule, or any other salary schedule es tablished by State law are
authorized to move up or down on applicable salary schedules and receive
applicable automatic step increases.
(5) Bonuses are authorized for teachers and principals pursuant to the
requirements of Section 7A.3 of S.L. 2023 -134 an d Section 1.3 of S.L.
2024-39, notwithstanding any limitation to the 2023-2025 fiscal biennium.
(6) Supplemental funds for teacher compensation are authorized pursuant to the
requirements of Section 7A.4 of S.L. 2023-134, as amended by Section 1.7B
of S.L. 2024-39, notwithstanding any limitation to the 2023 -2025 fiscal
biennium.

ALLOW IMPLEMENTATION OF SALARY ADJUSTMENTS

House Bill 125 Session Law 2025-89 Page 21
SECTION 3.4. Notwithstanding G.S. 143C-5-4(b)(5), a State agency may
implement salary adjustments during the period of continuing budget authority that begins July
1, 2025, within its authorized recurring personal services appropriations if all of the following
requirements are met:
(1) Total personal services expenditures do not exceed the agency's authorized
personal services appropriation for the most recent completed fiscal year.
(2) Any salary increases are funded through position vacancies, turnover savings,
or reallocation within the personal services budget.
(3) The salary increases do not include scheduled salary increases based on
experience-based salary schedules.

USE OF FUNDS APPROPRIATED FOR EMPLOYEE BENEFITS
SECTION 3.5.(a) The Office of State Budget and Management shall ensure that the
appropriations made by this act for employee benefits are used only for those purposes.
SECTION 3.5.(b) If the Director of the Budget determines that funds appropriated
to a State agency for employee benefits exceed the amount required by that agency for those
purposes, the Director may reallocate those funds to other State agencies that recei ved
insufficient funds for employee benefits.
SECTION 3.5.(c) Funds appropriated for employee benefit increases may not be
used to adjust the budgeted salaries of vacant positions, to provide salary increases in excess of
those required by the General Assembly, or to increase the budgeted salary of filled positions to
the minimum of the position's respective salary range.
SECTION 3.5.(d) Any funds appropriated for employee benefits in excess of the
amounts required to provide for employee benefits shall be credited to the Pay Plan Reserve.
SECTION 3.5.(e) No later than May 1, 2026, the Office of State Budget and
Management shall report to the Fiscal Research Division on the expenditure of funds for
employee benefits under this Part. This report shall include at least the following information for
each State agency:
(1) The total amount of funds that the agency received under this Part for
employee benefits.
(2) The total amount of funds transferred from the agency to other State agencies
pursuant to subsec tion (b) of this section. This section of the report shall
identify the amounts transferred to each recipient State agency.
(3) The total amount of funds used by the agency for employee benefits.
(4) The amount of funds credited to the Pay Plan Reserve.

SALARY-RELATED CONTRIBUTIONS
SECTION 3.6.(a) Effective for the 2025 -2027 fiscal biennium, required employer
salary-related contributions for employees whose salaries are paid from department, office,
institution, or agency receipts shall be paid from the same source as the source of the employee's
salary. If an employee's salary is paid in part from the General Fund or Highway Fund and in
part from department, office, institution, or agency receipts, required employer salary -related
contributions may be pai d from the General Fund or Highway Fund only to the extent of the
proportionate part paid from the General Fund or Highway Fund in support of the salary of the
employee, and the remainder of the employer's requirements shall be paid from the source that
supplies the remainder of the employee's salary. The requirements of this section as to source of
payment are also applicable to payments on behalf of the employee for hospital medical benefits,
longevity pay, unemployment compensation, accumulated leave, wo rkers' compensation,
severance pay, separation allowances, and applicable disability income benefits.
SECTION 3.6.(b) Effective July 1, 2025, the State's employer contribution rates
budgeted for retirement, health, and related benefits as a percentage of covered salaries for the

Page 22 Session Law 2025-89 House Bill 125
2025-2026 fiscal year for teachers and State employees, State law enforcement officers (LEOs),
the University and Community Colleges Optional Retirement Programs (ORPs), the
Consolidated Judicial Retirement System (CJRS), and the Legislative Retirement System (LRS)
are as set forth below:
Teachers State ORPs CJRS LRS
and State LEOs
Employees
Retirement 17.14% 17.14% 6.84% 37.73% 18.26%
Health 7.33% 7.33% 7.33% 7.33% 7.33%
Disability 0.07% 0.07% 0.07% 0.00% 0.00%
Death 0.13% 0.13% 0.00% 0.00% 0.00%
NC 401(k) 0.00% 5.00% 0.00% 0.00% 0.00%

Total Contribution
Rate 24.67% 29.67% 14.24% 45.06% 25.59%
The rate for health includes two and four -tenths percent (2.40%) for the Public
Employee Health Benefit Fund and four and ninety -three hundredths percent (4.93%) for the
Retiree Health Benefit Fund.
SECTION 3.6.(c) Effective July 1, 2025, the annual employer contributions for the
2025-2026 fiscal year, payable monthly, by the State to the North Carolina State Health Plan for
Teachers and State Employees for each covered employee is a maximum of eight thousand five
hundred dollars ($8,500).
SECTION 3.6.(d) G.S. 135-151(d) reads as rewritten:
"(d) Funding of the QEBA. – The QEBA shall be unfunded within the meaning of federal
tax laws. No payee contributions or deferrals, direct or indirect, by election or otherwise shall be
made or allowed. The benefit liability for the QEBA shall be determined each fiscal year, and
assets shall not be accumulated to pay benefits in future fiscal years. All of the following apply
to employer contributions required to pay benefits under the QEBA:
(1) The Board of Trustees, upon the recommendation of the actuary engaged by
the Board of Trustees, shall determine the employer contributions required to
pay the benefits due under the QEBA for each fiscal year.
(2) The required contributions shall be paid by all participating employers.
(3) The required contributions shall be deposited in a separate fund from the fund
into which regular employer contributions are deposited for the Retirement
System. The benefit liability for the QEBA shall be determined each fiscal
year, and assets shall not be accumulated to pay benefits in future fiscal years.
(4) A portion of the employer contribution rate established for retirement benefits
as a percentage of covered salaries for teachers, State employees, and State
law enforcement officers may be deposited into the separate fund established
in accordance with subdivision (3) of this subsection . The amount of the
portion allowable under this subdivision shall not exceed one-hundredths
percent (0.01%) in any given fiscal year."
SECTION 3.6.(e) Effective July 1, 2025, the State contribution to the North Carolina
Firefighters' and Rescue Squad Workers' Pension Fund is increased by three hundred fifty
thousand dollars ($350,000) in recurring funds for the 2025 -2026 fiscal year resulting in a tota l
State Contribution of twenty million seven hundred fifty-two thousand two hundred eight dollars
($20,752,208) for the 2025-2026 fiscal year.

PART IV. DEPARTMENT OF INFORMATION TECHNOLOGY

DEPARTMENT OF INFORMATION TECHNOLOGY CHANGES

House Bill 125 Session Law 2025-89 Page 23
SECTION 4.1.(a) G.S. 143B-1320(b) reads as rewritten:
"(b) Exemptions. – Except as otherwise specifically provided by law, the provisions of
this Chapter do this Article does not apply to the following entities: the General Assembly, the
Judicial Department, and The Uni versity of North Carolina and its constituent institutions.
institutions, the State Board of Elections, and the State Highway Patrol. These entities may elect
to participate in the information technology programs, services, or contracts offered by the
Department, including information technology procurement, in accordance with the statutes,
policies, and rules of the Department. The election must be made in writing, as follows:
(1) For the General Assembly, by the Legislative Services Commission.
(2) For the Judicial Department, by the Chief Justice.
(3) For The University of North Carolina, by the Board of Governors.
(4) For the constituent institutions of The University of North Carolina, by the
respective boards of trustees.
(5) For the State Board of Elections, by the Executive Director of the State Board
of Elections.
(6) For the State Highway Patrol , by the Commander of the State Highway
Patrol."
SECTION 4.1.(a1) If House Bill 549, 2025 Regular Session, becomes law,
G.S. 143B-1320(b), as amended by Section 2 of that act and subsection (a) of this section, reads
as rewritten:
"(b) Exemptions. – Except as otherwise specifically provided by law, this Article does not
apply to the following entities: the General Assembly, the Judicial Department, The Un iversity
of North Carolina and its constituent institutions, and the Office of the State Auditor. Auditor,
the State Board of Elections, and the State Highway Patrol. These entities may elect to participate
in the information technology programs, services, or contracts offered by the Department,
including information technology procurement, in accordance with the statutes, policies, and
rules of the Department. The election must be made in writing, as follows:
(1) For the General Assembly, by the Legislative Services Commission.
(2) For the Judicial Department, by the Chief Justice.
(3) For The University of North Carolina, by the Board of Governors.
(4) For the constituent institutions of The University of North Carolina, by the
respective boards of trustees.
(5) For the Office of the State Auditor, by the State Auditor.
(5)(6) For the State Board of Elections, by the Executive Director of the State Board
of Elections.
(6)(7) For the State Highway Patrol, by the Commander of the State Highway
Patrol."
SECTION 4.1.(b) Section 38.4 of S.L. 2023-134 reads as rewritten:
"SECTION 38.4.(a) In accordance with G.S. 143B-1325(c)(13), and notwithstanding any
other provision of Article 15 of Chapter 143B of the General Statutes to the contrary, the State
Highway Patrol, the State Bureau of Investigation, Investigation and the Division of Emergency
Management within the Department of Public Safety shall continue to be entirely exempt from
any and all information technology oversight by the Department of Public Saf ety and the
Department of Information Technology. The State Highway Patrol, the State Bureau of
Investigation, and the Division of Emergency Management shall initiate a pilot project where
those divisions the division shall be deemed as a separate, stand-alone entities entity within the
Department of Public Safety in all matters related to information technology, and each the
division shall autonomously manage their its own respective information technology
infrastructure and all associated services without oversight from the Department of Information
Technology or the Department of Public Safety. Exemption from information technology
oversight includes, but is not limited to, the following:

Page 24 Session Law 2025-89 House Bill 125
…
"SECTION 38.4.(b) This section expires on June 30, 2025.2027."
SECTION 4.1.(c) G.S. 143B-1325(c) reads as rewritten:
"(c) Participating Agencies. – The State CIO shall prepare detailed plans to transition each
of the participating agencies. As the transition plans are completed, the following participating
agencies s hall transfer information technology personnel, operations, projects, assets, and
appropriate funding to the Department of Information Technology:
…
(13) Department of Public Safety, with the exception of the following:
a. State Bureau of Investigation.
…
c. Division of Emergency Management.
The State CIO shall ensure that State agencies' operations are not adversely impacted under the
State agency information technology consolidation."

CHANGES TO THE BROADBAND POLE REPLACEMENT PROGRAM
SECTION 4.2.(a) Section 38.10 of S.L. 2021 -180, as amended by Section 16.4 of
S.L. 2022-6, reads as rewritten:
"BROADBAND ACCELERATION
…
"SECTION 38.10.(b) The Broadband Pole Replacement Program (hereinafter "Program")
is hereby established for the purpose of speeding and f acilitating the deployment of broadband
service to individuals, businesses, agricultural operations, and community access points in
unserved areas by reimbursing a portion of eligible pole replacement costs incurred by
communications service providers. A c ommunications service provider who pays or incurs the
costs of removing and replacing an existing pole pole, or placing facilities underground to better
protect the critical infrastructure from natural disasters, in connection with a qualified project
may apply to the Department for reimbursement in an amount equal to fifty percent (50%) of
eligible pole replacement costs paid or incurred by the applicant or ten thousand dollars
($10,000), whichever is less, for each pole replaced.replaced or, in the case of placing facilities
underground, fifty percent (50%) of such costs.
…
"SECTION 38.10.(g) A pole owner shall promptly review a request for access, perform
surveys, provide estimates and final invoices, and complete, or require the completion by other
attaching entities of, any make-ready work necessary for purposes of offering broadband service
in an unserved area. A pole owner shall provide a good -faith estimate for any make-ready costs
to the communications service provider within 60 days after receipt of a complete application for
access. If requested by the communications service provider, the pole owner shall provide
accompanying documentation indicating the basis of all estimated fees or other charges,
including, but not limited to, administrative costs, that form the basis of its estimate. A good-faith
estimate shall remain valid for 14 days. To accept a good -faith estimate, a communications
service provider must provide the pole owner with written acceptance and payment of the
good-faith estimate. M ake-ready work shall be conditioned upon payment of the good -faith
estimate and shall be completed within a reasonable time frame mutually agreed to by the
communications service provider and the pole owner. A pole owner may treat multiple requests
from a single communications service provider as one application for access when the requests
are filed within 90 days of one another. A pole owner may deviate from the time limits specified
in this subsection during performance of make -ready work for good and su fficient cause that
renders it infeasible to complete make -ready work within the time limits specified in this
subsection. Any deviation from the time limits specified in this subsection shall extend for a
period no longer than necessary. A communications service provider shall promptly be notified,

House Bill 125 Session Law 2025-89 Page 25
in writing, of the reason for a deviation and the new completion date estimate. A communications
service provider shall provide notice, in writing, to the pole owner no later than 14 days after
attaching equipment to a pole in an unserved area. This subsection shall not apply to poles owned
by a utility.
"SECTION 38.10.(h) A party subject to a dispute arising under subsection (g) of this section
may invoke the dispute procedures authorized in G.S. 62-350 in the same manner as a party
seeking resolution of a dispute under G.S. 62-350(c), and the Utilities Commission shall issue a
final order resolving the dispute within 120 days of the date the proceedings were initiated;
provided, however, the Commission may exte nd the time for issuance of a final order for good
cause and with the agreement of all parties. In such a dispute, the Commission shall apply the
provisions of this section notwithstanding any contrary provisions of any existing agreement.
This subsection shall not apply to poles owned by a utility.
"SECTION 38.10.(i) No later than 60 days after the date funds are appropriated to the
Program special fund, and on a quarterly basis thereafter, the Department shall maintain and
publish on its website all of the following:
(1) The number of applications for reimbursement received, processed, and
rejected, including the reasons applications were rejected.
(2) The amount of each reimbursement, the total number of reimbursements, and
the status of any pending reimbursements.
(3) The estimated remaining balance in the Program special fund.
"SECTION 38.10.(j) The following definitions apply in this section:
…
(4) Eligible pole replacement cost. – The actual and reasonable costs paid or
incurred by a party after June 1, 2021, to (i) remove and replace a pole,
including the amount of any expenditures to remove and dispose of the
existing pole, purchase and install a replacement pole, and transfer any
existing facilities to the new pole. pole or (ii) place facilities, including lines,
conduit, and related equipment, underground to better protect the critical
infrastructure from natural disaster. The term includes costs paid or incurred
by the party responsible for the costs of a pole replacement to reimburse the
party that performs the pole replacement. The term does not include costs that
the party incurs initially that have been reimbursed to the party by another
party ultimately responsible for the costs.
(5) Pole. – Any pole used, wholly or partly, for any wire commu nications or
electric distribution, irrespective of who owns or operates the pole.pole,
including poles owned by a utility.
(6) Pole owner. – A city or cooperatively organized entity that owns utility poles.
(7) Qualified project. – A project undertaken by a communications service
provider that is not affiliated with a pole owner seeking to provide or, due to
natural disaster or other force majeure event, restore , temporarily or
permanently, qualifying internet access service on a retail basis to one or more
households, businesses, agricultural operations, or community access points
in an unserved or underserved area. The project may be affiliated with a
cooperatively organized entity that owns utility poles but shall not be affiliated
with a city that owns utility poles. A pole owner whose affiliate seeks
reimbursement for a qualified project shall not pass through th e costs for
which reimbursement is sought to unaffiliated communications service
providers and shall schedule and perform all work in a nondiscriminat ory
fashion.
…

Page 26 Session Law 2025-89 House Bill 125
(9) Unserved area. – An area in which, according to the most recent map of fixed
broadband internet access service made available by the Federal
Communications Commission, fixed, terrestrial broadband service at speeds
of at least 25 megabits per second download and at least 3 megabits per second
upload is unavailable at the time the communications service provider
requests access. An unserved area also includes an area that was previously
served but has become unserved due to damage or destruction by a natural
disaster. A pole or underground installation shall be presumed to be located in
an unserved area if the pole is located in an area that is the subject of a federal
or State grant to deploy broadband service, the conditions of which limit the
availability of a grant to unserved areas.areas or, in the case of a damaged or
destroyed facility, was in such an area when the facility was originally
constructed.
(10) Utility. – As defined by 47 U.S.C. § 224.
…."
SECTION 4.2.(b) This section is effective when it becomes law. Funds encumbered
for expenses incurred as of June 1, 2021, prior to the effective date of this section shall remain
eligible for reimbursement.

BROADBAND FUND FLEXIBILITY
SECTION 4.3.(a) G.S. 143B-1373.2 is repealed.
SECTION 4.3.(b) G.S. 143B-1374 is repealed.
SECTION 4.3.(c) The Department of Information Technology shall use funds
appropriated for the Growing Rural Economies with Access to Technology program for fixed
wireless and satellite broadband grants, established in G.S. 143B-1373.2, to award grants to
eligible entities to purchase installation materials for satellite internet service. Installation
materials and internet service must be for the grantee's own use and not for distribution to other
parties. No portion of funds granted un der this section shall be used for internet service
subscriptions. The Department shall prioritize grant applicants that operate in one of the 39
counties designated as a disaster area due to Hurricane Helene. The Department may also give
priority to grant ees that offer emergency services, disaster relief, educational services, or
economic development.
SECTION 4.3.(d) For the purposes of subsection (c) of this section, an eligible entity
is one of the following:
(1) A State agency.
(2) A local government entity.
(3) A volunteer fire department.
(4) An anchor point, as that term is defined in G.S. 117-18.1(d)(1).
SECTION 4.3.(e) The Department of Information Technology may provide
emergency funding to communications service providers to rebuild, repair, or replace broadband
infrastructure damaged by Hurricane Helene, including reimbursement of costs already incurred
for rebuilding, repairing, or replacing broadband infrastructure, provided that all of the following
apply:
(1) An applicant for funding under this section shall only be permitted to recover
costs that are not subject to reimbursement from another source of external
funding, including insurance.
(2) The Department may cap reimbursement at a portion of the costs incurred
based upon evaluation of c onsiderations such as the number of applications
anticipated compared to funds available.
(3) Priority shall be given to restoration of broadband service.

House Bill 125 Session Law 2025-89 Page 27
SECTION 4.3.(f) The Department may use up to fifty million dollars ($50,000,000)
of the funds availa ble from the Broadband Make Ready Accelerator appropriation in S.L.
2021-180 for the emergency funding described in subsection (e) of this section. Funds shall be
used in compliance with applicable federal guidelines associated with the use of federal fund s.
The Department may use its emergency procurement authority provided in 09 NCAC 06B .1302
to procure any goods or services in accordance with subsection (e) of this section and shall
document the request for funding, the emergency situation or need, the area to be served, and the
community's need for the procurement.
SECTION 4.3.(g) Section 38.15 of S.L. 2021-180, as enacted by Section 16.1(a) of
S.L. 2022-6, reads as rewritten:
"SECTION 38.15. Except as otherwise provided, provided and after the intent of the original
appropriation has been satisfied to the extent practicable, the Department of Information
Technology shall have flexibility to transfer funding between the programs outlined in Section
38.4, Section 38.5, and Section 38.6 38.6, and Sections 38.10(b) through (k) of this act, so long
as the total allocations for the programs remain the same.act."

BEAD DEPLOYMENT CHANGES
SECTION 4.4.(a) Section 10.2 of S.L. 2024-55 reads as rewritten:
"SECTION 10.2.(a) Definitions. – As used in this section, the following definitions apply:
(1) BEAD. – Broadband Equity, Access, and Deployment.
(2) Broadband service. – For the purposes of this section, a terrestrially deployed
mass-market retail service by wire or radio that provides the capability to
transmit data to and receive data from all or substantially all internet
endpoints, including any capabilities that are incidental to and enable the
operation of the communications service, but excluding dial-up internet access
service.
…
(8) Extremely hig h cost per location threshold. – A BEAD subsidy cost per
location above which the Office may decline to select a proposal if use of an
alternative technology meeting the BEAD Program's technical requirements
is necessitated by the fact that selection of an eligible project proposing to
provision service via end -to-end fiber -optic facilities to each end -user
premises would be cost prohibitive. The Office will develop a methodology
for calculating this threshold in a manner that maximizes use of the best
available technology while ensuring that the program can, at a minimum, meet
the prioritization requirements. The Office will post the methodology for
public comment before implementation. The Office shall not, unless it is
determined that it does not have suf ficient funding to select each
highest-scoring application in the initial round described in this section, utilize
the extremely high cost per location threshold in the initial round.
…
(14) Low-cost broadband service option. – A broadband service offered to
low-income households that meets the eligibility requirements for the federal
Affordable Connectivity Program, or similar replacement program, in the
project area for at least the length of time defined by federal requirements. A
low-cost broadband service option must be made available and include the
following elements: As defined in the IIJA and as interpreted by a ny
subsequent guidance issued by NTIA.
a. Provide typical download speeds of at least 100 Mbps and typical
upload speeds of at least 20 Mbps.

Page 28 Session Law 2025-89 House Bill 125
b. Provide typical latency measurements of no more than 100
milliseconds.
c. Not be subject to nongovernmental imposed surcharges and be subject
only to the same acceptable use policies to which subscribers to all
other broadband internet access service p lans offered to home
subscribers by the participating subgrantee must adhere.
d. Shall be offered at a price that does not exceed the highest price listed
in the FCC's 2024 Urban Rate Survey data for Fixed Broadband
Service for a service offering in North Carolina that provides a
download speed of 100 Mbps, upload speed of 20 Mbps, and an
unlimited capacity allowance. The price may be adjusted by the
subgrantee based on the Consumer Price Index, as defined by the
United States Bureau of Labor Statistics, beginning with an adjustment
in the first new calendar year after the date of enactment of this section.
e. In the event the provider later increases the speeds of one of its
low-cost plans, it will permit eligible subscribers that are subscribed
to that pla n to upgrade to those new speeds at no more than a
commensurate change in cost.
…
(20) Reliable broadband service. – Terrestrial-based broadband service (i) with
ninety-five percent (95%) of latency measurements during testing windows
falling at or below 100 milliseconds round-trip time and (ii) which is designed
to ensure that network outages should not exceed, on average, 48 hours over
any 365 -day period except in the case of natural disasters or other force
majeure occurrences. Locations served exclusive ly by satellite, terrestrial
fixed wireless services utilizing entirely licensed spectrum, using a hybrid of
licensed and unlicensed spectrum, or a technology not specified by the FCC
for purposes of its Broadband DATA Maps do not meet the definition of
"reliable broadband service" and will be considered "unserved" for the
purposes of determining eligible locations. As defined in the IIJA and as
interpreted by any subsequent guidance issued by NTIA.
(21) Secretary. – The Secretary of Information Technology.
(22) Subgrantee. – An eligible recipient who receives BEAD funds for an eligible
project.
(23) Underserved. – A BSL that has access to reliable broadband service equal to
or greater than 25 Mbps download and 3 Mbps upload but less than 100 Mbps
download an d 20 Mbps upload. Unless otherwise determined by the
Department based on competent findings of fact, locations that the FCC's
Broadband DATA Maps show to have available qualifying broadband service
delivered via (i) DSL or (ii) terrestrial fixed wireless services utilizing entirely
licensed spectrum, or using a hybrid of licensed and unlicensed spectrum,
shall be considered "underserved" for the purpose of determining eligible
locations.As defined in the IIJA and as interpreted by any subsequent
guidance issued by NTIA.
(24) Unserved. – A BSL that does not have access to reliable broadband service
with transmission speeds of at least 25 Mbps download and at least 3 Mbps
upload.As defined in the IIJA and as interpreted by any subsequent guidance
issued by NTIA.
…
"SECTION 10.2.(j) Competitive Subgrantee Selection Process. – The Office shall
implement a competitive subgrantee selection process that conforms with published regulations

House Bill 125 Session Law 2025-89 Page 29
and guidelines under the BEAD Program under the IIJA. Applications receiving the highest score
shall receive priority status for the awarding of subgrants pursuant to this section. As a means of
breaking a tie for applications receiving the same score, the Office shall give priority to the
application proposing to serve the highest number of new unserved and underserved locations.
Applications shall be scored on an objective 100 -point scale that is published prior to the
submission of applications for subgrants. The Office shall determine whether or not a subgrantee
has the capacity to perform multiple projects and shall not be required to award multiple projects
to a prequalified subgrantee that has failed to demonstrate its ability to perform.
…."
SECTION 4.4.(b) Section 10.2(p) of S.L. 2024-55 reads as rewritten:
"SECTION 10.2.(p) The State Controller shall establish There is established a BEAD
Reserve (Reserve) Fund (Fund) in the General Fund to maintain federal funds received from the
IIJA for the BEAD Program. The State Controller shall transfer funds to the GREAT 3.0 Fund
established in subsection (d) of this section only as needed to meet the appropriations set out in
subsequent legislation. Funds reserved in the Reserve do not constitute an "appropriation made
by law," as that phrase is used in Section 7(1) of Article V of the North Carolina
Constitution.Monies received in the Fund may be used for the purposes set forth in this section,
subject to applicable federal rules and regulations, and those funds are hereby appropriated for
those purposes."

LIFELINE SERVICE PROVIDERS
SECTION 4.5. Article 3 of Chapter 62 of the General Statutes is amended by adding
a new section to read:
"§ 62-30.1. Designating telecommunications carriers; rules.
(a) Notwithstanding G.S. 62-3(23)j. or G.S. 62-30, the Utilities Commission may, solely
upon petition of any provider or reseller of mobile radio communications service, designate the
petitioning provider or reseller of mobile radio communications service as an eligible
telecommunications carrier pursuant to 47 C.F.R. § 54.201 for purposes of providing Lifeline
service. The Commission may adopt rules to effectuate the purposes of this section.
(b) Nothing in this section shall confer upon the Utilities C ommission any regulatory
jurisdiction over providers or res ellers of mobile radio communications service that have been
previously designated as eligible telecommunications carriers for purposes of providing Lifeline
service prior to the enactment of this section."

PART V. CAPITAL

CAPITAL IMPROVEMENT & REPAIRS A ND RENOVATION PROJECT CASH
FLOW
SECTION 5.1.(a) There is appropriated from the State Capital and Infrastructure
Fund to the Office of State Budget and Management the sum of eight hundred twenty -three
million five hundred sixty -five thousand eight hundred ninety-seven dollars ($823,565,897) in
nonrecurring funds for the 2025 -2026 fiscal year to be allocated to the following project codes
in the following amounts:
(1) DACS21-2 $1,500,000
(2) DACS21-4 1,500,000
(3) DEQ21-1 17,075,000
(4) DNCR21-13 86,800,000
(5) DNCR23-7 7,000,000
(6) DOA23-2 800,000
(7) NCGA21-3 65,250,000
(8) NCGA23-1 26,000,000

Page 30 Session Law 2025-89 House Bill 125
(9) UNC/BOG21-1 3,750,000
(10) DOI21-1 22,000,000
(11) DPS21-9 19,793,242
(12) DPS21-6 2,658,750
(13) DPS23-9 2,024,414
(14) DPS23-11 5,927,250
(15) NG23-1 6,000,000
(16) NG23-2 5,750,000
(17) NG23-3 2,250,000
(18) TRAN23-1 60,000,000
(19) UNC/ASU21-1 12,500,000
(20) UNC/ASU22-1 12,300,000
(21) UNC/ECS21-4 9,172,727
(22) UNC/ECS23-1 17,172,727
(23) UNC/ECU21-1 60,000,000
(24) UNC/FSU21-2 6,573,912
(25) UNC/NCS20-1 22,224,823
(26) UNC/NCS23-1 27,000,000
(27) UNC/NCS23-2 24,000,000
(28) UNC/SSM23-2 3,000,000
(29) UNC/CH20-2 17,693,052
(30) UNC/PEM21-1 30,500,000
(31) UNC/SA23-1 22,950,000
(32) UNC/WSS21-1 22,400,000
(33) R&R21 100,000,000
(34) UNC/R&R21 100,000,000
SECTION 5.1.(b) The Board of Governors of The University of North Carolina shall
prioritize funds allocated for project code UNC/R&R21 for repairs and renovations pursuant to
G.S. 143C-8-13 and, notwithstanding G.S. 143C-8-13(a), for projects listed in Section 40.1(d) of
S.L. 2021-180. The cost for any single repair and renovation project other than those specifically
listed in Section 40.1(d) of S.L. 2021-180 shall not exceed fifteen million dollars ($15,000,000).
The Board of Governors may reallocate funds in accordance with G.S. 143C-8-13(b) or to
projects listed in Section 40.1(d) of S.L. 2021 -180; provided, h owever, reallocation of funds
intended for a project located at a particular constituent institution may only be reallocated for
repairs and renovations projects at that particular constituent institution. The provisions of
G.S. 143C-8-13(b)(4) shall not apply to the projects listed in Section 40.1(d) of S.L. 2021 -180.
The Board of Governors shall report to the Joint Legislative Commission on Governmental
Operations in accordance with G.S. 143C-8-13(b).
SECTION 5.1.(c) For project code R&R21, the provisions of Section 40.1(c) of S.L.
2021-180 shall apply to funds allocated for the project code during the 2025 -2027 fiscal
biennium.
SECTION 5.1.(d) There is appropriated from the State Capital and Infrastructure
Fund to the Office of State Budget and Management the sum of one million six hundred thousand
dollars ($1,600,000) in nonrecurring funds for the 2025 -2026 fiscal year to be allocated to the
North Carolina School of Science and Mathematics for temporary housing. This project shall be
known as project co de UNC/SSM25-1 and shall have a maximum project authorization of one
million six hundred thousand dollars ($1,600,000).

VARIOUS SCIF CHANGES

House Bill 125 Session Law 2025-89 Page 31
SECTION 5.2.(a) Section 40.8(a) of S.L. 2023-134, as enacted by Section 9.1(a) of
S.L. 2024 -1 and amended by Sect ion 7.1(a) of S.L. 2025 -4, is amended by adding a new
subdivision to read:
"(6) The funds for UNC Health Blue Ridge Hospital transferred from the ARPA
Temporary Savings Fund to provide funds in the amount of one million five
hundred thousand dollars ($1,500,000) for each year of the 2023 -2025 fiscal
biennium for capital improvements or equipment may also be used to offset
expenditures incurred prior to July 1, 2023 , for the purposes for which the
funding was intended."
SECTION 5.2.(b) There is transferred from the State Capital and Infrastructure Fund
to the Highway Fund the sum of eight million three hundred thousand dollars ($8,300,000) in
nonrecurring funds to be used for capital improvements, equipment, and State Highway Patrol
aviation relocation at Johnston Regional Airport, and the funds are hereby appropriated.

PART VI. MISCELLANEOUS

STATE BUDGET ACT APPLICABILITY
SECTION 6.1. If any provision of this act and G.S. 143C-5-4 are in conflict, the
provisions of this act shall prevail. The appropriations and the authorizations to allocate and
spend funds which are set out in this act shall remain in effect until the Current Operations
Appropriations Act for the applicable fiscal year becomes law, at which time that act shall
become effective and shall govern appropriations and expenditures. When the Current
Operations Appropriations Act for that fiscal year becomes law, the Director of the Budget shall
adjust allotments to give effect to that act from July 1 of the fiscal year.

SEVERABILITY CLAUSE
SECTION 6.2. If any provision of this act or its application is held invalid, the
invalidity does not affect other provisions or applications of this act that can be given effect
without the invalid provisions or application and, to th is end, the provisions of this act are
severable.

Page 32 Session Law 2025-89 House Bill 125
PART VII. EFFECTIVE DATE
SECTION 7.1. Except as otherwise provided, this act is effective retroactively to
July 1, 2025.
In the General Assembly read three times and ratified this the 31st day of July, 2025.

s/ Rachel Hunt
President of the Senate

s/ Allen Chesser
Presiding Officer of the House of Representatives

s/ Josh Stein
Governor

Approved 3:05 p.m. this 6th day of August, 2025