Part I.

Specifies that Parts II and III of the act become effective only if the Current Operations Appropriations Act for 2026-27 does not become law in the 2025 Regular Session of the General Assembly. In that case, the effective date of those parts are the earlier of when the NCGA adjourns the 2025 Regular Session sine die or January 1, 2027.

Part II.

Sets a monthly teacher salary schedule for "A" teachers for 2026-27 for licensed public school personnel classified as teachers, based on years of experience, ranging from $4,600 for teachers with 0 years of experience to $6,370 for 29 or more years of experience. Provides for a 12% salary supplement for licensed teachers who have National Board for Professional Teaching Standards certification; a 10% salary supplement for licensed teachers classified as "M" teachers; a $126 salary supplement for licensed teachers with licensure based on academic preparation at the six-year degree level, in addition to the "M" teachers salary supplement; a $253 salary supplement for licensed teachers with licensure based on academic preparation at the doctoral degree level, in addition to the "M" teachers salary supplement; a 10% salary supplement for certified school nurses; and a $100 salary supplement for school counselors licensed as counselors at the master’s degree level or higher.

Requires that the first step of the salary schedule for school psychologists, school speech pathologists licensed at the master's degree level or higher, and school audiologists licensed at the master's degree level or higher must be equivalent to the sixth step of the "A" salary schedule. Provides for a 10% and $500 salary supplement. Deems these employees eligible to receive salary supplements equivalent to those of teachers for academic preparation at the six-year degree level or the doctoral degree level. Requires that the twenty-sixth step of the salary schedule for school psychologists, school speech pathologists licensed at the master's degree level or higher, and school audiologists licensed at the master's degree level or higher must be 7.5% higher than the salary received by these same employees on the twenty-fifth step of the salary schedule. Provides that in lieu of the amounts of annual longevity payments to teachers paid on the teacher salary schedule, beginning with the 2014-15 fiscal year, the amounts of those longevity payments are included in the monthly amounts under the teacher salary schedule.

Details teacher compensation for the 2026-27 school year based on either (1) the applicable salary schedule; (2) the sum of the salary the teacher received in 2013-14, longevity pay for the 2013-14 school year, and annual bonus provided in SL 2014-100; or (3) the sum of the salary and annual bonus the teacher received in the 2014-15 school year, with the compensation amount determined to be equal to the greater of those amounts. Provides that "teacher" includes instructional support personnel. Appropriates $921.2 million in recurring funds for 2026-27 from the General Fund to the Department of Public Instruction (DPI) to increase salaries for teachers and support personnel.

Part III.

Raises salaries for certain individuals whose salaries are (1) set/authorized in this Part under the State Human Resources Act (SHRA) and (2) who are employed in a state-funded position on June 30, 2025, by 6% effective July 1, 2026, in addition to any other raises permitted by law. Exempts employees of local boards of education, local community college employees, employees of The University of North Carolina, officers and employees of the Department of Adult Correction (DAC) or Department of Public Safety (DPS) subject to Sections 3.7 and 3.8 of this Part, clerks of superior court compensated under GS 7A-101, state law enforcement officers to which Section 3.9 applies, employees of the State Highway Patrol to which Section 3.9A applies, and employees of schools operated by the Department of Health and Human Services (DHHS), DPS, DAC, the specified schools for the deaf and blind, and the State Board of Education (SBE) who are paid based on the Teacher Salary Schedule. Allows for permanent part-time employees to receive the increase on a prorated and equitable basis. Specifies that no eligible State-funded employee will be prohibited from receiving the full salary increase solely because the employee’s salary after applying the increase would be above the maximum of the salary range prescribed by the State Human Resources Commission (SHRC).

Authorizes state agencies to use the funding allotted to them from the Receipt-Supported Cost-of-Living Adjustment (COLA) Reserve to fundshift a limited number of receipt-supported positions in the General Fund to net appropriation funding.

Replaces references to “longevity pay” in GS Chapter 126 with “retention pay.” Sets retention pay provided to employees who are full-time or over half-time and have a permanent, time-limited, or probationary appointment and who are in pay status for one-half of the regularly scheduled workdays and holidays in a pay period ranging from 1% for those employees with two years but less than five years of service to 4.5% for those employees with 25 or more years of service.

Provides for retention bonuses for the 2026-27 fiscal year as follows: (1) the school personnel described in Part I and continuously employed by the State or a public school unit from July 1, 2026, to October 31, 2026, a retention bonus of $500 paid during November 2026; (2) the school personnel described in Part I and continuously employed by the State or a public school unit from November 1, 2026, to March 31, 2027, a retention bonus of $500 paid during April 2027; (3) an additional retention bonus of $250 to all permanent full-time State employees and local education employees continuously employed from July 1, 2026, to October 31, 2026, who earn an annual salary that does not exceed $75,000, payable in November 2026; and (4) all permanent full-time State employees and local education employees employed by the State or a public school unit from November 1, 2026, to March 31, 2027, and who earn an annual salary that does not exceed $75,000 must be paid an additional retention bonus of $250 paid during April 2027 by employers of State employees and local education employees. Specifies that the funds appropriated for retention bonuses in excess of the amounts required to implement these bonuses will revert and not be credited to the Pay Plan Reserve. Specifies how bonuses are to be paid and treated in terms of whether they are categorized as salary.

Effective July 1, 2026, directs the State Board of Community Colleges shall provide community college faculty and non-faculty personnel with an across-the-board salary increase in the amount of 6%. Sets out the minimum salaries for nine-month, full-time curriculum community college faculty for the 2025-27 fiscal biennium based on education level. Prohibits full-time faculty members from earning less than the minimum salary for his or her education level.

For the UNC system, directs that SHRA employee salaries will be increased as provided by this act. Authorizes the UNC Board of Governors to provided EHRA employees a salary increase pursuant to policies adopted by the board for one or more of the following purposes: merit pay, across-the-board increases, recruitment bonuses, retention increases, and other compensation increases pursuant to those policies. Requires the Board of Governors to report on the use of compensation to the General Assembly by March 1 of each year of the biennium.

Requires correctional officers in the Department of Adult Correction to be compensated at a specific pay rate on the basis of a salary schedule based on years of experience. Also requires employees in DPS’s Division of Juvenile Justice and Delinquency Prevention to be compensated at a specific pay rate based on years of experience; sets out the salary schedule to be used based on type of position. Sets out the annual salary schedule for correctional officers, based on experience and job class, for 2026-27 ranging from $39,913 for correctional officers classified as COI with 0 years of experience to $57,371 for correctional officers classified as COIII with six or more years of experience.

Sets an annual salary schedule for probation and parole officers, based on experience, for 2026-27 ranging from $48,189 for officers with 0 years experience to $70,314 for officers with 6 years or more of experience. Requires Juvenile Court Counselors working in the Division of Juvenile Justice and Delinquency Prevention to also be paid on this salary schedule. 

Sets an annual salary schedule based on the officer's respective work experience, based on experience and job class, for law enforcement officers of Alcohol Law Enforcement and the State Bureau of Investigation compensated pursuant to an experience-based salary schedule for 2026-27 ranging from $56,733 for those with 0 years experience and $82,785 for those with 6 years or more of experience.

Sets an annual salary schedule based on the officer's respective work experience, based on experience and job class, for law enforcement officers of the State Highway Patrol pursuant to an experience-based salary schedule for 2026-27 ranging from $58,350 for those with 0 years experience and $85,140 for those with 6 years or more of experience;.

Specifies that employees of the schools operated by DHHS, DPS, and the Board who are paid on the Teacher Salary Schedule will be paid as authorized by the act and that employees of the School of Science and Mathematics of The University of North Carolina paid pursuant to a salary schedule adopted by the North Carolina School of Science and Mathematics Board of Trustees will be paid in accordance with the schedule adopted by that board. Applies those same provisions to employees of the Governor Morehead School for the Blind, the Eastern North Carolina School for the Deaf, and the North Carolina School for the Deaf.

Specifies that the COLAs authorized by the act will be paid on July 1, 2026, and do not apply to persons who separated from service due to resignation, dismissal, reduction in force, death, or retirement or whose last workday is prior to June 30, 2026. Provides for flexibility by the Director of the Budget (Director) to administer the act. Sets forth provisions related to the effective dates of State employer contribution rates for administrative purposes. Applies to all employees paid from state funds, including employees of public schools, community colleges, and UNC.

Provides that the annual salaries in effect for the following on June 30, 2026, must be legislatively increased as provided in Section 2.1 of the act, unless another requirement applies under other provisions of the act: permanent, full-time State officials and persons whose salaries are set in accordance with the SHRA; permanent, full-time State officials and persons in positions exempt from the SHRA; permanent, part-time State employees; and temporary and permanent hourly State employees.

Requires the Office of State Budget and Management (OSMB) to ensure the appropriations are being used appropriately. Specifies that funds appropriated for COLAs and employee benefit increases cannot be used to adjust the budgeted salaries of vacant positions or to provide salary increases in excess of those required by the General Assembly except to increase the budgeted salary of any position to the minimum of the position's salary range and to meet retention pay needs. Authorizes the Director to reallocate funds if they find the funds are being used for other purposes. Specifies that the funds appropriated for COLA and employee benefit increases in excess of the amounts required will be credited to the Pay Plan Reserve. Requires OSMB to report to the specified NCGA committee and division by March 1 on the expenditure of funds for legislatively mandated salary increases and employee benefits with four specified matters that must be addressed.

Allows, during the 2025-27 fiscal biennium, State agencies, departments, institutions, the North Carolina Community College System, and UNC to offer State employees the opportunity to use or to cash in special bonus leave benefits that have accrued pursuant to specified provisions under the following conditions: (1) employee participation in the program must be voluntary; (2) special leave that is liquidated for cash payment to an employee must be valued at the amount based on the employee's current annual salary rate; and (3) by September 1, 2026, a report on the demographic information must be submitted to the respective agency head or employing agency and to the Fiscal Research Division.

Amends GS 135-5 (pertaining to benefits under TSERS), GS 135-65 (post-retirement increases under CJRS), GS 120-4.22A (post- retirement increases under LRS) as follows. Effective July 1, 2026, provides for a 2% COLA for certain beneficiaries who retired on or before July 1, 2025, and for employees who retired after July 1, 2025, and before June 30, 2026. Provides for proration. After September 1, 2026, but on or before October 31, 2026, provides for a one-time 1% COLA supplement payment to be paid on or behalf of living beneficiaries whose retirement began on or before September 1, 2026. Does not allow for proration. Sets forth provisions related to payment if the beneficiary dies before payment is made. Specifies that no beneficiary will be deemed to have acquired a vested right to any future supplemental payments.

Appropriates from the General Fund to the Reserve for Compensation Increases: (1) $701.1 million in recurring funds for  2026-27 and (2) $503.5 million for 2026-27 to fund pay increases and cost-of-living adjustments.

Part IV.

Amends GS 143C-5-4 to automatically increase the State employee salary schedule and teacher salary schedule, principal salary schedule, and any other salary grade or salary range for State/public school employees in effect on June 30 of the prior fiscal year by 5% until the Current Operations Appropriations Act for the current fiscal year becomes law. Applies beginning in 2027-28. (Currently, law provides for current salaries to stay in effect until a new state budget is passed.)