Effective July 1, 2013 and beginning with the 2013-14 school year, directs the State Board of Education (SBE) to implement a five-year pilot program to be known as the Local Board of Education Charter School Oversight Pilot Program (pilot program) in up to 10 local school administrative units (LEAs) selected by the SBE. States the purpose of thepilot program is to (1) expand on the options for local boards of education to improve student learning and (2) provide parents and students with expanded choices in the types of educational opportunities that are available within the public school system.

Authorizes the local boards for the LEAsselected by the SBE to participate in the pilot program to (1) act as a chartering entity and approveor revoke a school's charter, and (2) approve the conversion of an existing public school to a charter school.

Classifies schools established as a result of a successful application for a charter submitted to the local board as "local charter schools" and those public schools converted to charter schools as the result of a successful application as "district charter schools." Provides details as to the application process to establish either a local charter school or a district charter school.

An application for a district charter school must be made to the superintendent of the LEA by the principal of the school seeking conversion to a charter school. Requires that there must be approval of the application for a district charter school at the school level with a majority vote ofthe current school personnel in favor of the application and the application must be signed by the district school advisory committee, the principal, the president of the parent-teacher organization, and the chair of the school improvement team. Directsthe superintendent of the LEA where the applicant school is located to review the application and makea recommendation to thelocal boardas to whether the application should be approved or disapproved. Provides criteria to be considered by the local board in making its decision. Declares that the local board's decision is final and there is no right of appeal if the local board disapproves an application. Provides that except as otherwise provided in this act and in the provisions of its charter agreement, a district charter school is exempt from statutes and rules applicable to public schools located in the LEA and subject to the statutes and rules that apply to charter schools.

Provides that an applicant seeking to operate as a local charter school should apply directly to the local board. Also provides that an application submitted under this section takes the place of submitting a preliminary application to a board of trustees at a constituent institution of the University of North Carolina or an application to the SBE to establish a charter school under GS 115C-238.29B. Specifies the required content of the application. Limits initial charters to five years. Provides that if the local board disapproves the application, the decision is final and there is no right of appeal.

Includes additional specifications regarding performance standards, accountability, and fundingfor local charter schools and district charter schools. Also provides specifications regarding nonrenewal, termination, or revocation of a charter.

Directs the SBE to make an interim report on or before January 1, 2016, and a final report on or before March 15, 2018 to the Joint Legislative Education Oversight Committee on the school performance of the schools participating in the pilot program and to make recommendations on the implementation of the program statewide.