Continuing Budget Adjustments.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 3
SENATE BILL 177
House Committee Substitute Favorable 6/24/25
Third Edition Engrossed 6/25/25

Short Title: Continuing Budget Adjustments. (Public)
Sponsors:
Referred to:
February 27, 2025
*S177-v-3*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE VARIO US ADJUSTMENTS AFFEC TING THE CONTINUING 2
OPERATIONS OF THE STATE. 3
The General Assembly of North Carolina enacts: 4
5
PART I. HEALTH AND HUMAN SERVICES 6
7
MEDICAID REBASE AND MANAGED CARE ADMINISTRATION 8
SECTION 1.1. There is appropriated from the General Fund to the Department of 9
Health and Human Services, Division of Health Benefits, the sum of five hundred million dollars 10
($500,000,000) in recurring funds and associated receipts for each year of the 2025 -2027 fiscal 11
biennium. These funds shall be used to adjust Medicaid funding to account for projected changes 12
in enrollment, enrollment mix, service and capitation costs, and federal match rates, as well as 13
the implementation of the Children and Families Specialty Pl an in December 2025 or for 14
contracts needed to operate the State's Medicaid managed care program. 15
16
PART II. GENERAL GOVERNMENT 17
18
AUDITOR POSITIONS 19
SECTION 2.1. There is appropriated from the General Fund to the Office of the 20
State Auditor the sum of two million two hundred fifty thousand dollars ($2,250,000) in recurring 21
funds for each fiscal year of the 2025 -2027 fiscal biennium for up to 25 additional positions, 22
including salaries, benefits, and operating costs. 23
24
SBE EXEMPT POSITIONS/FUNDS 25
SECTION 2.2.(a) There is appropriated from the General Fund to the State Board 26
of Elections the sum of one million one hundred ninety-three thousand nine hundred seventy-nine 27
dollars ($1,193,979) in recurring funds for each fiscal year of the 2025 -2027 fiscal biennium to 28
provide funds for the following seven new exempt positions, including salaries, benefits, and 29
operating costs: 30
(1) Administrative Officer III. 31
(2) Agency General Counsel II. 32
(3) Agency HR Director II. 33
(4) Assistant General Counsel II. 34
(5) Internal Auditor. 35
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 177-Third Edition
(6) Legislative Affairs Manager. 1
(7) Public Information Manager. 2
SECTION 2.2.(b) G.S. 126-5 reads as rewritten: 3
"§ 126-5. Employees subject to Chapter; exemptions. 4
… 5
(c14) Notwithstanding any provision of this Chapter to the contrary, each Council of State 6
agency and agency, the Office of the State Controller Controller, and the Executive Director of 7
the State Board of Elections has the sole authority to set the salary of it s exempt policymaking 8
and exempt managerial positions within the minimum rates, and the maximum rates plus ten 9
percent (10%), established by the State Human Resources Commission under G.S. 126-4(2). 10
… 11
(d)(1) Exempt Positions in Cabinet Department. – Subject to this Chapter, which is 12
known as the North Carolina Human Resources Act, the Governor may designate a total of 425 13
exempt positions throughout the following departments and offices: 14
… 15
(2) Exempt Positions in Council of State Departments and Offices and Offices, 16
the Office of the State Controller. Controller, and the State Board of Elections. 17
– The Secretary of State, the Auditor, the Treasurer, the Attorney General, the 18
Superintendent of Public Instruction, the Commissioner of Agriculture, the 19
Commissioner of Insurance, the Labor Commissioner, and the State 20
Controller Controller, and the Execu tive Director of the State Board of 21
Elections may designate exempt positions. The number of exempt 22
policymaking positions in each department headed by an elected de partment 23
head listed in this subdivision is limited to 25 exempt policymaking positions 24
or two percent (2%) of the total number of full -time positions in the 25
department, whichever is greater. The number of exempt managerial positions 26
is limited to 25 positions or two percent (2%) of the total number of full-time 27
positions in the department, whichever is greater. The number of exempt 28
policymaking positions designated by the Superintendent of Public Instruction 29
is limited to 70 exempt policymaking positions o r two percent (2%) of the 30
total number of full -time positions in the department, whichever is greater. 31
The number of exempt managerial positions designated by the Superintendent 32
of Public Instruction is limited to 70 exempt managerial positions or two 33
percent (2%) of the total number of full -time positions in the department, 34
whichever is greater. The total number of exempt positions, policymaking and 35
managerial, designated by the Office of the State Controller is limited to 10. 36
The total number of exempt positions designated by the Executive Director of 37
the State Board of Election s is limited to the following seven positions: 38
Agency Human Relations Director II, Agency General Counsel II, Assistant 39
General Counsel II, Public Information Manager, Legislative Affairs 40
Manager, Internal Auditor, and Administrative Officer III. 41
… 42
(4) Vacancies. – In the event of a vacancy in the Office of Governor, the office of 43
a member of the Council of State, or the Office of the State Controller, 44
Controller, or the Executive Director of the State Board of Elections, the 45
person who succeeds to or is appointed or elected to fill the unexpired term 46
shall make designations in a letter to the Director of the Office of State Human 47
Resources, the Speaker of the House of Representatives, and the President of 48
the Senate within 180 days after the oath of office is administered to that 49
person. 50
…." 51
General Assembly Of North Carolina Session 2025
Senate Bill 177-Third Edition Page 3
1
SBE LITIGATION FUNDS 2
SECTION 2.3. There is appropriated from the General Fund to the State Board of 3
Elections the sum of one million five hundred thousand dollars ($1,500,000) in nonrecurring 4
funds for the 2025 -2026 fiscal year for future litigation needs. These funds shall not revert on 5
June 30, 2026, but shall remain available until expended. 6
7
SBE SOFTWARE MODERNIZATION AND DIT PROCUREMENT EXEMPTION 8
SECTION 2.4.(a) There is appropriated from the Information Technology Reserve 9
in the General Fund, as established in Section 2.2(h) of S.L. 2021 -180, to the Stat e Board of 10
Elections the sum of fifteen million dollars ($15,000,000) in nonrecurring funds for the 11
2025-2026 fiscal year to be used to complete the State Election Information Management System 12
(SEIMS) upgrade and the campaign finance software upgrade. 13
SECTION 2.4.(b) G.S. 143B-1320(b) reads as rewritten: 14
"(b) Exemptions. – Except as otherwise specifically provided by law, the provisions of 15
this Chapter do this Article does not apply to the following entities: the General Assembly, the 16
Judicial Department, and The University of North Carolina and its constituent institutions. 17
institutions, and the State Board of Elections . These entities may elect to participate in the 18
information technology programs, services, or contracts offered by the Department, including 19
information technology procurement, in accordance with the statutes, policies, and rules of the 20
Department. The election must be made in writing, as follows: 21
(1) For the General Assembly, by the Legislative Services Commission. 22
(2) For the Judicial Department, by the Chief Justice. 23
(3) For The University of North Carolina, by the Board of Governors. 24
(4) For the constituent institutions of The University of North Carolina, by the 25
respective boards of trustees. 26
(5) For the State Board of Elections, by the Executive Director of the State Board 27
of Elections." 28
29
SBE MOVE TO ALBEMARLE BUILDING/FUNDS 30
SECTION 2.5.(a) The Department of Administration shall assign the sixth and 31
seventh floors of the Albemarle Building located in Raleigh, North Carolina, to the State Board 32
of Elections. The State Board of Elections shall complete its move to the Albemarle Building not 33
later than October 31, 2025. All State -owned equipment, furnishings, and other fixtures on the 34
sixth and seventh floors of the Albemarle Building on the date this section becomes effective 35
shall remain on those floors for use by the State Board of Elections. Nothing in this section shall 36
be construed as prohibiting the disposal, removal, or replacement of the equipment, furnishings, 37
and other fixtures described in this section after the State Board of Elections has moved into the 38
space described in this section. 39
SECTION 2.5.(b) There is appropriated from the General Fund to the State Board 40
of Elections the sum of one million dollars ($1,000,000) in nonrecurring funds for the 2025-2026 41
fiscal year to be used to relocate to the Albemarle Building as provided in sub section (a) of this 42
section. 43
44
PART III. STATEWIDE 45
46
CAPITAL IMPROVEMENT & REPAIRS AND RENOVATION PROJECT CASH 47
FLOW 48
SECTION 3.1.(a) There is appropriated from the State Capital and Infrastructure 49
Fund to the Office of State Budget and Management the sum of seven hundred thirteen million 50
seven hundred twenty thousand eight hundred eleven dollars ($713,720,811) in nonrecurring 51
General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 177-Third Edition
funds for the 2025-2026 fiscal year to be allocated to the following project codes in the following 1
amounts: 2
(1) DACS21-2 $1,500,000 3
(2) DACS21-4 1,500,000 4
(3) DEQ21-1 17,075,000 5
(4) DNCR21-13 86,800,000 6
(5) DNCR23-7 7,000,000 7
(6) DOA23-2 800,000 8
(7) NCGA21-3 65,250,000 9
(8) NCGA23-1 26,000,000 10
(9) UNC/BOG21-1 3,750,000 11
(10) DOI21-1 22,000,000 12
(11) DPS21-9 19,793,242 13
(12) DPS21-6 2,658,750 14
(13) DPS23-9 2,024,414 15
(14) DPS23-11 5,927,250 16
(15) NG23-1 6,000,000 17
(16) NG23-2 5,750,000 18
(17) NG23-3 2,250,000 19
(18) TRAN23-1 60,000,000 20
(19) UNC/ASU21-1 12,500,000 21
(20) UNC/ASU22-1 12,300,000 22
(21) UNC/ECS21-4 9,172,727 23
(22) UNC/ECS23-1 17,172,727 24
(23) UNC/ECU21-1 60,000,000 25
(24) UNC/FSU21-2 6,573,912 26
(25) UNC/NCS20-1 22,224,823 27
(26) UNC/NCS23-1 27,000,000 28
(27) UNC/NCS23-2 24,000,000 29
(28) UNC/SSM23-2 3,000,000 30
(29) UNC/CH20-2 17,693,052 31
(30) UNC/PEM21-1 30,500,000 32
(31) UNC/SA23-1 22,950,000 33
(32) UNC/WSS21-1 22,400,000 34
(33) PERS21 154,914 35
(34) R&R21 40,000,000 36
(35) UNC/R&R21 50,000,000 37
SECTION 3.1.(b) The Board of Governors of The University of North Carolina shall 38
prioritize funds allocated for project code UNC/R&R21 for repairs and renovations pursuant to 39
G.S. 143C-8-13 and, notwithstanding G.S. 143C-8-13(a), for projects listed in Section 40.1(d) of 40
S.L. 2021-180. The cost for any single repair and renovation project other than those specifically 41
listed in Section 40.1(d) of S.L. 2021-180 shall not exceed fifteen million dollars ($15,000,000). 42
The Board of Governors may reallocate funds in accordance with G.S. 143C-8-13(b) or to 43
projects listed in Section 40.1(d) of S.L. 2021 -180; provided, however, reallocation of funds 44
intended for a project located at a particular constituent institution may only be reallocated for 45
repairs and renovations projects at that particular constituent institution. The provisions of 46
G.S. 143C-8-13(b)(4) shall not apply to the projects listed in Section 40 .1(d) of S.L. 2021-180. 47
The Board of Governors shall report to the Joint Legislative Commission on Governmental 48
Operations in accordance with G.S. 143C-8-13(b). 49
General Assembly Of North Carolina Session 2025
Senate Bill 177-Third Edition Page 5
SECTION 3.1.(c) For project code R&R21, the provisions of Section 40.1(c) of S.L. 1
2021-180 sha ll apply to funds allocated for the project code during the 2025 -2027 fiscal 2
biennium. 3
SECTION 3.1.(d) There is appropriated from the State Capital and Infrastructure 4
Fund to the Office of State Budget and Management the sum of one million six hundred for ty 5
thousand dollars ($1,640,000) in nonrecurring funds for the 2025-2026 fiscal year to be allocated 6
to the North Carolina School of Science and Math for temporary housing. This project shall be 7
known as project code UNC/SSM25 -1 and shall have a maximum pr oject authorization of two 8
million one hundred eighty thousand dollars ($2,180,000). 9
10
SALARY-RELATED CONTRIBUTIONS 11
SECTION 3.2.(a) Effective for the 2025 -2027 fiscal biennium, required employer 12
salary-related contributions for employees whose salaries are paid from department, office, 13
institution, or agency receipts shall be paid from the same source as the source of the employee's 14
salary. If an employee's salary is paid in part from the General Fund or Highway Fund and in 15
part from department, office, ins titution, or agency receipts, required employer salary -related 16
contributions may be paid from the General Fund or Highway Fund only to the extent of the 17
proportionate part paid from the General Fund or Highway Fund in support of the salary of the 18
employee, and the remainder of the employer's requirements shall be paid from the source that 19
supplies the remainder of the employee's salary. The requirements of this section as to source of 20
payment are also applicable to payments on behalf of the employee for hospital medical benefits, 21
longevity pay, unemployment compensation, accumulated leave, workers' compensation, 22
severance pay, separation allowances, and applicable disability income benefits. 23
SECTION 3.2.(b) Effective July 1, 2025, the State's employer contr ibution rates 24
budgeted for retirement, health, and related benefits as a percentage of covered salaries for the 25
2025-2027 fiscal biennium for teachers and State employees, State law enforcement officers 26
(LEOs), the University and Community Colleges Optiona l Retirement Programs (ORPs), the 27
Consolidated Judicial Retirement System (CJRS), and the Legislative Retirement System (LRS) 28
are as set forth below: 29
Teachers State ORPs CJRS LRS 30
and State LEOs 31
Employees 32
Retirement 17.14% 17.14% 6.84% 37.73% 18.26% 33
Health 7.33% 7.33% 7.33% 7.33% 7.33% 34
Disability 0.07% 0.07% 0.07% 0.00% 0.00% 35
Death 0.13% 0.13% 0.00% 0.00% 0.00% 36
NC 401(k) 0.00% 5.00% 0.00% 0.00% 0.00% 37
38
Total Contribution 39
Rate 24.67% 29.67% 14.24% 45.06% 25.59% 40
The rate for health includes two and four -tenths percent (2.40%) for the Public 41
Employee Health Benefit Fund and four and ninety -three hundredths percent (4.93%) for the 42
Retiree Health Benefit Fund. 43
SECTION 3.2.(b1) If House Bill 192, 2025 Regular Session, becomes law, then 44
subsection (b) of this sectio n is repealed and, effective July 1, 2025, the State's employer 45
contribution rates budgeted for retirement, health, and related benefits as a percentage of covered 46
salaries for the 2025 -2027 fiscal biennium for teachers and State employees, State law 47
enforcement officers (LEOs), the University and Community Colleges Optional Retirement 48
Programs (ORPs), the Consolidated Judicial Retirement System (CJRS), and the Legislative 49
Retirement System (LRS) are as set forth below: 50
Teachers State ORPs CJRS LRS 51
General Assembly Of North Carolina Session 2025
Page 6 Senate Bill 177-Third Edition
and State LEOs 1
Employees 2
Retirement 17.44% 17.44% 6.84% 38.36% 18.90% 3
Health 7.33% 7.33% 7.33% 7.33% 7.33% 4
Disability 0.07% 0.07% 0.07% 0.00% 0.00% 5
Death 0.13% 0.13% 0.00% 0.00% 0.00% 6
NC 401(k) 0.00% 5.00% 0.00% 0.00% 0.00% 7
8
Total Contribution 9
Rate 24.97% 29.97% 14.24% 45.69% 26.23% 10
The rate for health includes two and four -tenths percent (2.40%) for the Public 11
Employee Health Benefit Fund and four and ninety -three hundredths percent (4.93%) for the 12
Retiree Health Benefit Fund. 13
SECTION 3.2.(c) Effective July 1, 2025, the annual employer contributions for the 14
2025-2027 fiscal biennium, payable monthly, by the State to the North Carolina State Health 15
Plan for Teachers and State Employees for each covered employee is a maximum of eight 16
thousand five hundred dollars ($8,500). 17
SECTION 3.2.(d) G.S. 135-151(d) reads as rewritten: 18
"(d) Funding of the QEBA. – The QEBA shall be unfunded within the meaning of federal 19
tax laws. No payee contributions or deferrals, direct or indirect, by election or otherwise shall be 20
made or allowed. The benefit liability for the QEBA shall be determined each fiscal year, and 21
assets shall not be accumulated to pay benefits in future fiscal years. All of the following apply 22
to employer contributions required to pay benefits under the QEBA: 23
(1) The Board of Trustees, upon the recommendation of the actuary engaged by 24
the Board of Trustees, shall determine the employer contributions required to 25
pay the benefits due under the QEBA for each fiscal year. 26
(2) The required contributions shall be paid by all participating employers. 27
(3) The required contributions shall be deposited in a separate fund from the fund 28
into which regular employer contributions are deposited for the Retirement 29
System. The benefit liability for the QEBA shall be determined each fiscal 30
year, and assets shall not be accumulated to pay benefits in future fiscal years. 31
(4) A portion of the employer contribution rate established for retirement benefits 32
as a percentage of covered salaries for teachers, State employees, and State 33
law enforcement officers may be deposited into the separate fund established 34
in accordance with subdivision (3) of this subsection . The amount of the 35
portion allowable under this subdivision shall not exceed one-hundredths 36
percent (0.01%) in any given fiscal year." 37
SECTION 3.2.(e) The State contribution to the North Carolina Firefighters' and 38
Rescue Squad Workers' Pension Fund is increased by three hundred fifty thousand dollars 39
($350,000) in recurring funds for each year of the 2025-2027 fiscal biennium resulting in a total 40
State contribution of twenty million seven hundred fifty-two thousand two hundred eight dollars 41
($20,752,208) for each fiscal year. 42
43
CONTRIBUTION-RELATED APPROPRIATIONS 44
SECTION 3.3. There is transferred from the General Fund to a Benefits 45
Contributions Reserve in the Office of State Budget and Management the sum of one hundred 46
ninety-seven million five hundred sixty -three thousand one hundred thirty -three dollars 47
($197,563,133) in r ecurring funds to be distributed accordingly to account for the State 48
contributions required by this Part and the funds distributed are appropriated for this purpose. 49
50
PART IV. MISCELLANEOUS 51
General Assembly Of North Carolina Session 2025
Senate Bill 177-Third Edition Page 7
1
DISASTER FUNDING 2
SECTION 4.1.(a) Lumber River Basin Funding. – The State Controller shall transfer 3
the sum of twenty million dollars ($20,000,000) in nonrecurring funds for the 2025 -2026 fiscal 4
year of the funds allocated to the Department of Environmental Quality from the State Capital 5
and Infrastructure Fund as referenced in Section 40.7 of S.L. 2021-180, as amended, to Robeson 6
County for State matching requirements for federal funding for the community-led Lumber River 7
Basin Coalition waterway restoration project due to damage from Potential Tropical Cyclone #8 8
and Tropical Storm Debby. 9
SECTION 4.1.(b) Reversion. – Remaining unspent funds appropriated under this 10
section shall revert to the State Capital and Infrastructure Fund to be used for the original purpose 11
set forth in Section 40.7 of S.L. 2021 -180, as amended, if not used to draw down federal funds 12
before the expiration of the federal deadline to receive those funds. 13
SECTION 4.2.(a) Statewide Agricultural Disaster Crop Loss Funding. – There is 14
appropriated from the State Emergency Response and Disaster Relief Fund to the Department of 15
Agriculture and Consumer Services the sum of one hundred forty -two million dollars 16
($142,000,000) in nonrecurring funds for the 2025-2026 fiscal year for the Agricultural Disaster 17
Crop Loss Program (Program), established in Secti on 2D.2(a) of S.L. 2025 -2, for verifiable 18
losses from an agricultural disaster in 2024. 19
SECTION 4.2.(b) Funding Requirements. – Funds allocated to the Program under 20
this section shall be subject to all requirements of Section 2D.2 of S.L. 2025-2. The Department 21
of Agriculture and Consumer Services shall include these funds in the reporting requirements set 22
forth in Section 2D.2(i) of S.L. 2025 -2. Section 2D.2(h) of S.L. 2025 -2 does not apply to these 23
funds. 24
SECTION 4.3.(a) Receipt of Allocations. – A recipient of State funds under this Part 25
shall use best efforts and take all reasonable steps to obtain alternative funds that cover the losses 26
or needs for which the State funds are provided, including funds from insurance policies in effect 27
and available federal aid. State funds paid under this Part are declared to be excess over funds 28
received by a recipient from the settlement of a claim for loss or damage covered under the 29
recipient's applicable insurance policy in effect or federal aid. Where a recipient is an institution 30
of higher education or a non -State entity, the requirement regarding alternative funds and the 31
calculation of alternative funds received under this subsection includes seeking private donations 32
to help cover the losses or needs for which State funds are provided. An agency awarding State 33
funds for disaster relief shall include a notice to the recipient of the requirements of this 34
subsection. 35
SECTION 4.3.(b) Remittance of Funds. – If a recipient obtains alternative funds 36
pursuant to subsection (a) of this section, the recipient shall remit the funds to the State agency 37
from which the State funds were received. A recipient is not required to remit any amount in 38
excess of the State funds provided to the recipient under this Part. The State agency shall transfer 39
these funds to the Savings Reserve. 40
SECTION 4.3.(c) Contract Requirements. – Any contract or other instrument 41
entered into by a recipient for receipt of funds under this Part shall include the requirements set 42
forth in subsections (a) and (b) of this section. 43
SECTION 4.3.(d) Limitation on Powers of Governor. – The Governor may not use 44
the funds described in this Part to make budget adjustments under G.S. 143C-6-4 or to make 45
reallocations under G.S. 166A-19.40(c). Nothing in this Part s hall be construed to prohibit the 46
Governor from exercising the Governor's authority under these statutes with respect to funds 47
other than those described in this Part. 48
SECTION 4.3.(e) Directive. – The Governor shall ensure that funds allocated in this 49
Part are expended in a manner that does not adversely affect any person's or entity's eligibility 50
for federal funds that are made available, or that are anticipated to be made available, as a result 51
General Assembly Of North Carolina Session 2025
Page 8 Senate Bill 177-Third Edition
of natural disasters. The Governor shall also, to the extent practicable, avoid using State funds to 1
cover costs that will be, or likely will be, covered by federal funds. 2
SECTION 4.3.(f) Continuation of Allocation Reporting Requirements. – OSBM 3
shall add the appropriations and allocations provided for in this Part to the reporting requirements 4
set forth in Section 4.1(g) of S.L. 2025-2. 5
SECTION 4.3.(g) Continuation of State Auditor Oversight. – The Office of the 6
Governor of North Carolina shall continue the reporting requirements set forth in Section 4.2 of 7
S.L. 2025-2 for funds described in this Part. The State Auditor shall include all funds appropriated 8
and allocated under this Part in their report to the Joint Legislative Commission on Governmental 9
Operations and include the expenditure of these funds in the public dashboard as set forth in 10
Sections 4.2(c) and (d) of S.L. 2025-2. 11
SECTION 4.4. If Senate Bill 401, 2025 Regular Session, becomes law, then Part II 12
of that act is repealed. 13
14
PART V. EFFECTIVE DATE 15
SECTION 5.1. Except as otherwise provided, this act becomes effective July 1, 16
2025. 17