Section 1

Amends GS 116-74.44(a) to provide for grants to school leader preparation programs to develop innovative ways of training principals as part of the NC Principal Fellows Program (Program). Makes conforming changes in subsection (c) of GS 116-74.44, GS 116-74.45. and GS 116-74.46 to clarify if referring to grants to provide forgivable scholarship loans, the new grants to develop innovative ways of training, or both.

Further amends GS 116-74.46 to mandate that the North Carolina Principal Fellows Commission (Commission) select up to two recipients for a grant of up to $250,000 per recipient per fiscal year to develop innovative ways of training principals and notify the State Education Assistance Authority (SEAA) of its decisions on the duration and renewal of grants to eligible entities in accordance with the included list, which includes a mandate that the duration of grants for training development be one year that may be renewed by the Commission on an annual basis, in its discretion.

Section 2

Amends GS 116-74.41B by adding the following to the list of permitted uses that the Commission can expend the SEAA’s allocation to the Commission from the North Carolina Principal Fellows Trust Fund (Trust Fund) each fiscal year: programming on research-based school leadership practices that will be shared with eligible entities to improve principal preparation throughout NC. Adds new subsection (c) requiring the SEAA to allocate funds to the Commission for any purposes identified in GS 116-74.41B(b)(3) through (6), upon the request of the Commission, if there are unobligated or otherwise unencumbered funds remaining in the Trust Fund at the end of each fiscal year.

Section 3

Appropriates $5 million in recurring funds for 2026-27 from the General Fund to the Trust Fund to increase the number of principal fellows candidates supported by the Program in accordance with GS Chapter 116, Article 5C. Directs that these funds will be allocated as follows: (1) $2.6 million to be used to bring the number of candidates receiving funds in the 2028-34 award cycle into parity with the number of recipients in other award cycles and (2) $2.4 million to expand the number of candidates supported by the Program with the goal of having 55% of all principals employed in NC be graduates of the Program.

Section 4

Amends GS Chapter 115C, Article 19 by adding new GS 115C-284.2, which does the following:

(1) Defines (1) Authority (SEAA), (2) Department (Department of Public Instruction), (3) MSA intern (participant in approved full-time master’s in school administration program who is completing an internship pursuant to GS 115C-284.1(d)(1)), (4) Principal Fellow MSA intern (MSA intern who is a participant in the Principal Fellows Program), and (5) school administrator (principal or assistant principal).

(2) Requires Department to provide a 10-month stipend to MSA interns with a full-time internship position during the internship period of the master’s program, to the extent funds are made available for this purpose. Requires the stipend to be equal to the beginning salary of an assistant principal or, for a teacher who becomes an intern, at least as much as that person would earn as a teacher on the teacher salary schedule. Directs Department to use funds appropriated to the State Public School Fund for this purpose, if the funds provided for this purpose are insufficient to fully fund the stipend. Sets out certification requirement for the Program or MSA intern’s school of education to receive stipends.

(3) Conditions receipt of stipend for MSA interns who are not Principal Fellow MSA interns on an agreement that intern will reimburse SEAA on behalf of the Department in cash for up to $20,000 of the stipend funds provided to the intern if the intern does not serve as a school administrator in a public school unit for two years within seven years after graduation from the MSA program. Provides authorized deferment exception. Requires SEAA to transfer any funds received in repayment to the Department.   

(4) Permits the Department to retain up to 2% of funds appropriated pursuant to GS 115C-284.2 for the administrative costs associated with the payback agreement. Requires the Department to use these funds to enter into a memorandum of understanding with the SEAA to accept repayment on behalf of the Department and to monitor the acceptability of compliance of the recipient with that agreement. Details when the SEAA is required to forgive repayment, the required repayment timeline of 10 years after MSA internship completion, when repayment should begin, and permits the SEAA to extend the repayment period where recipient presents extenuating circumstances for up to a total of 12 years.

(5) Requires the Department, in consultation with the SEAA, to report to the Joint Legislative Education Oversight Committee on the stipends provided, including all listed information, no later than February 15 of each year.

Requires the Department to include the funds retained for administration of the payback agreement pursuant to GS 115C-284.1(d) as part of its recommended technical adjustments, beginning with the Current Operations Appropriations Act of 2027.

Appropriates $177,241 in recurring funds for 2026-27 from the General Fund to the Department to provide for MSA intern stipends in accordance with new GS 115C-284.2(b).

Section 4 applies beginning with MSA internships beginning in the 2027-28 academic year.

Except as otherwise provided, effective July 1, 2026.