2026 DST Admin/Technical/Clarifying Changes.-AB

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 936

Short Title: 2026 DST Admin/Technical/Clarifying Changes.-AB (Public)
Sponsors: Senators Ford, Alexander, and Hanig (Primary Sponsors).
Referred to: Rules and Operations of the Senate
April 30, 2026
*S936-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE ADMIN ISTRATIVE, TECHNICAL, AND CLARIFYING CHA NGES 2
TO THE LAWS RELATED TO THE DEPARTMENT OF STATE TREASURER. 3
The General Assembly of North Carolina enacts: 4
5
PART I. ADMINISTRATIVE CHANGES/RETIREMENT SYSTEMS 6
7
PREVIOUSLY CREDITED MILITARY SERVICE TO BE REINSTATED UPON 8
PURCHASE OF PREVIOUSLY WITHDRAWN SERVICE 9
SECTION 1.1.(a) G.S. 135-4(g) reads as rewritten: 10
"(g) Teachers All of the following apply to teachers and other State employees who served 11
in the uniformed services services, as defined in the Uniformed Services Employment and 12
Reemployment Rights Act of 1994, 38 U.S.C. § 4303, who (i) were not dishonorably discharged, 13
and who discharged and (ii) returned to the service of the State within a period of two years from 14
date of discharge shall discharge: 15
(1) The member shall be credited with prior service for such the period of service 16
in the uniformed services for the maximum period that they are the member 17
is entitled to reemployment under the Uniformed Services Employment and 18
Reemployment Rights Act of 1994, 38 U.S.C. § 4301, et seq., or other federal 19
law, and the law. 20
(2) The salary or compensation of such a the teacher or State employee during 21
that period of service credited under subdivision (1) of this subsection is 22
deemed to be that salary or compensation the employee would have received 23
but for the period of service had the employee remained continuously 24
employed, if the determination of that salary or co mpensation is reasonably 25
certain. If the determination of the salary or compensation is not reasonably 26
certain, then it is deemed to be that employee's average rate of compensation 27
during the 12-month period immediately preceding the period of service. 28
(3) When a member who has served in the uniformed services returns to work in 29
compliance with the conditions of this subsection, that member's employer 30
shall remit to the System all employer and employee contributions for the full 31
period of that member's military service. 32
(4) If a member forfeited service previously credited under this subsection by 33
electing to receive a return of accumulated contributions, as provided for 34
under G.S. 135-5(f), and subsequently purchases the maximum amount of 35
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 936-First Edition
service allo wed under G.S. 135-4.5(a)(1), then that member shall have the 1
service previously credited under this subsection restored." 2
SECTION 1.1.(b) Subsection (a) of this section is effective January 1, 2027, and 3
applies to members of the Teachers' and State Emplo yees' Retirement System with forfeited 4
service that was previously credited under G.S. 135-4(g) who subsequently purchase the 5
maximum amount of service allowed under G.S. 135-4.5(a)(1) on or after January 1, 2027. 6
SECTION 1.1.(c) G.S. 128-26 is amended by adding a new subsection to read: 7
"(a2) If a member forfeited service previously credited under subsection (a1) of this section 8
by electing to receive a return of accumulated contributions, as provided for under 9
G.S. 128-27(f), and subsequently purchases t he maximum amount of service allowed under 10
G.S. 128-26.5(a)(1), then that member shall have the service previously credited under 11
subsection (a1) of this section restored." 12
SECTION 1.1.(d) Subsection (c) of this section is effective January 1, 2027, and 13
applies to members of the Local Governmental Employees' Retirement System with forfeited 14
service that was previously credited under G.S. 128-26(a1) who subsequently purchase the 15
maximum amount of service allowed under G.S. 128-26.5(a)(1) on or after January 1, 2027. 16
17
CONTRIBUTORY DEATH BENEFIT NOT SUBJECT TO OVERPAYMENT OFFSETS 18
SECTION 1.2.(a) G.S. 135-9(b) reads as rewritten: 19
"(b) Notwithstanding any provisions of law to the contrary, any overpayment of benefits 20
or erroneous payments to a member in a State -administered retirement system or the former 21
Disability Salary Continuation Plan or the Disability Income Plan of North Carolina, including 22
any benefits paid to, or State Health Plan premiums or claims paid on behalf of, any member or 23
beneficiary who is later determined to have been ineligible for those benefits or unentitled to 24
those amounts, may be offset against any retirement allowance, return of contributions or any 25
other right accrui ng under this Chapter to the same person, the person's estate, or designated 26
beneficiary. The ability to offset under this subsection does not apply to the fully contributory 27
death benefit for retired members under G.S. 135-175 or G.S. 135-64(k)." 28
SECTION 1.2.(b) G.S. 128-31(b) reads as rewritten: 29
"(b) Notwithstanding any provisions of law to the contrary, any overpayment of benefits 30
or erroneous payments to a member in a State -administered retirement system, the Disability 31
Salary Continuation Plan, or the Disability Income Plan of North Carolina, including any benefits 32
paid to, or State Health Plan premiums or claims paid on behalf of, any member who is later 33
determined to have been ineligible for those benefits or unentitled to those amounts, may be 34
offset against any retirement allowance, return of contributions or any other right accruing under 35
this Chapter to the same person, the person's estate, or designated beneficiary. The ability to 36
offset under this subsection does not apply to the fully contributory death benefit for retired 37
members under G.S. 128-38.40." 38
SECTION 1.2.(c) G.S. 120-4.29 reads as rewritten: 39
"§ 120-4.29. Exemption from garnishment, attachment. 40
(a) Except for the applications of the provisions of G. S. 110-136, and in connection with 41
a court -ordered equitable distribution under G.S. 50-20, the right of a person to a pension, 42
annuity, or retirement allowance, to the return of contributions, or to the receipt of the pension, 43
annuity or retirement allowance itself, any optional benefit or any other right accrued or accruing 44
to any person under the provisions of this Article, and the moneys in the various funds created 45
by this Article, are exempt from levy and sale, garnishment, attachment, or any othe r process 46
whatsoever, and shall be unassignable except as this Article specifically provides. 47
(b) Notwithstanding any provisions of law to the contrary, any overpayment of benefits 48
or erroneous payments to a member in a State -administered retirement system , the Disability 49
Salary Continuation Plan, or the Disability Income Plan of North Carolina, including any benefits 50
paid to, or State Health Plan premiums or claims paid on behalf of, any member who is later 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 3
determined to have been ineligible for those bene fits or unentitled to those amounts, may be 1
offset against any retirement allowance, return of contributions, or any other right accruing under 2
this Article to the same person, the person's estate, or designated beneficiary. The ability to offset 3
under this subsection does not apply to the fully contributory death benefit for retired members 4
under G.S. 120-4.27." 5
6
CONTRIBUTION-BASED BENEFIT CAP (CBBC) INVOICE/SECOND RETIREMENT 7
SECTION 1.3.(a) G.S. 135-5(a3) reads as rewritten: 8
"(a3) Anti-Pension-Spiking Contribution-Based Benefit Cap. – Notwithstanding any other 9
provision of this section, every service retirement allowance provided under this section for 10
members who retire on or after January 1, 2015, is subject to adjustment pursuant to a 11
contribution-based benefit cap under this subsection. All of the following shall apply to the 12
contribution-based benefit cap under this subsection: 13
(1) The Board of Trustees shall adopt a contribution -based benefit cap factor 14
recommended by the actuary, based upon actual experience, such that no more 15
than three -quarters of one percent (0.75%) of retirement allowances are 16
expected to be capped. The Board of Trustees shall modify such factors every 17
five years, as shall be deemed necessary, based upon the five-year experience 18
study as required by G.S. 135-6(n). Prior to establishing a service retirement 19
allowance under this section, the Board shall:shall do all of the following: 20
(1)a. Determine an amount equal to the member's accumulated 21
contributions as required under G.S. 135-8(b)(1) for all years during 22
which the member earned membership service, other than service 23
earned through armed service credit under G.S. 135-4(f), 24
G.S. 135-4(g), or G.S. 135-4.5, used in the calculation of the 25
retirement allowance that the member woul d receive under this 26
section. 27
(2)b. Determine the amount of a single life annuity that is the actuarial 28
equivalent of the amount determined under subdivision (1) 29
sub-subdivision (1)a. of this subsection, adjusted for the age of the 30
member at the time of retirement or, when appropriate, the age at the 31
time of the member's death. 32
(3)c. Multiply the annuity amount determined under subdivision (2) 33
sub-subdivision (1)b. of this subsection by the contribution -based 34
benefit cap factor. 35
(4)d. Determine the amount of the retirement allowance that results from 36
the member's membership service, service to which the member would 37
be entitled but for the adjustment under this subsection. The amount 38
shall be calculated in the same manner as the member's service 39
retirement allowance, with the following exceptions: 40
1. The applicable percentage of the member's average final 41
compensation shall be multiplied by the number of years of 42
membership service, rather than the number of years of 43
creditable service; the service. 44
2. The amount shall include the effect of any percentage 45
reduction that applies to the member's service retirement 46
allowance by virtue of the member's age or amount of 47
creditable service as of the service retirement date; and the 48
date. 49
3. The amount shall not be adjusted for an optional allowance 50
elected under subsection (g) of this section. 51
General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 936-First Edition
(2) The product of the multiplication in subdivision (3) sub-subdivision (1)c. of 1
this subsection is the member's contribution-based benefit cap. If the amount 2
determined unde r subdivision (4) sub-subdivision (1)d. of this subsection 3
exceeds the member's contribution -based benefit cap, then the member's 4
retirement allowance shall be reduced by an amount equal to the difference 5
between the contribution-based benefit cap and the amount determined under 6
subdivision (4) sub-subdivision (1)d. of this subsection. 7
(3) Notwithstanding the foregoing, anything to the contrary under subdivisions 8
(1) and (2) of this subsection, the retirement allowance of a member with an 9
average final compensation of less than one hundred thousand dollars 10
($100,000), as hereinafter indexed, indexed under this subdivision, shall not 11
be subject to the contribution -based benefit cap. The minimum average final 12
compensation necessary fo r a retirement allowance to be subject to the 13
contribution-based benefit cap shall be increased on January 1 each year by 14
the percent change between the June Consumer Price Index in the year prior 15
to retirement and the June Consumer Price Index in the fisc al year most 16
recently ended, calculated to the nearest tenth of a percent (0.1%), provided 17
that this percent change is positive. 18
(4) Notwithstanding the foregoing, anything to the contrary under subdivisions 19
(1) through (3) of this subsection, the retirement allowance of a member who 20
became a member before January 1, 2015, or who has not earned at least five 21
years of membership service in the Retirement System after January 1, 2015, 22
shall not be reduced; however, the member's last employer, or if the member's 23
last employer did not report to the retirement system any compensation paid 24
to the member during the period used to compute the member's average final 25
compensation, the member's employer or employers who reported 26
compensation to the member during such period, shall be required to make an 27
additional contribution as specified in G.S. 135-8(f)(2)f., if applicable. 28
(5) For any member whose retirement allowance was (i) initially restored to the 29
pre-contribution-based benefit cap level, in accordance w ith G.S. 135-4(jj), 30
(ii) subsequently suspended for a period of at least three years due to the 31
member being restored to service, and (iii) recalculated based on becoming 32
reemployed for at least three years on the basis of the member's compensation 33
and service before and after the period of prior retirement without restrictions, 34
the amount required to restore the member 's benefit to the 35
pre-contribution-based benefit cap level shall be reduced on a dollar-for-dollar 36
basis by the amount required to restore the initial retirement allowance." 37
SECTION 1.3.(b) G.S. 128-27(a3) reads as rewritten: 38
"(a3) Anti-Pension-Spiking Contribution-Based Benefit Cap. – Notwithstanding any other 39
provision of this section, every service retirement allowance provided under this section for 40
members who retire on or after January 1, 2015, is subject to adjustment pursuant to a 41
contribution-based benefit cap under this subsection. All of the following shall apply to the 42
contribution-based benefit cap under this subsection: 43
(1) The Board of Trustees shall adopt a contribution -based benefit cap factor 44
recommended by the actuary, based upon actual experience, such that no more 45
than three -quarters of one percent (0.75%) of retirement allowances are 46
expected to be capped. The Board of Trustees shall modify such factors every 47
five years, as shall be deemed necessary, based upon the five-year experience 48
study as required by G.S. 128-28(o). Prior to establishing a service retirement 49
allowance under this section, the Board shall:shall do all of the following: 50
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 5
(1)a. Determine an amount equal to the member's accumulated 1
contributions as required under G.S. 128-30(b)(1) for all years during 2
which the member earned membership service, other than service 3
earned through armed service credit under G.S. 128-26(a1), 4
G.S. 128-26(a2), G.S. 128-26(j1), or G.S. 128-26.5, used in the 5
calculation of the retirement allowance that the member would receive 6
under this section. 7
(2)b. Determine the amount of a single life annuity that is the actuarial 8
equivalent of the amount determined under subdivision (1) 9
sub-subdivision (1)a. of this subsection, adjusted for the age of the 10
member at the time of retirement or, when appropriate, the age at the 11
time of the member's death. 12
(3)c. Multiply the annuity amount determi ned under subdivision (2) 13
sub-subdivision (1)b. of this subsection by the contribution -based 14
benefit cap factor. 15
(4)d. Determine the amount of the retirement allowance that results from 16
the member's membership service, service to which the member would 17
be entitled but for the adjustment under this subsection. This amount 18
shall be calculated in the same manner as the member's service 19
retirement allowance, with the following exceptions: 20
1. The applicable percentage of the member's average final 21
compensation shall be multiplied by the number of years of 22
membership service, rather than the number of years of 23
creditable service; the service. 24
2. The amount shall include the effect of any percentage 25
reduction that applies to the member's service retirement 26
allowance by virtue of the member's age or amount of 27
creditable service as of the service retirement date; and the 28
date. 29
3. The amount shall not be adjusted for an optional allowance 30
elected under subsection (g) of this section. 31
(2) The product of the multiplicati on in subdivision (3) sub-subdivision (1)c. of 32
this subsection is the member's contribution-based benefit cap. If the amount 33
determined under subdivision (4) sub-subdivision (1)d. of this subsection 34
exceeds the member's contribution -based benefit cap, then the member's 35
retirement allowance shall be reduced by an amount equal to the difference 36
between the contribution-based benefit cap and the amount determined under 37
subdivision (4) sub-subdivision (1)d. of this subsection. 38
(3) Notwithstanding the foregoing, anything to the contrary under subdivis ions 39
(1) and (2) of this subsection, the retirement allowance of a member with an 40
average final compensation of less than one hundred thousand dollars 41
($100,000), as hereinafter indexed, indexed under this subdivision, shall not 42
be subject to the contribution -based benefit cap. The minimum average final 43
compensation necessary for a retirement allowance to be subject to the 44
contribution-based benefit cap shall be increased on January 1 each year by 45
the percent change between the June Consumer Price Index in the year prior 46
to retirement and the June Consumer Price Index in the fiscal year most 47
recently ended, calculated to the nearest tenth of a percent (0.1%), provided 48
that this percent change is positive. 49
(4) Notwithstanding the foregoing, anything to the contrary under subdivisions 50
(1) through (3) of this subsection, the retirement allowance of a member who 51
General Assembly Of North Carolina Session 2025
Page 6 Senate Bill 936-First Edition
became a member before January 1, 2015, or who has not earned at least five 1
years of membership service in the Retirement System after January 1, 2015, 2
shall not be reduced; however, the member's last employer, or if the member's 3
last employer did not report to the retirement system any compensation paid 4
to the member during the period used to compute the member's average final 5
compensation, the member's employer or employers who reported 6
compensation to the member during such period, shall be required to make an 7
additional contribution as specified in G.S. 128-30(g)(2)b., if applicable. 8
(5) For any member whose retirement allowance was (i) initially restored to the 9
pre-contribution-based benefit cap level, in accordance with G.S. 128-26(y), 10
(ii) subsequently suspended for a period of at least three years due to the 11
member being restored to service, and (iii) recalculated based on becoming 12
reemployed for at least three years on the basis of the member's compensation 13
and service before and after the period of prior retirement without restrictions, 14
the amount required to restore the member 's b enefit to the 15
pre-contribution-based benefit cap level shall be reduced on a dollar-for-dollar 16
basis by the amount required to restore the initial retirement allowance." 17
18
LEGISLATIVE RETIREMENT SYSTEM REEMPLOYMENT FLEXIBILITY 19
SECTION 1.4.(a) G.S. 135-3(a)(8)c. reads as rewritten: 20
"c. Unless otherwise provided, if a beneficiary who retired on an early or 21
service retirement allowance under this Article is reemployed by, or 22
otherwise engaged to perform services for, an employer participating 23
in the Retirement System on a part time, temporary, interim, or on a 24
fee for service basis, whether contractual or otherwise, and if the 25
beneficiary earns an amount during the 12 month period immediately 26
following the effective date of retirement or in any calendar year which 27
exceeds fifty percent (50%) of the reported compensation, excluding 28
terminal payments, during the 12 months of service preceding the 29
effective date of retirement, or twenty thousand dollars ($20,000), 30
whichever is greater, as hereinafter indexed, t hen the retirement 31
allowance shall be suspended as of the first day of the month following 32
the month in which the reemployment earnings exceed the indexed 33
amount, for the balance of the calendar year, unless the reemployment 34
earnings exceed the indexed amount in the month of December. If the 35
reemployment earnings exceed the indexed amount in December, then 36
the retirement allowance shall not be suspended. A suspended 37
retirement allowance of the beneficiary shall be reinstated as of 38
January 1 of each year following suspension. The amount that may be 39
earned before suspension shall be increased on January 1 of each year 40
by the percentage change between the December Consumer Price 41
Index in the year prior to retirement and the December Consumer Price 42
Index in the year most recently ended, calculated to the nearest tenth 43
of a percent (1/10 of 1%), provided that this percentage change is 44
positive. This sub-subdivision shall not apply to service as a member 45
of the Legislative Retirement System of North Carolina under Article 46
1A of Chapter 120 of the General Statutes." 47
SECTION 1.4.(b) G.S. 135-3(a)(8)d. reads as rewritten: 48
"d. Should a beneficiary who retired on an early or service retirement 49
allowance under this Chapter be restored to service as an employee or 50
teacher, then the retirement allowance shall cease as of the first of the 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 7
month following the month in which the beneficiary is restored to 1
service and the beneficiary shall become a member of the Retirement 2
System and shall contribute thereafter as allowed by law at the uniform 3
contribution payable by all members. This sub-subdivision shall not 4
apply to service as a member of the Legislative Retirement System of 5
North Carolina under Article 1A of Chapter 120 of the General 6
Statutes. 7
…." 8
SECTION 1.4.(c) G.S. 120-4.21(d) expires July 1, 2026. 9
SECTION 1.4.(d) G.S. 120-4.21(c) reads as rewritten: 10
"(c) Limitations Applicable to Members Retiring Before September 1, 2005. All 11
Members. – In no event shall any member receive a service retirement allowance greater than 12
seventy-five percent (75%) of his the member's "highest annual salary"." 13
SECTION 1.4.(e) This section is effective July 1, 2026, and applies to all members 14
of the Legislative Retirement System of North Carolina on or after that date, including those 15
members who retired after September 1, 2005. 16
SECTION 1.4.(f) If the service retirement allowance of a member who retired on or 17
after September 1, 2005, and before July 1, 2026, was suspended in accordance with 18
G.S. 120-4.21(d) prior to its expiration on July 1 , 2026, then that service retirement allowance 19
shall continue to be suspended until the member withdraws from membership in either the 20
Teachers' and State Employees' Retirement System or the Consolidated Judicial Retirement 21
System and the member is not ent itled to any retroactive reinstatement of a service retirement 22
allowance related to the expiration of G.S. 120-4.21(d). 23
24
ELECTRONIC REPORTING OF CONTRIBUTIONS/FIREFIGHTERS' AND RESCUE 25
SQUAD WORKERS' PENSION FUND 26
SECTION 1.5. Article 86 of Chapter 58 of the General Statutes is amended by 27
adding a new section to read: 28
"§ 58-86-41. Collection and reporting of contributions. 29
(a) Under rules adopted by the Board , each eligible fire department and each eligible 30
rescue or emergenc y medical services squad shall, on account of each eligible firefighter and 31
each eligible rescue squad worker, certify any information necessary for the proper 32
administration of the Pension Fund. The submission of this information by an eligible fire 33
department or an eligible rescue or emergency medical services squad constitutes a certification 34
of its accuracy. 35
(b) Each eligible fire department and each eligible rescue or emergency medical services 36
squad shall transmit contributions as certified under subsection (a) of this section on the forms 37
prescribed by the Board." 38
39
CLARIFICATION/FELONY FORFEITURE OF CERTAIN SUPPLEMENTAL 40
RETIREMENT INCOME PLAN BENEFITS 41
SECTION 1.6.(a) G.S. 143-166.30(g1) reads as rewritten: 42
"(g1) Forfeiture of Benefits for Certain Felonies. – Participants in the Supplemental 43
Retirement Income Plan for State Law-Enforcement Officers whose benefits are forfeited under 44
G.S. 135-18.10A shall also forfeit contributions paid on or after December 1, 2012, on behalf of 45
the participa nt by the State to the Supplemental Retirement Income Plan. Pending the 46
determination of whether G.S. 135-18.10A applies to a law enforcement officer's conviction, the 47
administrator of the Supplemental Retirement Income Plan may prohibit the withdrawal of 48
contributions from the law enforcement officer's account for a period of up to 60 days from the 49
date of conviction. Any contribution funds forfeited under this subsection shall be deposited in 50
the Supplemental Retirement Income Plan." 51
General Assembly Of North Carolina Session 2025
Page 8 Senate Bill 936-First Edition
SECTION 1.6.(b) G.S. 143-166.50(e2) reads as rewritten: 1
"(e2) Forfeiture of Benefits for Certain Felonies. – Participants in the Supplemental 2
Retirement Income Plan for Local Governmental Law-Enforcement Officers whose benefits are 3
forfeited under G.S. 128-38.4A shall also forfeit contributions paid on or after December 1, 2012, 4
on behalf of the participant by local government employers of law enforcement officers to the 5
Supplemental Retirement Income Plan for Local Governmental Law -Enforcement Officers. 6
Pending the determinat ion of whether G.S. 128-38.4A applies to a law enforcement officer 's 7
conviction, the administrator of the Supplemental Retirement Income Plan may prohibit the 8
withdrawal of contributions from the law enforcement officer 's account for a period of up to 60 9
days from the date of conviction. Any contribution funds forfeited under this subsection shall be 10
deposited in the Supplemental Retirement Income Plan." 11
SECTION 1.6.(c) This section is effective when this act becomes law and applies to 12
law enforcement officers with applicable convictions on or after that date. 13
14
PERSONNEL FLEXIBILITY 15
SECTION 1.7.(a) G.S. 135-6 reads as rewritten: 16
"§ 135-6. Administration. 17
… 18
(g) Officers and Other Employees; Salaries and Expenses. – The State Treasurer shall be 19
ex officio chair of the Board of Trustees and shall appoint a director. The Board shall engage 20
actuarial and other services required to transact the business of the Retirement System. The State 21
Treasurer and the Board of Trustees may appoint employees as they deem advisable to carry out 22
the terms and conditions of the Retirement Systems. The compensation of all persons, other than 23
the director, engaged by the Board, and all other expenses of the Board necessary for t he 24
operation of the Retirement System, System shall be paid at rates and in amounts approved by 25
the Board, subject to the approval of the Director of the Budget.Board. 26
(g1) Compensation of Designated Employees. – The Board of Trustees shall authorize the 27
State Treasurer to establish compensation plans, including salaries and performance -related 28
bonuses, for employees who possess specialized skills or knowledge necessary for the proper 29
administration of the Retirement Systems. All of the following apply: 30
(1) Employees designated under this subsection shall be exempt from the 31
classification and compensation rules established by the Office of State 32
Human Resources, in accordance with G.S. 126-5(c13). 33
(2) The total number of designated employees under this subsection and 34
G.S. 128-28(h1) shall not exceed forty percent (40%) of the employees of the 35
Retirement Systems Division. 36
(h) Actuarial Data. – The Board shall engage actuarial and other services required to 37
transact the business of the Retirement System. The Board of Trustees shall keep in convenient 38
form data necessary for actuarial valuation of the various funds of the Retirement System and for 39
checking the experience of the System. 40
…." 41
SECTION 1.7.(b) G.S. 128-28 reads as rewritten: 42
"§ 128-28. Administration and responsibility for operation of System. 43
… 44
(h) Officers and Other Employees, Salaries, and Employees; Expenses. – The State 45
Treasurer shall be ex officio chair of the Board of Trustees and sha ll appoint a director. The 46
Board shall engage actuarial and other services required to transact the business of the Retirement 47
System. The State Treasurer and the Board of Trustees may appoint employees as they deem 48
advisable to carry out the terms and conditions of the Retirement Systems. The compensation of 49
all persons engaged by the Board, and all other expenses of the Board necessary for the operation 50
of the Retirement System, System shall be paid at rates and in amounts approved by the Board. 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 9
(h1) Compensation of Designated Employees. – The Board of Trustees shall authorize the 1
State Treasurer to establish compensation plans, including salaries and performance -related 2
bonuses, for employees who possess specialized skills or knowledge necessary for the proper 3
administration of the Retirement Systems. All of the following apply: 4
(1) Employees designated under this subsection shall be exempt from the 5
classification and compensation rules established by the Office of State 6
Human Resources, in accordance with G.S. 126-5(c13). 7
(2) The total number of designated employees under this subsection and 8
G.S. 135-6(g1) shall not exceed forty percent (40%) of the employees of the 9
Retirement Systems Division. 10
(i) Actuarial Data. – The Board shall engage actuarial and other services required to 11
transact the business of the Retirement System. The Board of Trustees shall keep in convenient 12
form data necessary for actuarial valuation of the various funds of the Retirement System and for 13
checking the experience of the System. 14
…." 15
SECTION 1.7.(c) G.S. 126-5(c13) reads as rewritten: 16
"(c13) Except as to G.S. 126-13, 126-14, 126-14.1, and Articles 6, 7, 14, 15, and 16 of this 17
Chapter, this Chapter does not apply to any of the following employees of the Department of 18
State Treasurer Treasurer: 19
(1) Employees possessing specialized skills or knowledge necessary for the 20
proper administration of the Supplemental Retirement Plans and compensated 21
pursuant to G.S. 135-91(c).G.S. 135-91(c2). 22
(2) Designated employees under G.S. 135-6(g1) or G.S. 128-28(h1)." 23
24
LEGAL COUNSEL FLEXIBILITY 25
SECTION 1.8.(a) G.S. 135-6(u) is recodified as the second sentence of 26
G.S. 135-6(j). 27
SECTION 1.8.(b) G.S. 135-6(j), as amended by subsection (a) of this section, reads 28
as rewritten: 29
"(j) Legal Adviser. Counsel. – The Attorney General is State Treasurer shall designate a 30
licensed attorney employed by the Department of State Treasurer as the legal adviser of the Board 31
of Trustees. The State Treasurer may designate legal counsel, including private counsel, to 32
represent the interests of the administration of benefit programs under this Chapter." 33
SECTION 1.8.(c) G.S. 128-28(k) reads as rewritten: 34
"(k) Legal Adviser. Counsel. – The Attorney General is State Treasurer shall designate a 35
licensed attorney employed by the Department of State Treasurer as the legal adviser of the Board 36
of Trustees. The State Treasurer may designate legal counsel, including private counsel, to 37
represent the interests of the administration of benefit programs under this Article." 38
SECTION 1.8.(d) G.S. 120-4.10 is amended by adding a new subsection to read: 39
"(c) The State Treasurer shall designate a licensed attorney employed by the Department 40
of State Treasurer as the legal adviser of the Board of Tr ustees. The State Treasurer may 41
designate legal counsel, including private counsel, to represent the interests of the administration 42
of benefit programs under this Article." 43
44
BOARD OF TRUSTEES PER DIEM 45
SECTION 1.9.(a) G.S. 135-6(c) reads as rewritten: 46
"(c) Compensation of Trustees. – The During sessions of the Board, trustees shall be paid 47
during sessions of the Board at the prevailing rate established for members of State boards and 48
commissions, and they receive one hundred dollars ($1 00.00) per day, except for any trustee 49
whose salary, in whole or in part, is paid from State funds . In accordance with G.S. 138-5 and 50
General Assembly Of North Carolina Session 2025
Page 10 Senate Bill 936-First Edition
G.S. 138-6, trustees shall be reimbursed for all necessary expenses that they incur through service 1
on the Board." 2
SECTION 1.9.(b) G.S. 128-28(d) reads as rewritten: 3
"(d) Compensation of Trustees. – The During sessions of the Board, trustees shall be paid 4
during sessions of the Board at the prevailing rate established for members of State boards and 5
commissions, and they receive one hundred dollars ($100.00) per day, except for any trustee 6
whose salary, in whole or in part, is paid from State funds . In accordance with G.S. 138-5 and 7
G.S. 138-6, trustees shall be reimbursed for all necessary expenses that they incur through service 8
on the Board." 9
SECTION 1.9.(c) G.S. 135-96 is amended by adding a new subsection to read: 10
"(f) During sessions of the Board, trustees shall receive one hundred dollars ($100.00) per 11
day, except for any trustee whose salary, in whole or in part, is paid from State funds. In 12
accordance with G.S. 138-5 and G.S. 138-6, trustees shall be reimbursed for all necessary 13
expenses that they incur through service on the Board." 14
SECTION 1.9.(d) G.S. 147-86.72 is amended by adding a new subsection to read: 15
"(a1) Compensation of Trustees. – During sessions of the Board, trustees shall receive one 16
hundred dollars ($1 00.00) per day, except for any trustee whose salary, in whole or in part, is 17
paid from State funds . In accordance with G.S. 138-5 and G.S. 138-6, t rustees shall be 18
reimbursed for all necessary expenses that they incur through service on the Board." 19
SECTION 1.9.(e) This section is effective when it becomes law and applies to 20
sessions of the Boards of Trustees on or after that date. 21
22
SURVIVOR'S ALTERNATIVE BENEFIT RENUNCIATION CLARIFICATION 23
SECTION 1.10.(a) G.S. 135-5(m)(2) reads as rewritten: 24
"(2) At the time of the member's death, one and only one beneficiary is eligible to 25
receive a return of his the member's accumulated contributions. If multiple 26
beneficiaries are designated and living at the time of the member 's death and 27
any beneficiary elects to renounce that beneficiary's portion of the member 's 28
accumulated contributions , th e renunciation shall not result in another 29
beneficiary becoming eligible for benefits under this subsection." 30
SECTION 1.10.(b) G.S. 128-27(m)(2) reads as rewritten: 31
"(2) At the time of the member's death, one and only one beneficiary is eligible to 32
receive a return of his the member's accumulated contributions. If multiple 33
beneficiaries are designated and living at the time of the member 's death and 34
any beneficiary elects to renounce that beneficiary's portion of the member 's 35
accumulated contributions , th e renunciation shall not result in another 36
beneficiary becoming eligible for benefits under this subsection." 37
38
LEIA MODIFICATIONS 39
SECTION 1.11.(a) G.S. 135-7(h) reads as rewritten: 40
"(h) Legislative Enactment Implementation Arrangement. – The Legislative Enactment 41
Implementation Arrangement, or LEIA, is established effective October 1, 2017, and placed 42
under the management of the Board of Trustees. The purpose of the LEIA is to provide for timely 43
and ongoing administrative implementation of legislative provisions regarding the retirement of, 44
or payment of retirement benefits to, public officers or public employees. The LEIA shall have 45
the following parameters: 46
(1) Administration. – The LEIA shall be administered by the Board of Trustees, 47
which shall compile and maintain all reco rds necessary or appropriate for 48
administration. The Board of Trustees shall have full discretionary authority 49
to interpret, construe, and implement the LEIA and to adopt such rules and 50
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 11
regulations as may be necessary or desirable to implement the provisio ns of 1
the LEIA. 2
(2) Funding of the LEIA. – In the event that (i) the General Assembly creates or 3
modifies any provision for the retirement of, or payment of retirement benefits 4
to, public officers or public employees that has a cost savings as measured by 5
actuarial note required by Article 15 of Chapter 120 of the General Statutes, 6
or (ii) the Board of Trustees identifies a specific administrative or information 7
technology purpose that is necessary to prevent an interruption to the normal 8
operation of the R etirement System, the Board of Trustees may direct up to 9
one hundredth percent (0.01%) of the required contributions to fund the LEIA. 10
These funds must be deposited in a separate fund from the fund into which 11
regular employer contributions are deposited for the Retirement System. The 12
Board of Trustees shall not direct any employer contributions into the LEIA 13
after January 1, 2035. 14
(3) Allocation of LEIA funds. – The Board of Trustees may allocate LEIA funds 15
to (i) the implementation of legislative provisions regarding the retirement of, 16
or payment for retirement benefits to, public officers or public employees, or 17
(ii) be used for administrative or information technology purposes, subject to 18
the following restrictions: 19
a. The Board of Trustees must identify individual implementation 20
projects that will be paid for with LEIA funds. These implementation 21
projects must be necessitated by a specific statute or session law that 22
was enacted within five years of the allocation of the funds. The Board 23
of Trustees must also identify the number of years for which each 24
individual implementation project will be paid for with LEIA funds. 25
b. For implementation projects that will be paid for with LEIA funds for 26
a period of one year or less, the Board of Trustees must determine that 27
the cost savings from implementing the project is projected to be no 28
less than half of the amount of LEIA funds utilized to pay for 29
implementation. 30
c. For implementation projects that will be paid for with LEIA funds for 31
a period of greater than one year, but not more than four years, the 32
Board of Trustees must determine that the long-term cost savings from 33
implementing the project is projected to be at least three times greater 34
than the cost of implementation. 35
d. No implementation project shall be pa id for with LEIA funds for a 36
period of more than four years. 37
e. The Board of Trustees shall identify the specific administrative or 38
information technology purpose for which LEIA funds will be used. 39
Any use of LEIA funds for administrative or information te chnology 40
purposes requires a determination by the Board of Trustees that the 41
use of funds is necessary to prevent an interruption to the normal 42
operation of the Retirement System. purposes that the Board of 43
Trustees determines are necessary to prevent an in terruption to the 44
normal operation of the Retirement System. 45
(4) Treatment of unused assets. – Any assets of the LEIA not used to pay allowed 46
administrative expenses for timely administrative implementation of 47
legislative provisions shall be transferred The Board of Trustees may transfer 48
assets of the LEIA to the Retirement System as an additional employer 49
contribution. 50
…." 51
General Assembly Of North Carolina Session 2025
Page 12 Senate Bill 936-First Edition
SECTION 1.11.(b) G.S. 128-29(g) reads as rewritten: 1
"(g) Legislative Enactment Implementation Arrangement. – The Legislative Enactment 2
Implementation Arrangement, or LEIA, is established effective October 1, 2017, and placed 3
under the management of the Board of Trustees. The purpose of the LEIA is to provide for timely 4
and ongoing administrative implementation of legislative provisions regarding the retirement of, 5
or payment of retirement benefits to, public officers or public employees. The LEIA shall have 6
the following parameters: 7
(1) Administration. – The LEIA shall be administered by the Board of Trustees, 8
which shall compile and main tain all records necessary or appropriate for 9
administration. The Board of Trustees shall have full discretionary authority 10
to interpret, construe, and implement the LEIA and to adopt such rules and 11
regulations as may be necessary or desirable to implement the provisions of 12
the LEIA. 13
(2) Funding of the LEIA. – In the event that (i) the General Assembly creates or 14
modifies any provision for the retirement of, or payment of retirement benefits 15
to, public officers or public employees that has a cost savings as measured by 16
actuarial note required by Article 15 of Chapter 120 of the General Statutes, 17
or (ii) the Board of Trustees identifies a specific administrative or information 18
technology purpose that is necessary to prevent an interruption to the normal 19
operation of the Retirement System, the Board of Trustees may direct up to 20
one hundredth percent (0.01%) of the required contributions to fund the LEIA. 21
These funds must be deposited in a separate fund from the fund into which 22
regular employer contributions are deposited for the Retirement System. The 23
Board of Trustees shall not direct any employer contributions into the LEIA 24
after January 1, 2035. 25
(3) Allocation of LEIA funds. – The Board of Trustees may allocate LEIA funds 26
to (i) the implementation of legislative provisions regarding the retirement of, 27
or payment for retirement benefits to, public officers or public employees, or 28
(ii) be used for administrative or information technology purposes, subject to 29
the following restrictions: 30
a. The Board of Trustees must identify individual implementation 31
projects that will be paid for with LEIA funds. These implementation 32
projects must be necessitated by a sp ecific statute or session law that 33
was enacted within five years of the allocation of the funds. The Board 34
of Trustees must also identify the number of years for which each 35
individual implementation project with be paid for will LEIA funds. 36
b. For implementation projects that will be paid for with LEIA funds for 37
a period of one year or less, the Board of Trustees must determine that 38
the cost savings from implementing the project is projected to be no 39
less than half of the amount of LEIA funds utilized to pa y for 40
implementation. 41
c. For implementation projects that will be paid for with LEIA funds for 42
a period of greater than one year, but not more than four years, the 43
Board of Trustees must determine that the long-term cost savings from 44
implementing the project is projected to be at least three times greater 45
than the cost of implementation. 46
d. No implementation project shall be paid for with LEIA funds for a 47
period of more than four years. 48
e. The Board of Trustees shall identify the specific administrativ e or 49
information technology purpose for which LEIA funds will be used. 50
Any use of LEIA funds for administrative or information technology 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 13
purposes requires a determination by the Board of Trustees that the 1
use of funds is necessary to prevent an interrupti on to the normal 2
operation of the Retirement System. purposes that the Board of 3
Trustees determines are necessary to prevent an interruption to the 4
normal operation of the Retirement System. 5
(4) Treatment of unused assets. – Any assets of the LEIA not used to pay allowed 6
administrative expenses for timely administrative implementation of 7
legislative provisions shall be transferred The Board of Trustees may transfer 8
assets of the LEIA to the Retirement System as an additional employer 9
contribution. 10
…." 11
SECTION 1.11.(c) This section is effective July 1, 2026. 12
13
PART II. STATE HEALTH PLAN 14
15
ALLOW MATERNITY BENEFITS FOR ALL ELIGIBLE DEPENDENT 16
CHILDREN/REMOVE REFERENCE TO MATERNITY BENEFITS FROM THE 17
STATUTE DEALING WITH CATEGORIES OF COVERAGE 18
SECTION 2.1.(a) G.S. 135-48.43(d) reads as rewritten: 19
"(d) Categories of Coverage Available. – There The following are four categories of 20
coverage which that an employee or retiree may elect.elect: 21
(1) Employee Only. – Covers enrolled employees only. Maternity benefits are 22
provided to employee only. 23
(2) Employee and Child. – Covers enrolled employee and all eligible dependent 24
children. Maternity benefits are provided to the employee only. 25
(3) Employee and Family. – Covers employee and spouse, and all eligible 26
dependent children. Maternity benefits are provided to employee or enrolled 27
spouse. 28
(4) Employee and Spouse. – Covers employee and spouse only. Maternity 29
benefits are provided to the employee or the employee's enrolled spouse." 30
SECTION 2.1.(b) This section is effective 30 days after this act becomes law. 31
32
COORDINATION OF BENEFITS WITH MEDICARE 33
SECTION 2.2. G.S. 135-48.38(a) reads as rewritten: 34
"(a) Benefits payable for covered expenses under this Plan will be reduced by any benefits 35
payable for the same covered expenses under Medicare, so that Medicare. Medicare will be the 36
primary carrier except where compliance with federal law specifies otherwise.otherwise or when 37
the Treasurer has determined that the administrative cost of coordinating with Medicare is likely 38
to exceed the financial benefit of the coordination to the Plan." 39
40
EXCEPTION FROM FINAL PAYEE REQUIREMENT 41
SECTION 2.3. G.S. 147-86.11(f)(1) reads as rewritten: 42
"(1) Moneys deposited with the State Treasurer remain on deposit with the State 43
Treasurer until final disbursement to the ultimate payee, except (i) for the 44
purposes of the operation of North Carolina State Health Plan for Teacher s 45
and State Employees , as deter mined by the State Treasurer , and (ii) as 46
provided in G.S. 147-86.12. If an ultimate payee is required by law to submit 47
information for certification or verification by the State Auditor, then no 48
disbursement may be made to that ultimate payee if the certi fication or 49
verification has not been issued by the State Auditor to the State Controller." 50
51
General Assembly Of North Carolina Session 2025
Page 14 Senate Bill 936-First Edition
PART III. NORTH CAROLINA INVESTMENT AUTHORITY 1
2
CONFORM WITH THE CHANGE FROM THE STATE TREASURER AS CUSTODIAN 3
OF FUNDS TO THE NORTH CAROLINA INVESTMENT AUTHORITY 4
SECTION 3.1.(a) G.S. 58-31-1 reads as rewritten: 5
"§ 58-31-1. State Property Fire Insurance Fund created. 6
Upon the expiration of all existing policies of fire insurance upon state -owned buildings, 7
fixtures, furniture, and equipment, including all such pro perty the title to which may be in any 8
State department, institution, or agency, the State of North Carolina shall not reinsure any of such 9
properties. 10
There is hereby created a "State Property Fire Insurance Fund," which shall be as a special 11
fund in the State treasury, for the purpose of providing a reserve against loss from fire at State 12
departments and institutions. The State Treasurer shall be the custodian of the "State Property 13
Fire Insurance Fund" and shall invest deposit its assets in accordance with the provisions of G.S. 14
147-69.2 and 147 -69.3. with the North Carolina Investment Authority to invest these assets in 15
accordance with Article 6 of Chapter 147 of the General Statutes. The unexpended appropriations 16
of State departments and institutions fo r fire insurance premiums for the fiscal year 1944 -1945 17
and the appropriations for fire insurance premiums made for the biennium 1945-1947 or that may 18
thereafter be made for this purpose shall be transferred to the "State Property Fire Insurance 19
Fund."" 20
SECTION 3.1.(b) G.S. 58-31A-20(a) reads as rewritten: 21
"(a) There is established a State Public Education Property Insurance Fund (Fund) as a 22
special fund in the State treasury for the purpose of providing a reserve against property loss of 23
public education boards. The State Treasurer shall be the custodian of the Fund and shall invest 24
deposit its assets in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3. with the 25
North Carolina Investment Authority to invest these assets in accordance with Article 6 of 26
Chapter 147 of the General Statutes. All funds paid over to the State Treasurer by the State Fire 27
Marshal for premiums on insurance by public education boards and all money received from 28
interest or from loans and deposits and from any other s ource connected with the insurance of 29
the property shall be held by the State Treasurer in the Fund for the purpose of paying all 30
insurable hazards for which the Fund shall be liable and the expenses necessary for the proper 31
conduct of the insurance of such property, together with such premiums for reinsurance that the 32
State Fire Marshal may deem necessary to reinsure as provided by this Article." 33
SECTION 3.1.(c) G.S. 58-86-20 reads as rewritten: 34
"§ 58 -86-20. State Treasurer to be custodian of fund; appro priations; contributions to 35
fund; expenditures. 36
(a) The State Treasurer shall be the custodian of the North Carolina Firefighters' and 37
Rescue Squad Workers' Pension Fund and shall invest its assets in accordance with the provisions 38
of G.S. 147 -69.2 and G.S. 147 -69.3.deposit these assets with the North Carolina Investment 39
Authority to invest these assets in accordance with Article 6 of Chapter 147 of the General 40
Statutes. 41
(b) The appropriations made by the General Assembly out of the general fund General 42
Fund to provide money for administrative expenses of the Pension Fund shall be handled in the 43
same manner as any other general fund General Fund appropriation. One -fourth of the 44
appropriation made out of the general fund General Fund to provide for the fin ancing of the 45
pension fund Pension Fund shall be transferred quarterly to a special fund to be known as the 46
North Carolina Firefighters' and Rescue Squad Workers' Pension Fund. There shall be set up 47
(c) The North Carolina Firefighters ' and Rescue Squad Workers ' Pension Fund is a 48
special fund established in the Department of State Treasurer's office a special fund to be known 49
as the North Carolina Firefighters' and Rescue Squad Workers' Pension Fund, and all Treasurer. 50
All contributions made by the members of this pension fund shall be deposited in the special 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 15
fund. All expenditures for refunds, investments or benefits shall be in the same manner as 1
expenditures of other special funds." 2
SECTION 3.1.(d) G.S. 58-87-5(a) reads as rewritten: 3
"(a) There is created in the Department of Insurance the Volunteer Rescue/EMS Fund to 4
provide grants to volunteer rescue units, rescue/EMS units, EMS units that are volunteer fire 5
departments that are a part of a county's EMS system plan, an d EMS units providing rescue or 6
rescue and emergency medical services to purchase equipment and make capital improvements. 7
An eligible unit may apply to the Office of the State Fire Marshal for a grant under this section. 8
The application form and criteria for grants shall be established by the Office of the State Fire 9
Marshal. The North Carolina Association of Rescue and Emergency Medical Services, Inc., shall 10
provide the Office of the State Fire Marshal with an advisory priority listing for rescue equipment 11
eligible for funding, and the Department of Health and Human Services shall provide the Office 12
of the State Fire Marshal with an advisory priority listing of EMS equipment eligible for funding. 13
The State Treasurer shall invest deposit the Fund's assets according to law, with the North 14
Carolina Investment Authority to invest these assets in accordance with Article 6 of Chapter 147 15
of the General Statutes , and the earnings shall remain in the Fund. On December 15, or on the 16
first business day after December 15 if December 15 falls on a weekend or a holiday, of each 17
year, the Office of the State Fire Marshal shall make grants to eligible units subject to all of the 18
following limitations: 19
…." 20
SECTION 3.1.(e) G.S. 74C-30(d) reads as rewritten: 21
"(d) The State T reasurer shall invest and reinvest deposit the moneys in the Fund in a 22
manner provided by law. with the North Carolina Investment Authority to invest these assets in 23
accordance with Article 6 of Chapter 147 of the General Statutes. The Board, in its discretion, 24
may use the Fund for any of the following purposes: 25
…." 26
SECTION 3.1.(f) G.S. 74D-30(d) reads as rewritten: 27
"(d) The State Treasurer shall invest and reinvest deposit the moneys in the Fund in a 28
manner provided by law. with the North Carolina Investment Authority to invest these assets in 29
accordance with Article 6 of Chapter 147 of the General Statutes. The Board in its discretion, 30
may use the Fund for any of the following purposes: 31
…." 32
SECTION 3.1.(g) G.S. 113-173.1(a) reads as rewritten: 33
"(a) Establishment. – There is hereby established the North Carolina Commercial Fishing 34
Resources Fund (Fund) as a nonreverting special revenue fund in the office of the State Treasurer. 35
The purpose of the Fund is to provide funding for the development of sust ainable commercial 36
fishing in the State. The principal of the Fund shall consist of all of the following: 37
… 38
The State Treasurer shall hold the Fund separate and apart from all other moneys, funds, and 39
accounts. The State Treasurer shall invest deposit the assets of the Fund in accordance with the 40
provisions of G.S. 147-69.2, with the North Carolina Investment Authority to invest these assets 41
in accordance with Article 6 of Chapter 147 of the General Statutes, except that interest and other 42
income received on the fund balance shall be treated as set forth in G.S. 147-69.1(d)." 43
SECTION 3.1.(h) G.S. 113-175.1(b) reads as rewritten: 44
"(b) The State Treasurer shall hold the Marine Resources Fund separate and apart from all 45
other moneys, funds, and accou nts. The State Treasurer shall invest deposit the assets of the 46
Marine Resources Fund in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3, 47
with the North Carolina Investment Authority to invest these assets in accordance with Article 6 48
of Chapter 147 of the General Statutes , and all marine resources investment income shall be 49
deposited to the credit of the Marine Resources Fund. The State Treasurer shall disburse the 50
principal of the Marine Resources Fund and marine resources investment income only upon the 51
General Assembly Of North Carolina Session 2025
Page 16 Senate Bill 936-First Edition
written direction of the Division of Marine Fisheries of the Department of Environmental 1
Quality." 2
SECTION 3.1.(i) G.S. 113-175.5(b) reads as rewritten: 3
"(b) The State Treasurer shall hold the Endowment Fund separate and apart from all other 4
moneys, funds, and accounts. The State Treasurer shall invest deposit the assets of the 5
Endowment Fund in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3. with 6
the North Carolina Investment Authority to invest these assets in accorda nce with Article 6 of 7
Chapter 147 of the General Statutes. The State Treasurer shall disburse the endowment 8
investment income only upon the written direction of the Division of Marine Fisheries of the 9
Department of Environmental Quality." 10
SECTION 3.1.(j) G.S. 115C-546.10 reads as rewritten: 11
"§ 115C-546.10. Fund created; purpose; prioritization. 12
There is created the Needs -Based Public School Capital Fund as an interest -bearing, 13
nonreverting special fund in the Department of Public Instruction. The State Treasurer shall be 14
the custodian of the Needs-Based Public School Capital Fund and shall invest deposit its assets 15
in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3. with the North Carolina 16
Investment Authority to invest these assets in accordance with Article 6 of Chapter 147 of the 17
General Statutes. The Department of Public Instruction shall award grants from the Fund to 18
counties to assist with their critical public school building capital needs in accordance with the 19
following priorities: 20
…." 21
SECTION 3.1.(k) G.S. 116-209 reads as rewritten: 22
"§ 116 -209. Reserve Trust Fund created; transfer of Escheat Fund; pledge of security 23
interest for payment of bonds; administration. 24
The appropriation made to the Authority under this Article shall be used exclusively for the 25
purpose of acquiring contingent or vested rights in obligations which it may acquire under this 26
Article; such these appropriations, payments, revenue and interest as well as other income 27
received in connection with such the obligations is hereby established as a trust fund. Such This 28
fund shall be used for the purposes of the Authority other than maintenance and operation. 29
The maintenance and operating expenses of the Authority shall be paid from funds 30
specifically appropriated for such those purposes. No part of the trust fund established under this 31
section shall be expended for such those purposes. 32
The State Treasurer shall be the custodian of the assets of the Authority and shall invest them 33
in accordance with the provisions of G.S. 147-69.2 and 147-69.3. deposit its assets with the North 34
Carolina Investment Authority to invest these assets in accordance with Article 6 of Chapter 147 35
of the General Statutes. All payments from the accounts thereof shall be made by him the State 36
Treasurer issued upon vouchers signed by such persons as are a person or persons designated by 37
the Authority. A duly attested copy of a resolution of the Authority designating such the persons 38
authorized to sign the vouche rs and bearing on its face the specimen signatures of such the 39
persons shall be filed with the State Treasurer as his authority for issuing warrants upon such 40
vouchers.vouchers in accordance with this section. 41
…." 42
SECTION 3.1.(l) G.S. 116-209.25 reads as rewritten: 43
"§ 116-209.25. Parental Savings Trust Fund. 44
… 45
(c1) Investments. – The Authority shall determine an appropriate investment strategy for 46
the Parental Savings Trust Fund. The strategy may include a combination of fixed income assets 47
and preferred or common stocks issued by any company incorporated, or otherwise located 48
within or without the United States, or other appropriate investment instruments to achieve 49
long-term return through a combination of capital appreciation and current income. The 50
Authority may deposit all or any portion of the Parental Savings Trust Fund for investment either 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 17
with the State Treasurer, North Carolina Investment Authority, or in the individual, common, or 1
collective trust funds of an investment manager or managers that meet the requirements of this 2
subsection. Contributions to the Parental Savings Trust Fund on deposit with the State Treasurer 3
shall be invested by the State Treasurer as authorized in G.S. 147-69.2(b)(1) through (6) and the 4
applicable provisions of G.S. 147-69.3. North Carolina Investment Authority to invest these 5
assets in accordance with Article 6 of Chapter 147 of the General Statutes. Contributions to the 6
Parental Savings Trust Fund may be invested in the individual, common, or collective trust funds 7
of an investment manager provided that the investment manager meets both of the following 8
conditions: 9
… 10
(f) Limitations. – Nothing in this section shall be con strued to create any obligation of 11
the Authority, the State Treasurer, the North Carolina Investment Authority, the State, or any 12
agency or instrumentality of the State to guarantee for the benefit of any parent, other interested 13
party, or designated benef iciary the rate of return or other return for any contribution to the 14
Parental Savings Trust Fund and the payment of interest or other return on any contribution to 15
the Parental Savings Trust Fund." 16
SECTION 3.1.(m) G.S. 120-4.18 reads as rewritten: 17
"§ 120-4.18. Management of funds. 18
The Board of Trustees shall manage All of the following appl y to the fund established by 19
G.S. 120-4.17 pursuant to G.S. 135-7.G.S. 135-7: 20
(1) The Board of Trustees shall manage the fund. 21
(2) The State Treasurer shall be the custodian of the assets of this fund and shall 22
deposit these assets with the North Carolina Investment Authority to invest 23
these assets in accordance with Article 6 of Chapter 147 of the General 24
Statutes." 25
SECTION 3.1.(n) G.S. 122E-3(c) reads as rewritten: 26
"(c) The State Treasurer shall serve as trustee for the Fund. The Treasurer shall deposit 27
these assets with the North Carolina Investment Authority to invest the North Carolina Housing 28
Trust Fund revenues he receives as provided in G.S. 147 -69.2(b). in accordance with Article 6 29
of Chapter 147 of the General Statutes. The Treasurer North Carolina Investment Authority shall 30
provide the Agency with quarterly and annual reports of Fund revenues and interest earnings." 31
SECTION 3.1.(o) G.S. 127A-40.1 reads as rewritten: 32
"§ 127A-40.1. North Carolina National Guard Pension Fund. 33
(a) As used in this section, the term "Board of Trustees" means the The following 34
definitions apply in this section: 35
(1) Board of Trustees. – The Board of Trustees of the Teachers' and State 36
Employees' Retirement System. 37
(2) Fund. – The North Carolina National Guard Pension Fund. 38
(b) The North Carolina National Guard Pension Fund shall include general fund General 39
Fund appropriations made to the Departmen t of State Treasurer and held with the Pension 40
Accumulation Fund of the Teachers' and State Employees' Retirement System. 41
(b1) The State Treasurer shall be the custodian of the assets of this Fund and shall deposit 42
these assets with the North Carolina Investment Authority to invest these assets in accordance 43
with Article 6 of Chapter 147 of the General Statutes. 44
…." 45
SECTION 3.1.(p) G.S. 131A-32 reads as rewritten: 46
"§ 131A-32. The Rural Health Care Stabilization Fund. 47
The Rural Health Care Stabilizati on Fund is created as a nonreverting special fund in the 48
Office of State Budget and Management. The Fund shall operate as a revolving fund consisting 49
of funds appropriated to, or otherwise received by, the Rural Health Care Stabilization Program 50
and all funds received as repayment of the principal of or interest on a loan made from the Fund. 51
General Assembly Of North Carolina Session 2025
Page 18 Senate Bill 936-First Edition
The State Treasurer is the custodian of the Fund and shall deposit the assets of the Fund with the 1
North Carolina Investment Authority to invest its assets in accordanc e with G.S. 147-69.2 and 2
G.S. 147-69.3. Article 6 of Chapter 147 of the General Statutes. Moneys in the Fund shall only 3
be used for loans made pursuant to this Article." 4
SECTION 3.1.(q) G.S. 135-66(a) reads as rewritten: 5
"(a) The State Treasurer shall be the custodian of the assets of this Retirement System and 6
shall invest them in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3.deposit 7
these assets with the North Carolina Investment Authority to invest these assets in accordance 8
with Article 6 of Chapter 147 of the General Statutes." 9
SECTION 3.1.(r) G.S. 135-110(d) reads as rewritten: 10
"(d) The State Treasurer shall be the custodian of the funds and shall invest the assets of 11
the fund in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3.deposit the funds 12
with the North Carolina Investment Authority to invest these assets in accordance with Article 6 13
of Chapter 147 of the General Statutes." 14
SECTION 3.1.(s) G.S. 143-58.5(b) reads as rewritten: 15
"(b) The Alternative Fuel Revol ving Fund is created and shall be held by the State 16
Treasurer. The Fund shall consist of moneys received from the sale of EPAct credits under 17
G.S. 143-58.4, any moneys appropriated to the Fund by the General Assembly, and any moneys 18
obtained or accepted by the Department for deposit into the Fund. The Fund shall be managed to 19
maximize benefits to the State for the purchase of alternative fuel, related refueling infrastructure, 20
and AFV purchases. To the extent possible, benefits from the sale of EPAct credit shall be 21
distributed to State departments, institutions, and agencies in proportion to the number of EPAct 22
credits generated by each. No portion of the Fund shall be transferred to the General Fund, and 23
any appropriation made to the Fund shall not revert. The State Treasurer shall deposit the funds 24
with the North Carolina Investment Authority to invest moneys in the Fund in the same manner 25
as other funds are invested. accordance with Article 6 of Chapter 147 of the General Statutes. 26
Interest and moneys earned on such investments shall be credited to the Fund." 27
SECTION 3.1.(t) G.S. 143-166.82(b) reads as rewritten: 28
"(b) The State Treasurer shall be the custodian of the Sheriffs' Supplemental Pension Fund 29
and shall invest deposit its assets with the North Ca rolina Investment Authority to invest the 30
assets in accordance with the provisions of G.S. 147-69.2 and G.S. 147-69.3.Article 6 of Chapter 31
147 of the General Statutes." 32
SECTION 3.1.(u) G.S. 143-250.1(b) reads as rewritten: 33
"(b) There is created the Board of Trustees of the Wildlife Endowment Fund of the 34
Wildlife Resources Commission, with full authority over the administration of the Wildlife 35
Endowment Fund, whose ex officio chairman, vice -chairman, and members shall be the 36
chairman, vice -chairman, and mem bers of the Wildlife Resources Commission. The State 37
Treasurer shall be the custodian of the Wildlife Endowment Fund and shall invest deposit its 38
assets with the North Carolina I nvestment Authority to invest the assets in accordance with the 39
provisions of G.S. 147-69.2 and 147-69.3.Article 6 of Chapter 147 of the General Statutes." 40
SECTION 3.1.(v) G.S. 143-719(b) reads as rewritten: 41
"(b) Fund Earnings, Assets, and Balances. – The State Treasurer shall hold the Fund 42
separate and apart from all other moneys, funds, and accounts. The State Treasurer is the 43
custodian of the Fund and shall deposit its assets with the North Carolina Investment Authority 44
to invest the assets in accordance with G.S. 147-69.2 and G.S. 147-69.3. Article 6 of Chapter 147 45
of the General Statutes. Investment earnings credited to the Fund become part of the Fund. Any 46
balance remaining in the Fund at the end of any fiscal year is carried forward in the Fund for the 47
next succeeding fiscal year. Payments from the Fund shall be made on the wa rrant of the chair 48
of the Commission, pursuant to the directives of the Commission." 49
SECTION 3.1.(w) G.S. 143B-135.236(a) reads as rewritten: 50
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 19
"(a) The North Carolina Conservation Easement Endowment Fund is established as a 1
special fund in the Office of th e State Treasurer. The principal of the Endowment Fund shall 2
consist of a portion of grant funds transferred by the Trustees to the Endowment Fund from the 3
North Carolina Land and Water Fund for stewardship activities related to projects for 4
conservation easements funded from the North Carolina Land and Water Fund. The principal of 5
the Endowment Fund may also consist of any proceeds of any gifts, grants, or contributions to 6
the State that are specifically designated for inclusion in the Endowment Fund and a ny 7
investment income that is not used in accordance with subsection (b) of this section. The State 8
Treasurer shall hold the Endowment Fund separate and apart from all other moneys, funds, and 9
accounts. The State Treasurer shall deposit its assets with the North Carolina Investment 10
Authority to invest the assets of the Endowment Fund in accordance with the provisions of 11
G.S. 147-69.2 and G.S. 147-69.3. Article 6 of Chapter 147 of the General Statutes. The State 12
Treasurer shall disburse the endowment investment income only upon the written direction of 13
the Chair of the Board of Trustees. No expenditure or disbursement shall be made from the 14
principal of the Endowment Fund." 15
SECTION 3.1.(x) G.S. 143C-9-2(a) reads as rewritten: 16
"(a) The Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse 17
Services and Bridge Funding Needs is established as an interest -bearing, nonreverting special 18
trust fund in the Office of State Budget and Management. Moneys in the Trust Fund shall be held 19
in trust and used solely to increase community -based services that meet the mental health, 20
developmental disabilities, and substance abuse services needs of the State. The Trust Fund shall 21
be used to supplement and not to supplant or replace existing State an d local funding available 22
to meet the mental health, developmental disabilities, and substance abuse services needs of the 23
State. 24
The State Treasurer shall hold the Trust Fund separate and apart from all other moneys, funds, 25
and accounts. The State Treasur er shall be the custodian of the Trust Fund and shall deposit its 26
assets with the North Carolina Investment Authority to invest its assets in accordance with G.S. 27
147-69.2 and G.S. 147 -69.3. Article 6 of Chapter 147 of the General Statutes. Investment 28
earnings credited to the assets of the Trust Fund shall become part of the Trust Fund. Any balance 29
remaining in the Trust Fund at the end of any fiscal year shall be carried forward in the Trust 30
Fund for the next succeeding fiscal year. 31
Moneys in the Trust Fun d shall be expended only in accordance with subsection (b) of this 32
section and in accordance with limitations and directions enacted by the General Assembly." 33
SECTION 3.1.(y) G.S. 147-54.5(e) reads as rewritten: 34
"(e) Revenues derived from consent orders r esulting from negotiated settlements of 35
securities investigations by the Secretary of State shall be credited to the Fund. The State 36
Treasurer shall deposit its assets with the Investment Authority to invest the assets of the Fund 37
according to law. in accordance with Article 6 of this Chapter. Any interest or other investment 38
income earned by the Investor Protection and Education Trust Fund shall remain in the Fund. 39
The balance of the Investor Protection and Education Trust Fund at the end of each fiscal ye ar 40
shall not revert to the General Fund." 41
SECTION 3.1.(z) G.S. 147-69.6(a) reads as rewritten: 42
"(a) The Swain County Settlement Trust Fund is established as a special fund in the Office 43
of the State Treasurer under the management of the Investment Authori ty. The Investment 44
Authority may invest the assets of the Fund in any of the investments authorized under 45
subdivisions (b)(1) through (6) and subdivision (b)(8) of G.S. 147-69.2. in accordance with 46
Article 6 of this Chapter. The Fund shall consist of the proceeds of any payments made by the 47
United States in settlement of the 1943 agreement between Swain County and the United States 48
Department of Interior, such other contributions as Swain County or other entities may choose 49
to make to the Fund, and the int erest and other investment income earned by the Fund. For the 50
General Assembly Of North Carolina Session 2025
Page 20 Senate Bill 936-First Edition
purposes of this section, the initial balance of the Fund shall be defined as fifty -two million 1
dollars ($52,000,000)." 2
SECTION 3.1.(aa) G.S. 161-50.2(b) reads as rewritten: 3
"(b) The State Trea surer shall be the custodian of the Registers of Deeds' Supplemental 4
Pension Fund and shall invest its assets in accordance with the provisions of G.S. 147-69.2 and 5
G.S. 147-69.3.deposit its assets with the North Carolina Investment Authority to invest the se 6
assets in accordance with Article 6 of Chapter 147 of the General Statutes." 7
8
REASSIGN RESPONSIBILITY FOR PROHIBITIONS ON STATE INVESTMENT 9
FROM THE STATE TREASURER TO THE NORTH CAROLINA INVESTMENT 10
AUTHORITY 11
SECTION 3.2.(a) G.S. 147-86.57 is amended by adding a new subdivision to read: 12
"(4a) "Investment Authority " means the North Carolina Investment Authority 13
established under Part 4 of Article 6 of this Chapter." 14
SECTION 3.2.(b) G.S. 147-86.58 reads as rewritten: 15
"§ 147-86.58. Prohibitions on State investment. 16
No more than 30 days after October 1, 2015, the State Treasurer The Board of Directors of 17
the Investment Authority shall adopt a policy prohibiting the North Carolina Retirement Systems 18
or Systems, the Investment Authority, and the Department of the State Treasurer from investing 19
funds with a company engaging in investment activities in Iran. At a minimum, the policy shall 20
provide:provide for the following: 21
(1) List of restricted companies. – Within 120 days of adoption of the policy, the 22
State Treasurer Board of Directors of the Investment Authority shall develop 23
and make publically publicly available, a list of companies it determines 24
engage in investment activities in Iran. The State Treasurer Investment 25
Authority shall use any other state lists of restricted companies pursuant to 26
similar laws and any federal information or guidance on companies engaged 27
in investment activities in Iran and any other credible information provided 28
by nonprofit organizations, research firms, govern mental entities, and 29
generally public information. The State Treasurer Investment Authority shall 30
make every effort to avoid erroneously including a company on the list. The 31
State Treasurer list shall update the list be updated annually. Before finalizing 32
an initial list or an updated list, the State Treasurer Board of Directors must 33
do all of the following before a company is included on the list: 34
a. Provide 90 days' written notice of the State Treasurer's intent to 35
include the company on the list. The notice shall inform the company 36
that inclusion on the list would make the company ineligible for State 37
investment and may affect the company's ability to conduct other 38
business with the State and its subdivisions. The notice shall specify 39
that the company may be removed from the list if it ceases its 40
investment activities in Iran. 41
b. The State Treasurer shall provide Provide a company with an 42
opportunity to comment in writing that it is not engaged in investment 43
activities in Iran. If the company demonstrat es to the State Treasurer 44
Board of Directors of the Investment Authority that the company is 45
not engaged in investment activities in Iran, the company shall not be 46
included on the list. 47
(2) Investments prohibited. – Neither the The North Carolina Retirement Systems 48
nor Systems, the Investment Authority, and the State Treasurer may not invest 49
funds with a company that is identified on a list created pursuant to 50
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 21
subdivision (1) of this section as a company engaging in investment activities 1
in Iran. 2
(3) Existing investments. – Any existing investment with a company that is 3
identified on a list created pursuant to subdivision (1) of this section as a 4
company engaging in investment activities in Iran must be divested within 5
180 days of being placed on the list created pursuant to subdivision (1) of this 6
section. 7
(4) Fiduciary duties. – Nothing in the policy or in this Article shall require the 8
North Carolina Retirement Systems Systems, the Investment Authority, or the 9
State Treasurer to take action unless it is determined by the State Treasurer, 10
Board of Directors of the Investment Authority, in good faith, that the action 11
is consistent with the fiduciary responsibilities of the Retirement Systems and 12
the State Treasurer.Investment Authority. 13
(5) Exceptions. – Notwithstanding the policy, an investment may be made in a 14
company engaged in investment activities in Iran if:if both of the following 15
are true: 16
a. The company is eligible to contract with the State under the exception 17
in G.S. 147-86.61. 18
b. The State Treasurer Board of Directors of the Investment Authority 19
makes a good -faith determination, on a case -by-case basis, that the 20
investments are necessary to perform its functions." 21
SECTION 3.2.(c) G.S. 147-86.60(a) reads as rewritten: 22
"(a) A company that is identified on a list created by the State Treasurer pursuant to 23
G.S. 147-86.58 as a company engaging in investment activities in Iran is ineligible to contract 24
with the State or any political subdivision of the State." 25
SECTION 3.2.(d) G.S. 147-86.61(b) reads as rewritten: 26
"(b) Companies engaged in substantial positive action. – Notwithstanding any other 27
provision of this Article, a company engaged in investment activities in Iran may not be placed 28
on the list developed pursuant to G.S. 147-86.58(1) if the State Treasurer Investment Authority 29
determines, using U.S. government statements and any other credible information available to 30
the public, that the company's investment activities in Iran were made before Oct ober 1, 2015, 31
the investment activities in Iran have not been expanded or renewed after October 1, 2015, and 32
the company has adopted, publicized, and is implementing a detailed plan to cease the investment 33
activities in Iran and to refrain from engaging in any new investments in Iran. The State Treasurer 34
Investment Authority shall develop and make publically publicly available a "Substantial 35
Positive Action Exception List" of these companies. The State Treasurer Investment Authority 36
shall update the list annually. Once a person has not engaged in investment activities in Iran 37
within the previous five years, the State Treasurer Investment Authority shall remove that person 38
from the list created pursuant to G.S. 147-86.58." 39
SECTION 3.2.(e) G.S. 147-86.80 reads as rewritten: 40
"§ 147-86.80. Definitions. 41
The following definitions apply in this Article: 42
… 43
(3a) Investment Authority. – The North Carolina Investment Authority established 44
under Part 4 of Article 6 of this Chapter. 45
(4) Restricted company. – A company that appears on the list of companies that 46
are engaged in a boycott of Israel developed by the State Treasurer under 47
G.S. 147-86.81(a)(1). 48
…." 49
SECTION 3.2.(f) G.S. 147-86.81 reads as rewritten: 50
"§ 147-86.81. Prohibitions on State investment. 51
General Assembly Of North Carolina Session 2025
Page 22 Senate Bill 936-First Edition
(a) No more than 30 days after October 1, 2017, the State Treasurer The Board of 1
Directors of the Investment Authority shall adopt a policy prohibiting the North Carolina 2
Retirement Systems Systems, the Investment Authority, or the Department of State Treasurer 3
from investing in any company engaged in a boycott of Israel. At a minimum, the policy shall 4
provide for the following: 5
(1) List of restricted companies. – Within 120 days of adoption of the policy, the 6
State Treasurer Board of Directors of the Investment Authority shall develop 7
and make publicly available a list of companies it determines to be engaged 8
in a boycott of Israel. In the development of this list, the State Treasurer 9
Investment Authority shall use any other state lists of restri cted companies 10
pursuant to similar laws and any federal information or guidance on 11
companies that boycott Israel and any other credible information provided by 12
nonprofit organizations, research firms, and governmental entities, and 13
generally publicly avail able information. The State Treasurer Investment 14
Authority shall make every effort to avoid erroneously including a company 15
on the list. Before finalizing an initial or updated list, the State Treasurer 16
Board of Directors must do all of the following before a company is included 17
on the list: 18
a. Provide 90 days' written notice of the State Treasurer's intent to 19
include the company on the list. The notice shall inform the company 20
that inclusion on the list would make the company ineligible for State 21
investment, may result in the company becoming subject to divestment 22
by the North Carolina Retirement Systems, and may affect the 23
company's ability to conduct business with the State and its 24
subdivisions. The notice shall specify that the company may be 25
removed fro m the list if the company ceases its engagement in a 26
boycott of Israel. 27
b. The State Treasurer shall provide Provide a company with an 28
opportunity to comment in writing that the company is not engaged in 29
a boycott of Israel or has ceased its boycott of Israel. If the company 30
demonstrates to the State Treasurer Board of Directors of the 31
Investment Authority that the compa ny has not been engaged in a 32
boycott of Israel, the company shall not be placed on the list. If a 33
company had been engaged in a boycott of Israel but has ceased the 34
boycott, it must submit a written certification to the State Treasurer 35
Investment Authority that the company will not reengage in a boycott 36
of Israel for the duration of any business with the State. The State 37
Treasurer Investment Authority shall keep all written certifications 38
from restricted and previously restricted companies. 39
(2) Identification of investments. – Upon completion of the initial list of restricted 40
companies created pursuant to subdivision (1) of this subsection, the State 41
Treasurer Investment Authority shall identify any restricted companies in 42
which the North Carolina Retirement Systems has investments. 43
(3) Review of restricted companies list. – The State Treasurer Board of Directors 44
of the Investment Authority shall review the list of restricted companies 45
created pursuant to subdivision (1) of this subsection on an annual basis. This 46
updated list shall be made publicly available and any updates shall be 47
distributed to the North Carolina Retirement Systems. 48
(4) Investments prohibited. – Neither the The North Carolina Retirement Systems 49
nor Systems, the Investment Authority, and the State Treasurer may not invest 50
funds with a company that is identified on a list created pursuant to 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 23
subdivision (1) of this section as a company engaging in restricted investment 1
activities. 2
(5) Existing investments. – Any existing investment with a com pany that is 3
identified on a list created pursuant to subdivision (1) of this section as a 4
company engaging in restricted activities must be divested within 180 days of 5
the adoption of the list. 6
(b) Nothing in the policy or in this Article shall require th e North Carolina Retirement 7
Systems or Systems, the Investment Authority, or the State Treasurer to take action unless it is 8
determined by the State Treasurer, Board of Directors of the Investment Authority in good faith, 9
that the action is consistent with the fiduciary responsibilities of the Retirement Systems and the 10
State Treasurer.Investment Authority." 11
SECTION 3.2.(g) The policies previously adopted by the State Treasurer under 12
G.S. 147-86.58 and G.S. 147-86.81 shall remain in effect until the applicable policy is adopted 13
by the Board of Directors of the North Carolina Investment Authority under G.S. 147-86.58 and 14
G.S. 147-86.81, as amended by this section. 15
16
EXCLUDE NCIA EMPLOYEE PERFORMANCE -RELATED BON USES FROM 17
COMPENSATION CALCULATIONS/TECHNICAL CLEAN-UP OF DEFINITION 18
SECTION 3.3.(a) G.S. 135-1(7a) reads as rewritten: 19
"(7a) a. "Compensation" shall mean all salaries and wages prior to any reduction 20
pursuant to sections 125, 401(k), 403(b), 414(h)(2), a nd 457 of the Internal 21
Revenue Code, not including any terminal payments for unused sick leave, 22
derived from public funds which are earned by a member of the Retirement 23
System for service as an employee or teacher in the unit of the Retirement 24
System for which he the employee is performing full-time work. In addition 25
to the foregoing, "compensation" All of the following shall apply: 26
a. The term "compensation" shall include:include all of the following: 27
1. Performance-based compensation (regardless regardless of 28
whether paid in a lump sum, in periodic installments, or on a 29
monthly basis);basis. 30
2. Conversion of additional benefits to salary (additional benefits 31
salary, such as health, life, or disability plans), plans, so long 32
as the benefits are oth er than mandated by State law or 33
regulation;rule. 34
3. Payment of tax consequences for benefits provided by the 35
employer, so long as they constitute an adjustment or increase 36
in salary and not a "reimbursement of expenses";expenses." 37
4. Payout of vacation leave so long as such payouts are permitted 38
by applicable law and regulation;rule. 39
5. Employee contributions to eligible deferred compensation 40
plans; andplans. 41
6. Effective July 1, 2009, payment of military differential wages. 42
7. All special pay contribution of annual leave made to a 401(a) 43
Special Pay Plan for the benefit of an employee. 44
b. "Compensation" shall not include any payment, as determined by the 45
Board of Trustees, for the reimbursement of expenses or payments for 46
housing or any other allowances whether or not classified as salary and 47
wages. "Compensation" includes all special pay contribution of annual 48
leave made to a 401(a) Special Pay Plan for the benefit of an employee. 49
Notwithstanding any other provision of this Chapter, Chapter to the 50
General Assembly Of North Carolina Session 2025
Page 24 Senate Bill 936-First Edition
contrary, the term "compensation" shall not include:include any of the 1
following: 2
1. Supplement/allowance provided to employee to purchase 3
additional benefits such as health, life, or disability 4
plans;plans. 5
2. Travel supplement/allowance (nonaccountable and other 6
nonaccountable allowance plans);plans. 7
2a. Any payment, as determined by the Board of Trustees, for the 8
reimbursement of expenses or payments for housing or any 9
other allowances , whether or not classified as salary and 10
wages. 11
3. Employer contributions to eligible deferred compensation 12
plans;plans. 13
4. Employer-provided fringe benefits (additional benefits, 14
including additional benefits such as health, life, or disability 15
plans);plans. 16
5. Reimbursement of uninsured medical expenses;expenses. 17
6. Reimbursement of business expenses;expenses. 18
7. Reimbursement of moving expenses;expenses. 19
8. Reimbursement/payment of personal expenses;expenses. 20
9. Incentive payments for early retirement;retirement. 21
10. Bonuses paid incident to retirement;retirement. 22
10a. Local supplementation as authorized under G.S. 7A-300.1 for 23
Judicial Department employees;employees. 24
11. Contract buyout/severance payments; andpayments. 25
12. Payouts for unused sick leave. 26
13. Performance-related bonuses paid to employees of the 27
Investment Authority in accordance with G.S. 147-71.2(d). 28
…." 29
SECTION 3.3.(b) G.S. 128-21(7a) reads as rewritten: 30
"(7a) a. "Compensation" shall mean all salaries and wages prior to any 31
reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 32
of the Internal Revenue Code, not including any terminal payments for 33
unused sick leave, derived from public funds which ar e earned by a 34
member of the Retirement System for service as an employee in the 35
unit of the Retirement System for which he the employee is performing 36
full-time work. In addition to the foregoing, "compensation" shall 37
include:All of the following shall apply: 38
a. The term "compensation" shall include all of the following: 39
1. Performance-based compensation (regardless regardless of 40
whether paid in a lump sum, periodic installments, or on a 41
monthly basis);basis. 42
2. Conversion of additional benefits to salary (additional benefits 43
salary, such as health, life, or disability plans), plans, so long 44
as the benefits are other than mandated by State law or 45
regulation;rule. 46
3. Payment of tax consequences for benefits provided by the 47
employer so long as they constitute an adjustment or increase 48
in salary and not a "reimbursement of expenses";expenses." 49
4. Payout of vacation leave so long as such payouts are permitted 50
by applicable law and regulation;rule. 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 25
5. Employee contributions to eligible deferred compensation 1
plans; andplans. 2
6. Effective July 1, 2009, payment of military differential wages. 3
b. "Compensation" shall not include any payment, as determined by the 4
Board of Trustees, for the reimbursement of expenses or payments for 5
housing or any other allowances whether or not classified as salary and 6
wages. Notwithstanding any other provision of this Chapter, Chapter 7
to the contrary, the term "compensation" shall not include:include any 8
of the following: 9
1. Supplement/allowance provided to employee to purchase 10
additional benefits such as health, life, or disability 11
plans;plans. 12
2. Travel supplement/allowance (nonaccountable and other 13
nonaccountable allowance plans);plans. 14
2a. Any payment, as determined by the Board of Trustees, for the 15
reimbursement of expenses or payments for housing or other 16
allowances, whether or not classified as salary and wages. 17
3. Employer contributions to eligible deferred compensation 18
plans;plans. 19
4. Employer-provided fringe benefits (additional benefits, 20
including additional benefits such as health, life, or disability 21
plans);plans. 22
5. Reimbursement of uninsured medical expenses;expenses. 23
6. Reimbursement of business expenses;expenses. 24
7. Reimbursement of moving expenses;expenses. 25
8. Reimbursement/payment of personal expenses;expenses. 26
9. Incentive payments for early retirement;retirement. 27
10. Bonuses paid incident to retirement;retirement. 28
11. Contract buyout/severance payments; andpayments. 29
12. Payouts for unused sick leave. 30
…." 31
SECTION 3.3.(c) This section is effective retroactively to July 1, 2025, and applies 32
to any performance-related bonuses paid to employees of the Investment Authority in accordance 33
with G.S. 147-71.2(d) on or after that date. 34
35
PART IV. TECHNICAL AND CLARIFYING CHANGES 36
37
REMOVE REFERENCES TO OBSOLETE BENEFITS AND FUNDS/OTHER 38
TECHNICAL CLEAN-UP OF RELATED STATUTES 39
SECTION 4.1.(a) G.S. 135-5(m1) reads as rewritten: 40
"(m1) Special Retirement Allowance for Law Enforcement Officers. – Upon retirement, a 41
member who is a law enforcement officer vested as of June 30, 2010, may elect to transfer any 42
portion of his the member's eligible accumulated contributions, not including any Roth after-tax 43
contributions and the earnings thereon, from the Supplemental Retirement Income Plan of North 44
Carolina to this Retirement System and receive, in addition to his the member's basic service, 45
service or early or disability retirement allowance, a special retirement allowance which that shall 46
be based upon his the member's eligible accumulated account balance at the date of the transfer 47
of the assets to this System. For the purpose of determining the special retirement allowance, the 48
following shall apply: 49
(1) The Board of Trustees shall adopt straight life annuity factors on the basis of 50
mortality tables, such other tables as may be necessary necessary, and the 51
General Assembly Of North Carolina Session 2025
Page 26 Senate Bill 936-First Edition
interest assumption rate recommended by the actuary based upon actual 1
experience including an assumed annual post -retirement allowance increase 2
of four percent (4%). 3
(2) The Board of Trustees shall modify such the straight life annuity factors every 4
five years, as shall be deemed necessary, based upon the five year experience 5
study as required by G.S. 135-6(n). Provided, however, a member, 6
(3) A member who transfers his eligible accumulated contributions from the 7
Supplemental Retirement Income Plan of North Carolina, Carolina shall be 8
taxed for North Carolina State Income tax purposes on the special retirement 9
allowance the same as if that special retirement allowance had been paid 10
directly by the Supplemental Retirement Income Plan of North Carolina. The 11
Teachers' and State Employees' Retirement System shall be responsible to 12
determine the taxable amount, if any, and report accordingly. 13
(4) For transfers of eligible accumulated contributions from the Supplemental 14
Retirement Income Plan of North Carolina that are made on or after July 1, 15
2022, if, subsequent to the member's election, the Bo ard of Trustees 16
determines that (i) the member was ineligible for the election or (ii) the 17
election was impermissible for any reason under federal or State law, then no 18
special retirement allowance shall be paid to the member pursuant to this 19
subsection; t he member shall return to the Retirement System any amount 20
already paid from the Retirement System as a special retirement allowance; 21
and the Retirement System shall return the transfer amount to the source of 22
the transfer, including any earnings adjustmen t that may be required under 23
federal law or Internal Revenue Service guidance. If the Retirement System is 24
unable to return the amount to the account from which it originated, the 25
member may designate another eligible account under the transferor plan or 26
receive a lump sum distribution paid directly to the member if the member 27
would otherwise be eligible for a distribution under the transferor plan at such 28
time." 29
SECTION 4.1.(b) G.S. 135-5(m2) reads as rewritten: 30
"(m2) Special Retirement Allowance. – At any time coincident with or following retirement, 31
a member may make a one -time, irrevocable election to transfer any portion of the member's 32
eligible accumulated contributions, not including any Roth after -tax contributions and the 33
earnings thereon, from the Supplemental Retirement Income Plan of North Carolina or the North 34
Carolina Public Employee Deferred Compensation Plan to this Retirement System and receive, 35
in addition to the member's basic service, service or early or disability retirement allowance, a 36
special retirement allowance which that shall be based upon the member's transferred balance. 37
All of the following shall apply to transfers made under this subsection: 38
(1) For transfers made on or after July 1, 2022, if, subsequent to the member's 39
election, the Board of Trustees determines that (i) the member was ineligible 40
for the election or (ii) the election was impermissible for any reason under 41
federal or State law, then no special retirement allowance shall be paid to the 42
member pursuant to this subsection; the member shall return to the Retirement 43
System any amount already paid from the Retirement System as a special 44
retirement allowance; and the Retirement System shall return the transfer 45
amount to the source of the transfer, including any earnings adjustment that 46
may be required under federal law or Internal Revenue Service guidance. If 47
the Retirement System is unable to return the amount to the account from 48
which it originated, the member may designate another eligible account under 49
the transferor plan or receive a lump sum distribution paid directly to the 50
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 27
member if the member would otherwise be eligible for a distribution under 1
the transferor plan at such time. 2
(2) A member who became a member of the Supplemental Retirement Income 3
Plan prior to retirement and who remains a member of the Supplemental 4
Retirement Income Plan may make a one-time, irrevocable election to transfer 5
eligible balances, not including any Roth after -tax contributions and the 6
earnings thereon, from any o f the following plans to the Supplemental 7
Retirement Income Plan, subject to the applicable requirements of the 8
Supplemental Retirement Income Plan, and then through the Supplemental 9
Retirement Income Plan to this Retirement System: (i) a 10
a. A plan participating in the North Carolina Public School Teachers' and 11
Professional Educators' Investment Plan; (ii) a Plan. 12
b. A plan described in section 403(b) of the Internal Revenue Code; (iii) 13
a Code. 14
c. A plan described in section 457(b) of the Internal Revenue Code that 15
is maintained by a state, political subdivision of a state, or any agency 16
or instrumentality of a state or political subdivision of a state; (iv) an 17
state. 18
d. An individual retirement accou nt or annuity described in section 19
408(a) or section 408(b) of the Internal Revenue Code that is eligible 20
to be rolled over and would otherwise be includible in gross income; 21
or (v) a income. 22
e. A tax-qualified plan described in section 401(a) or section 4 03(a) of 23
the Internal Revenue Code. In addition, any 24
(3) Any transfer under this subsection may be paid in whole or in part with 25
employer contributions paid directly to this Retirement System at the time of 26
transfer. 27
(4) Notwithstanding anything any provision of law to the contrary, a member may 28
not transfer such any amounts as that will cause the member's retirement 29
allowance under the System to exceed the amount allowable under 30
G.S. 135-18.7(b). 31
(5) The Board of Trustees may establish a minimum amount that must be 32
transferred if a transfer is elected. 33
(6) The member may elect a special retirement allowance with no postretirement 34
increases or a special retirement allowance with annual postretirement 35
increases equal to the annual increase in the U.S. Cons umer Price Index. 36
Postretirement increases on any other allowance will not apply to the special 37
retirement allowance. 38
(7) The Board of Trustees shall provide educational materials to the members who 39
apply for the transfer authorized by this section. subsection. Those materials 40
shall describe the special retirement allowance and shall explain the 41
relationship between the transferred balance and the monthly benefit and how 42
the member's heirs may be impacted by the election to make this transfer and 43
any costs and fees involved. 44
(8) For the purpose of determining the special retirement allowance, the Board of 45
Trustees shall adopt straight life annuity factors on the basis of yields on U.S. 46
Treasury Bonds and mortality and such other tables as may be necessary based 47
upon actual experience. All of the following apply to the adoption of straight 48
life annuity factors under this subdivision: 49
General Assembly Of North Carolina Session 2025
Page 28 Senate Bill 936-First Edition
a. A single set of mortality and such other applicable tables will be used 1
for all members, with factors differing only based on the age of the 2
member and the election of postretirement increases. 3
b. The Board of Trustees shall modify the mortality and such other 4
applicable tables every five years, as shall be deemed necessary, based 5
upon the five -year experience study as required by G.S. 135-6(n). 6
Provided, however, a 7
c. A member who transfers the member's eligible accumulated 8
contributions from an eligible retirement plan pursuant to this 9
subsection to this Retirement System shall be taxed for North Carolina 10
State Income Tax purposes on the special retirement allowance the 11
same as if that special retirement allowance had been paid directly by 12
the eligible plan or the plan through which the transfer was made, 13
whichever is most favorable to the member. The Teachers' and State 14
Employees' Retirement System shall be responsible to determine the 15
taxable amount, if any, and report accordingly. 16
(9) The Supplemental Retirement Board of Trustees established under 17
G.S. 135-96 may assess a one -time flat administrative fee not to exceed the 18
actual cost of the administrative expenses relating to these transfers. transfers 19
under this subsection. An eligible plan shall not assess a fee specifically 20
relating to a transfer of accumulated contributions authorized under this 21
subsection. This provision shall subdivision does not prohibit other fees that 22
may be assessable under the plan. 23
(10) Each plan, contract, account, or annuity shall fully disclose to any member 24
participating in a transfer under this subsection any surrender charges or other 25
fees, and such fees. This required disclosure shall be made contemporaneous 26
with the initiation of the transfer by the member. 27
(11) The special retirement allowance shall continue for the life of the member and 28
the beneficiary designated to receive a mon thly survivorship benefit under 29
Option 2, 3 or 6 as provided in G.S. 135-5(g), if any. The Board of Trustees, 30
however, shall establish two payment options that guarantee payments as 31
follows: 32
(1)a. A member may elect to receive the special retirement allowa nce for 33
life but with payments guaranteed for a number of months to be 34
specified by the Board of Trustees. Under this plan, if the member dies 35
before the expiration of the specified number of months, the special 36
retirement allowance will continue to be pai d to the member's 37
designated beneficiary for the life of the beneficiary, if Option 2, 3 or 38
6 is selected. If the member's designated beneficiary under Option 2, 39
3 or 6 begins receiving monthly payments and dies before the specified 40
number of monthly payme nts have been made in combination to the 41
member and beneficiary, a one -time payment will be paid to the 42
member's legal representatives equal to the initial monthly special 43
retirement allowance, multiplied by the specified number of months, 44
less the total o f the monthly payments made to the member and 45
beneficiary. If Option 2, 3 or 6 is not selected, and the member dies 46
before the expiration of the specified number of months, the member's 47
designated beneficiary will receive a one -time payment equal to the 48
initial monthly special retirement allowance, multiplied by the 49
specified number of months, less the total of the monthly payments 50
made to the member. 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 29
(2)b. A member may elect to receive the special retirement allowance for 1
life but is guaranteed that the su m of the special allowance payments 2
will equal the total of the transferred amount. Under this payment 3
option, if the member dies before receiving the total transferred 4
amount, the special retirement allowance will continue to be paid to 5
the member's designated beneficiary for the life of the beneficiary, if 6
Option 2, 3 or 6 is selected. If Option 2, 3 or 6 is not selected, the 7
member's designated beneficiary or the member's estate shall be paid 8
any remaining balance of the transferred amount. 9
(12) The General Assembly reserves the right to repeal or amend this subsection, 10
but such any repeal or amendment shall not affect any person who has already 11
made the one-time election provided in this subsection." 12
SECTION 4.1.(c) All of the following are repealed and any inchoate or accrued 13
rights of any member on January 1, 2027, shall not be diminished: 14
(1) Subsections (c) through (d4), (j), (s), and (x) of G.S. 135-5. 15
(2) G.S. 135-10.1(b). 16
(3) G.S. 135-28.1(e). 17
SECTION 4.1.(d) G.S. 135-3(a)(7)a. reads as rewritten: 18
"a. Notwithstanding any other provision of this Chapter, any member who 19
separates from service prior to the attainment of the age of 60 years 20
for any reason other than death or retirement for disability as provided 21
in G.S. 135-5(d), after comple ting 20 or more years of creditable 22
service, and who leaves his or her total accumulated contributions in 23
said the System shall have the right to retire on a deferred retirement 24
allowance upon attaining the age of 60 years: Provided, that such the 25
member m ay retire only upon written application to the Board of 26
Trustees setting forth at what time, not less than 30 days nor more than 27
90 days subsequent to the execution and filing thereof, he of the 28
application, that the member desires to be retired. Such The deferred 29
retirement allowance shall be computed in accordance with the 30
provisions of G.S. 135-5(b), subdivisions (1), (2) and (3)." 31
SECTION 4.1.(e) G.S. 135-3(a)(7)b. reads as rewritten: 32
"b. In lieu of the benefits provided in paragraph a of this subdivision (7) 33
any member who separates from service on or after July 1, 1951, and 34
prior to the attainment of the age of 60 years, for any reason other than 35
death or retirement for disability as prov ided in G.S. 135-5(d), death, 36
after completing 30 or more years of creditable service, and who 37
leaves his or her total accumulated contributions in said the System, 38
may elect to retire on an early retirement allowance; provided that such 39
the member may so retire only upon written application to the Board 40
of Trustees setting forth at what time, not less than 30 days nor more 41
than 90 days subsequent to the execution and filing thereof, he of the 42
application, that the member desires to be retired; provided further that 43
such retired. This required application shall be duly filed within 60 44
days following the date of such separation. Such separation from 45
service. This elected early retirement allowance so elected shall be the 46
actuarial equivalent of the deferred retirement allowance otherwise 47
payable at the attainment of the age of 60 years upon proper 48
application therefor." 49
SECTION 4.1.(f) G.S. 135-3(a)(8)a. reads as rewritten: 50
General Assembly Of North Carolina Session 2025
Page 30 Senate Bill 936-First Edition
"a. Notwithstanding any other provision of this Chapter, any member who 1
separates from service prior to the attainment of the age of 60 years 2
for any reason other than death or retirement for disability as provided 3
in G.S. 135-5(c), after completing 15 or more years of creditable 4
service, and who leaves his or her total accumulated contributions in 5
said the System shall have the right to retire on a deferred retirement 6
allowance upon attaining the age of 60 years; provided that such the 7
member may retire only upon electronic submission or written 8
application to the Board of Trustees setting forth at what time, not less 9
than one day nor more than 120 days subsequent to the execution and 10
filing thereof, he of the application, that the member desires to be 11
retired; and further provided that in retired. In the case of a member 12
who so separates f rom service on or after July 1, 1967, or whose 13
account is active on July 1, 1967, or has not withdrawn his the 14
member's contributions, the aforestated requirement of 15 or more 15
years of creditable service shall be reduced to 12 or more years of 16
creditable service; and further provided that in service. In the case of 17
a member who so separates from service on or after July 1, 1971, or 18
whose account is active on July 1, 1971, the aforestated requirement 19
of 12 or more years of creditable service shall be reduce d to five or 20
more years of creditable service. Such The deferred retirement 21
allowance shall be computed in accordance with the service retirement 22
provisions of this Article pertaining to a member who is not a law 23
enforcement officer or an eligible former l aw enforcement officer. 24
Notwithstanding the foregoing, any member whose services as a 25
teacher or employee are terminated for any reason other than 26
retirement, who becomes employed by a nonprofit, nonsectarian 27
private school in North Carolina below the coll ege level within one 28
year after such the teacher or employee has ceased to be a teacher or 29
employee, may elect to leave his or her total accumulated contributions 30
in the Teachers' and State Employees' Retirement System during the 31
period he the member is in the employment of such that employer; 32
provided that he the member files notice thereof in writing with the 33
Board of Trustees of the Retirement System within five years after 34
separation from service as a public school teacher or State employee; 35
such the member shall be deemed to have met the requirements of the 36
above provisions of this subdivision upon attainment of age 60 while 37
in such employment provided that he the member is otherwise vested." 38
SECTION 4.1.(g) G.S. 135-3(a)(8)b. reads as rewritten: 39
"b. In lieu of the benefits provided in paragraph a of this subdivision (8), 40
any member who separates from service prior to the attainment of the 41
age of 60 years, for any reason other than death or retirement for 42
disability as provided in G.S. 135-5(c), death, after completing 20 or 43
more years of creditable service, and who leaves his or her total 44
accumulated contributions in said the System, may elect to retire on 45
an early retirement allowance upon attaining the age of 50 years or at 46
any time thereafter; provided that such the member may so retire only 47
upon electronic submission or written application to the Board of 48
Trustees setting forth at what time, not less than one day nor more than 49
120 days subsequent to the execution and filing thereof, he of the 50
application, the member desires to be retired. Such The early 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 31
retirement allowance so elected shall be equal to the deferred 1
retirement allowance otherwise payable at the attainment of the age of 2
60 years reduced by the percentage thereof indicated below. 3
…." 4
SECTION 4.1.(h) G.S. 105-259(b)(39a) reads as rewritten: 5
"(39a) To furnish the Department of State Treasurer periodically upon request, the 6
State tax return of a beneficiary, or the wage and income statement of 7
beneficiary, or the NC -3 information of an em ployer, for the purpose of 8
substantiating the beneficiary's statement required to be submitted under 9
G.S. 135-5(e)(4), 135-109, G.S. 135-109 or 128-27(e)(4); G.S. 128-27(e)(4); 10
or for the purpose of assisting a fraud or compliance investigation in 11
accordance with G.S. 135-1(7b), 135 -1(11b), 135 -6(q), 128 -21(7b), 12
128-21(11c), and 128-28(r); provided that no federal tax information may be 13
disclosed under this subdivision unless such a disclosure is permitted by 14
section 6103 of the Code." 15
SECTION 4.1.(i) G.S. 128-27(c) reads as rewritten: 16
"(c) Disability Retirement Benefits. – Upon the application of a member or of his the 17
member's employer, any member who has had five or more years of creditable service may be 18
retired by the Board of Trustees, on the first day of any calendar month, not less than one day 19
nor more than 120 days next following the date of filing such application, on a disability 20
retirement allowance: Provided, that the medical board, after allowance. All of the following 21
shall apply to this subsection: 22
(1) After a medical examination of such member, shall certify that such a member 23
applying for dis ability retirement under this subsection , the medical board 24
shall make a certification of all of the following: 25
a. The member is mentally or physically incapacitated for the further 26
performance of duty, that such duty. 27
b. The member 's incapacity was incurred at the time of active 28
employment and has been continuous thereafter, that such since it was 29
incurred. 30
c. The member 's incapacity is likely to be permanent, and that such 31
permanent. 32
d. Due to the incapacity, the member should be retired; Provided further 33
retired. 34
(2) Notwithstanding sub-subdivision (1)d. of this subsection, the medical board 35
shall determine if the member is able to engage in gainful employment and, if 36
so, the member may still be retired and the disability retirement allowance as 37
a result thereof shall be reduced as in subsection (e) below. Provided further, 38
that the Medical Board 39
(3) The medical board shall not certify any member as disabled who:who meets 40
either of the following criteria: 41
(1)a. Applies The application for disability retirement is based upon a 42
mental or physical incapacity which existed when the member first 43
established membership in the system; orRetirement System. 44
(2)b. Is The member is in receipt of any payments on account of the same 45
disability which existed when the member first established 46
membership in the system.Retirement System. 47
The Board of Trustees shall require each employee upon enrolling in the retirement system 48
to provide information on the membership application concerning any mental or physical 49
incapacities existing at the time the member enrolls. 50
General Assembly Of North Carolina Session 2025
Page 32 Senate Bill 936-First Edition
(4) Notwithstanding the requirement of five or more years of creditable service to 1
the contrary, a member who is a law enforcement officer, an eligible 2
firefighter as defined in G.S. 58-86-2, or an eligible rescue squad worker as 3
defined in G.S. 58-86-2, and becomes incapacitated for duty as the natural and 4
proximate result of injuries incurred while in the actual performance of his or 5
her duties, and meets all other requirements for disability retirement benefits, 6
may be retired by the Board of Trustees on a disability retirement allowance. 7
(5) Notwithstanding the foregoing t o any provision of this subsection to the 8
contrary, any beneficiary who commenced retirement with an early or service 9
retirement benefit has the right, within three years of his the member 's 10
retirement, to convert to an allowance with disability retirement benefits 11
without modification of any election of optional allowance previously made; 12
provided, the beneficiary would have met all applicable requirements for 13
disability retirement benefits while still in service as a member. The allowance 14
on account of disability retirement benefits to the beneficiary shall be 15
retroactive to the effective date of early or service retirement. 16
(6) Notwithstanding the foregoing, any provision of this subsection to the 17
contrary, effective April 1, 1991, the surviving designated beneficiary of a 18
deceased member who met all other requirements for disability retirement 19
benefits, except whose death occurred before the first day of the calendar 20
month in which the member's disability retirement allowance was to be due 21
and payable, may elect to receive the reduced retirement allowance provided 22
by a one hundred percent (100%) joint and survivor payment option in lieu of 23
a return of accumulated contributions, provided the following condit ions 24
apply: 25
(1)a. At the time of the member's death, one and only one beneficiary is 26
eligible to receive a return of accumulated contributions, 27
andcontributions. If multiple beneficiaries are designated and living at 28
the time of the member's death and any beneficiary elects to renounce 29
that beneficiary's portion of the member 's accumulated contributions, 30
the renunciation shall not result in another beneficiary becoming 31
eligible for benefits under this subdivision. 32
(2)b. The member had not instructed the Boa rd of Trustees in writing that 33
he the member did not wish the provision of this subsection to apply." 34
SECTION 4.1.(j) G.S. 135-4(e) reads as rewritten: 35
"(e) Creditable service at retirement on which the retirement allowance of a member shall 36
be based shall consist of the all of the following: 37
(1) The membership service rendered by the member since he or she last became 38
a member, and also if member. 39
(2) If the member has a prior service certificate which is in full force and effect, 40
the amount of service certified on the prior service certificate; and if 41
certificate. 42
(3) If the member has sick leave standing to the member's credit upon retirement 43
on or after July 1, 1971, one month of credit for each 20 days or portion 44
thereof, but not less than one hour; hour. All of the following shall apply to 45
sick leave leave: 46
a. Sick leave shall not be counted in computing creditable service for the 47
purpose of determinin g eligibility for disability retirement or for a 48
vested deferred allowance. 49
b. Creditable service for unused sick leave shall be allowed only for sick 50
leave accrued monthly during employment under a duly adopted sick 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 33
leave policy and for which the member may be able to take credits and 1
be paid for sick leave without restriction. However, in no instance shall 2
unused sick leave be credited to a member's account at retirement if 3
the member's last day of actual service is more than five years prior to 4
the effective date of the member's retirement. Further, any 5
c. Any agency with a sick leave policy that is more generous than that of 6
all State agencies subject to the rules of the Office of State Human 7
Resources shall proportionately adjust each of its retiring e mployees' 8
sick leave balance to the balance that employee would have had under 9
the rules of the Office of State Human Resources. Days of sick leave 10
standing to a member's credit at retirement shall be determined by 11
dividing the member's total hours of sick leave at retirement by the 12
hours per month such the sick leave was awarded under the employer's 13
duly adopted sick leave policy as the policy applied to the member 14
when the leave was accrued." 15
SECTION 4.1.(k) G.S. 128-26(e) reads as rewritten: 16
"(e) Creditable service at retirement on which the retirement allowance of a member shall 17
be based shall consist of the all of the following: 18
(1) The membership service rendered by the member since he or she last became 19
a member, and also if member. 20
(2) If the member has a prior service certificate which is in full force and effect, 21
the amount of the service certified on the prior service certificate; and if 22
certification. 23
(3) If the member has sick leave standing to the member's credit upon retirement 24
on or aft er July 1, 1971, one month of credit for each 20 days or portion 25
thereof, but not less than one hour; hour. All of the following shall apply to 26
sick leave leave: 27
a. Sick leave shall not be counted in computing creditable service for the 28
purpose of determining eligibility for disability retirement or for a 29
vested deferred allowance. 30
b. Creditable service for unused sick leave shall be allowed only for sick 31
leave accrued monthly during employment under a duly adopted sick 32
leave policy and for which the member may be able to take credits and 33
be paid for sick leave without restriction. However, in no instance shall 34
unused sick leave be credited to a member's account at retirement if 35
the member's last day of actual service is more than 365 days prior to 36
the effective date of the member's retirement. 37
c. Days of sick leave standing to a member's credit at retirement shall be 38
determined by dividing the member's total hours of sick leave at 39
retirement by the hours per month such the sick leave was awarded 40
under the employer's duly adopted sick leave policy as the policy 41
applied to the member when the leave was accrued." 42
SECTION 4.1.(l) G.S. 135-6(k) reads as rewritten: 43
"(k) Medical Board. – The Board of Trustees shall designate a Medical Board to be 44
composed of not less than three nor more than five physicians not eligible to participate in the 45
Retirement System. The Board of Trustees may structure appointment requirements and term 46
durations for those Medical Board members. If required, other physicians may b e employed to 47
report on special cases. The Medical Board shall arrange for and pass upon all medical 48
examinations required under this Chapter, shall investigate all essential statements and 49
certificates by or on behalf of a member in connection with an app lication for disability 50
retirement, benefits provided under the Disability Income Plan of North Carolina, and shall report 51
General Assembly Of North Carolina Session 2025
Page 34 Senate Bill 936-First Edition
in writing to the Board of Trustees its conclusion and recommendations upon all the matters 1
referred to it, except as otherwise provi ded in this Chapter. A person serving on the Medical 2
Board is immune individually from civil liability for monetary damages, except to the extent 3
covered by insurance, for any act or failure to act arising out of that service, unless any of the 4
following applies: 5
…." 6
SECTION 4.1.(m) G.S. 135-48.41(d) reads as rewritten: 7
"(d) Former employees who are receiving disability retirement benefits under Article 1A 8
of Chapter 120 of the General Statutes or under Article 4 of this Chapter or disability income 9
benefits pursuant to under Article 6 of this Chapter 135 of the General Statutes or who are 10
approved for those benefits but not in receipt of the benefits due to lump-sum payouts of vacation, 11
bonus, and sick leave, provided the former employee has at least five years of contributory 12
retirement service with an employing unit of a State -supported retirement system, shall be 13
eligible for the benefit provisions of this Plan, as set forth in this Part, on a noncontributory or 14
partially contributory basis. Such coverage Coverage shall terminate as of the end of the month 15
in which such the former employee is no longer eligible for disability retirement benefits under 16
Article 1A of Chapter 120 of the General Statutes or under Article 4 of this Chapter or disability 17
income benefits pursuant to Article 6 of this Chapter." 18
SECTION 4.1.(n) All of the following are repealed and any inchoate or accrued 19
rights of any member on January 1, 2027, shall not be diminished: 20
(1) G.S. 120-4.11(2). 21
(2) G.S. 120-4.12(c)(2). 22
(3) G.S. 120-4.13(a). 23
(4) Subsections (a) and (b) of G.S. 120-4.15. 24
SECTION 4.1.(o) All except the catch line and the first sentence of G.S. 135-5(e) is 25
recodified as subsection (b) of G.S. 120-4.23. 26
SECTION 4.1.(p) G.S. 120-4.23, as amended by subsection (o) of this section, reads 27
as rewritten: 28
"§ 120-4.23. Reexamination for disability retirement allowance. 29
(a) Any disability retiree who has not reached age 65 shall be reexamined pursuant to 30
G.S. 135-5(e). in accordance with this section. After he a disability retiree reaches age 65, no 31
further examinations are required. 32
(b) Once each year during the first five years following retirement of a member on a 33
disability retirement allowance, and once in every three -year period thereafter, the Boa rd of 34
Trustees may, and upon the member's application shall, require any disability beneficiary who 35
has not yet attained the age of 60 years to undergo a medical examination performed at the place 36
of residence of that beneficiary, or other place mutually agreed upon, by a physician or physicians 37
designated by the Board of Trustees. Should any disability beneficiary who has not yet attained 38
the age of 60 years refuse to submit to at least one medical examination in any year required by 39
this subsection, the beneficiary's allowance may be discontinued until withdrawal of the refusal. 40
If the refusal continues for one year all the beneficiary's rights in and to the beneficiary's pension 41
may be revoked by the Board of Trustees. The following provisions apply: 42
…." 43
SECTION 4.1.(q) G.S. 135-5(e), as amended by subsection (o) of this section, is 44
repealed. 45
SECTION 4.1.(r) This section is effective January 1, 2027. 46
47
CONFORM TO ACTUAL PRACTICE/REPORTING OF EARNINGS 48
SECTION 4.2. G.S. 135-109 reads as rewritten: 49
"§ 135-109. Reports of earnings. 50
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 35
The Department of State Treasurer and Board of Trustees may require each beneficiary to 1
annually provide a statement of the beneficiary's monthly income received as compensation for 2
services, including fees, commissions, or simila r items, income received from business, and 3
benefits received from the Social Security Administration, the federal Veterans Administration, 4
any other federal agency, under the North Carolina Workers' Compensation Act, or under the 5
provisions of G.S. 127A-108. The benefit payable to a beneficiary who does not or refuses to 6
provide the information requested within 120 days after such the request may be suspended until 7
the information so requested is provided, and should such provided. If the refusal or failure to 8
provide such the requested information continue continues for 180 days after such request the 9
request, then the right of a beneficiary to a benefit under the Article may be terminated." 10
11
CLARIFY THE DE MINIMIS CALCULATION/REEMPLOYMENT PRIOR TO 12
EXPIRATION OF WAITING PERIOD 13
SECTION 4.3. G.S. 135-3(d)(2) reads as rewritten: 14
"(2) The member shall make a lump-sum payment to the Retirement System equal 15
to three times the amount of compensation earned during the six months 16
immediately follow ing the effective date of retirement. If the member is 17
unable to make a lump -sum payment, the member can elect to have the 18
entirety of their the member's net monthly retirement benefit withheld until 19
the Retirement System has recovered three times the amount of compensation 20
earned during the six months immediately following the effective date of 21
retirement." 22
23
TECHNICAL CHANGES IMPROVING CONSISTENCY WITH FEDERAL LAW 24
SECTION 4.4.(a) G.S. 120-4.11 reads as rewritten: 25
"§ 120-4.11. Membership. 26
The followin g members of the General Assembly and former members of the General 27
Assembly are eligible for membership members in the Retirement System: 28
…." 29
SECTION 4.4.(b) G.S. 135-106 reads as rewritten: 30
"§ 135-106. Long-term disability benefits. 31
… 32
(b) After the com mencement of benefits under this section, the benefits payable under 33
the terms of this section during the first 36 months of the long -term disability period shall be 34
equal to sixty-five percent (65%) of 1/12th of the annual base rate of compensation last p ayable 35
to the participant or beneficiary prior to the beginning of the short-term disability period as may 36
be adjusted for percentage increases as provided under G.S. 135-108, plus sixty -five percent 37
(65%) of 1/12th of the annual longevity payment to which the participant or beneficiary would 38
be eligible, to a maximum of three thousand nine hundred dollars ($3,900) per month reduced by 39
any primary Social Security disability benefits to which the beneficiary may be entitled, effective 40
as of the first of the month following the month of initial entitlement, and by monthly payments 41
for Workers' Compensation to which the participant or beneficiary may be entitled. All of the 42
following apply: 43
(1) When primary Social Security disability benefits are increased by 44
cost-of-living adjustments, the increased reduction shall be applied in the first 45
month following the month in which the member becomes entitled to the 46
increased Social Security benefit. 47
(2) The monthly benefit shall be further reduced by the amount of any monthly 48
payments from the federal Department of Veterans Affairs, for payments from 49
any other federal agency agency, or for any payments made under the 50
General Assembly Of North Carolina Session 2025
Page 36 Senate Bill 936-First Edition
provisions of G.S. 127A-108, to which the participant or beneficiary may be 1
entitled on account of the same disability. Provided, in any event, the 2
(3) The benefit payable shall be no less than ten dollars ($10.00) a month. 3
However, a 4
(4) A disabled participant may elect to receive any salary continuation as provided 5
in G.S. 135-104 in lieu of long-term disability benefits; provided such benefits 6
under this section so long as that election shall not extend the first 36 7
consecutive calendar months of the long-term disability period. An election to 8
receive any salary continuation for any part of any given day shall be in lieu 9
of any long-term benefit payable for that day, provided further, any lump-sum 10
payout for vacation leave shall be treated as if the beneficiary or participant 11
had exhausted the leave and shall be in lieu of any long-term benefit otherwise 12
payable. Provided that, in any event, a 13
(5) A beneficiary's benefit shall be reduced during the first 36 months of the 14
long-term disability period by an amount, as determined by the Board of 15
Trustees, equal to a primary Social Security retirement benefit to which the 16
beneficiary might be entitled, effective as of the first of the month following 17
the month of initial entitlement. 18
(b1) After 36 months of long -term disability, disability benefits un der this section, no 19
further benefits are payable under the terms of this section unless the member has been approved 20
and is in receipt of primary Social Security disability benefits. In that case the If the member has 21
been approved and is in receipt of primary Social Secu rity disability benefits, then all of the 22
following shall apply: 23
(1) The benefits payable shall be equal to sixty -five percent (65%) of 1/12th of 24
the annual base rate of compensation last payable to the participant or 25
beneficiary prior to the beginning of the short -term disability period as may 26
be adjusted for percentage increases as provided under G.S. 135-108, plus 27
sixty-five percent (65%) of 1/12th of the annual longevity payment to which 28
the participant or beneficiary would be eligible, to a maximum of three 29
thousand nine hundred dollars ($3,900) per month reduced by the primary 30
Social Security disability benefits to which the beneficiary may be entitled, 31
effective as of the first of the month following the month of initial entitlement, 32
and by monthly payments for Workers' Compensation to which the participant 33
or beneficiary may be entitled. 34
(2) When primary Social Security disability benefits are increased by 35
cost-of-living adjustments, the increased reduction shall be applied in the first 36
month following the month in which the member becomes entitled to the 37
increased Social Security benefit. 38
(3) The monthly benefit shall be further reduced by the amount of any monthly 39
payments from the federal Department of Veterans Affairs, for payments from 40
any other federal agency, or for any payments made under the provisions of 41
G.S. 127A-108, to which the participant or beneficiary may be entitled on 42
account of the same disability. Provided, in any event, the 43
(4) The benefit payable shall be no less than ten dollars ($10.00) a month. 44
(b2) Notwithstanding the foregoing, anything in subsection (b) or (b1) of this section, the 45
long-term disability benefit is payable so long as the beneficiary is disabled and is in receipt of a 46
primary Social Security disability benefit until the earliest date at which the beneficiary is eligible 47
for an unreduced service retirement allowance from the Retirement System, at which time the 48
beneficiary would receive a retirement allowance calculated on the basis of the beneficiary's 49
average final compensation at the time of disability as adjusted to reflect compensation increases 50
subsequent to the time of disability and the creditable service accumulated by the beneficiary, 51
General Assembly Of North Carolina Session 2025
Senate Bill 936-First Edition Page 37
including creditable service while in receipt of benefits under the Plan. In the even t If the 1
beneficiary has not been approved and is not in receipt of a primary Social Security disability 2
benefit, then the long-term disability benefit shall cease after the first 36 months of the long-term 3
disability period. When such a long-term disabili ty recipient begins receiving this unreduced 4
service retirement allowance from the System, that recipient shall not be subject to the six-month 5
waiting period set forth in G.S. 135-1(20). However, a beneficiary shall be entitled to a 6
restoration of the long-term disability benefit in the event If the Social Security Administration 7
grants a retroactive approval for primary Social Security disability benefits with a benefit 8
effective an entitlement date within the first 36 months of the long-term disability period. In such 9
event, period, then the beneficiary's long-term disability benefit shall be restored retroactively to 10
the date of cessation. 11
…." 12
SECTION 4.4.(c) G.S. 135-108 reads as rewritten: 13
"§ 135-108. Post disability benefit adjustments. 14
The compensation upon which the short -term or long -term disability benefit is calculated 15
under the provisions of G.S. 135-105(c) or G.S. 135-106(b) G.S. 135-106 may be increased by 16
any permanent across-the-board salary increase granted to employees of the State by the General 17
Assembly and the benefits payable to beneficiaries shall be recalculated based upon the increased 18
compensation, reduced by any percentage increase in Social Security benefits granted by the 19
Social Security Administration times the amount used in the reduction of benefits for primary 20
Social Security disability or retirement benefit as provided in G.S. 135-106(b). G.S. 135-106. 21
The provisions of this section shall be subject to future acts of the General Assembly." 22
23
REMOVE NAMED FORMS FROM STATUTORY REFERENCES 24
SECTION 4.5.(a) The Revisor of Statutes shall replace the phrase "(Form 6 -E or 25
Form 7 -E)" with the phrase "by electronic submission in a form approved by the Board of 26
Trustees or by written designation duly acknowledged and filed with the Board of Trustees" in 27
G.S. 135-5(g) and G.S. 128-27(g). 28
SECTION 4.5.(b) G.S. 135-10.1(a) reads as rewritten: 29
"(a) If a member fails to respond within 120 days after preliminary option figures and the 30
Form 6-E or Form 7-E are form approved by the Board of Trustees to elect the optional allowance 31
under G.S. 135-5(g) is transmitted to the member, or if a member fails to respond within 120 32
days after the effective date of retirement, whichever is later, then the Form 6 or Form 7 form 33
approved by the Board of Trustees to elect the optional allowance under G.S. 135-5(g) shall be 34
null and void." 35
SECTION 4.5.(c) G.S. 128-32.1(a) reads as rewritten: 36
"(a) If a member fails to respond within 120 days after preliminary option figures and the 37
Form 6-E or Form 7-E are form approved by the Board of Trustees to elect the optional allowance 38
under G.S. 128-27(g) is transmitted to the member, or if a member fails to respond within 120 39
days after the effective date of retirement, whichever is later, then the Form 6 or Form 7 form 40
approved by the Board of Trustees to elect the optional allowance under G.S. 128-27(g) shall be 41
null and void." 42
43
MISCELLANEOUS TECHNICAL CORRECTIONS 44
SECTION 4.6.(a) G.S. 143-166.60(d)(4) reads as rewritten: 45
"(4) An accidental A line-of-duty insurance death benefit not to exceed two 46
thousand one hundred dollars ($2,100) in total on account of the death of a 47
participant caused by an accident while in the actual performance of duty as 48
an officer." 49
SECTION 4.6.(b) The Revisor of Statutes shall replace the reference to "G.S. 135-4" 50
with "G.S. 135-4.5" in G.S. 135-5(f). 51
General Assembly Of North Carolina Session 2025
Page 38 Senate Bill 936-First Edition
SECTION 4.6.(c) The Revisor of Statutes shall replace the reference to 1
"G.S. 128-26" with "G.S. 128-26.5" in G.S. 128-27(f). 2
SECTION 4.6.(d) G.S. 120-4.25 reads as rewritten: 3
"§ 120-4.25. Return of accumulated contributions. 4
If a member ceases to be a member of the General Assembly except by death or retirement, 5
the member shall, upon submission of an application, be paid not earlier than 60 days following 6
the date of termination of service the sum of the member's accumulated contributions provided 7
the member has not in the meantime returned to service. Upon payment of this sum his or her 8
sum, the individual's membership in the System ceases. If the individual becomes a member 9
afterwards, no credit shall be allowed for any service previously rendered rendered, except as 10
provided in G.S. 120-4.14 and G.S. 120-4.15, and the payment shall be in full and complete 11
discharge of any rights in or to any benefits otherwise payable under this Article. Upon receipt 12
of proof satisfactory to the Board of Trustees o f the death, prior to retirement, of a member or 13
former member, there shall be paid to the person or persons the member or former member 14
nominated by electronic submission in a form approved by the Board of Trustees or by written 15
designation duly acknowledged and filed with the Board of Trustees, if the person or persons are 16
living at the time of the member's death, otherwise to the member's legal representatives, the 17
amount of the member's accumulated contributions at the time of the member's death, unless the 18
beneficiary elects to receive the alternate benefit under the provisions of G.S. 120-4.28." 19
SECTION 4.6.(e) G.S. 120-4.21(b2)(3) reads as rewritten: 20
"(3) For a member whose retirement date occurs on or after the member's 50th 21
birthday and before the member's 60th birthday and upon completion of 20 22
years of creditable service, computation as in subdivision (2) of this 23
subsection, reduced by the same percentage as provided for under 24
G.S. 135-5(b21)(2).G.S. 135-5(b21)(2)c.1." 25
SECTION 4.6.(f) G.S. 147-69.2A(b) reads as rewritten: 26
"(b) Organization and Reporting Investment Policy. – The Investment Authority shall 27
develop and adopt an investment policy statement for the Venture Capital Multiplier Fund." 28
SECTION 4.6.(g) G.S. 128-38.40(a) reads as rewritten: 29
"(a) Participation and Premiums. – All retired members may elect to participate in the 30
Death Benefit Plan and therefore become eligible to receive death benefits under the Death 31
Benefit Plan in accordance with this section. Elections shall be made prior t o death and no later 32
than 60 calendar days from the effective date of the member's retirement. Elections shall be 33
received by the Board of Trustees prior to the death of the retired member. Retired members 34
electing to receive a fully contributory death ben efit under the Death Benefit Plan shall 35
continuously pay monthly premiums on a fully contributory basis, as determined by the Board 36
of Trustees, to the North Carolina Teachers' and State Employees' Benefit Trust established under 37
G.S. 135-7(g). G.S. 135-154. Premium payments shall be made through retirement allowance 38
deductions or other methods adopted by the Board of Trustees." 39
SECTION 4.6.(h) G.S. 147-65.1(7)i. reads as rewritten: 40
"i. The North Carolina Teachers' and State Employees' Benefit Trust, 41
established under G.S. 135-7(g).G.S. 135-154." 42
43
PART V. EFFECTIVE DATE 44
SECTION 5.1. Except as otherwise provided, this act is effective when it becomes 45
law. 46