Enacts new GS 115C-419 to authorize the State Board of Education (SBE) to allocate educational funds to private psychiatric residential treatment facilities (PRTF) from within the funds appropriated to the SBE and the Department of Public Instruction (DPI). Defines PRTF to mean a private psychiatric residential treatment facility licensed by the Department of Health and Human Services (DHHS)and approved by DPI to provide special education and related services. Specifies how funds are to be allocated to PRTFs. Directs the SBE and DPI to develop policies that facilitate effective communication between PRTFs and local school administrative units (LEAs) to ensure orderly transition of students to and from PRTFs. Effective July 1, 2013.

Effective October 1, 2013, amends GS 108A-80 adding a new subsection (b1) to add a second exception (current subsection (b) also provides an exception)to the confidentiality of records provisions of this section, authorizing DHHS to share confidential information with a local education agency and DPI concerning a person receiving public assistance or social services. Limits disclosure to information necessary to facilitate providing an appropriate educational program for the person receiving assistance.

Adds a new subsection (b) to GS 122C-23.1to requirethat all PRTFs serving children with disabilities as defined in GS 115C-106.3 and children eligible under GS 115C-366to attend public schoolsmust have a facility-based school as a condition of licensure. Provides details on the licensing requirements and the roles of DHHS and DPI in the issuance of the license. Makes a clarifying change to subsection (c) and makes organizational changes. Amends GS 122C-55, adding new subsection (g2) to provide that when there is a reason to believe that the client of a residential facility is eligible for educational services through a governmental agency, the facility is required to disclose client identifying information tothe LEA responsible for the client and DPI, limiting that disclosure to information necessary to provide educational services to the client. Allows DPI to disclose identifying information to any other LEA DPI designates as the client's LEA while the client resides in the facility. Effective October 1, 2013.