Part I.

Appropriates $200,000 in recurring funds from the General Fund to the Department of Public Instruction (DPI) for 2026-27 for two additional positions for the Professional Educator Preparation and Standards Commission to increase the Commission’s capacity to coordinate efforts to recruit, prepare, retain, and support the State’s teaching workforce.

Requires the State Board of Education (State Board) to develop a plan for implementing a teacher licensure and compensation reform model designed to meet the specified objectives. Requires the plan to, at least: (1) offer early, inclusive, and clear pathways into the profession; (2) reward excellence and advancement among teachers; and (3) encourage retention in the profession. Requires the State Board to provide plan details and recommended legislative changes to the specified NCGA committee and division and the Office of State Budget and Management (OSBM) by March 15, 2027. Appropriates $50,000 for 2026-27 from the General Fund to the Department of Public Instruction to develop the plan.

Requires the State Board, in consultation with UNC System Office, to identify the resources and structures that educator preparation programs at UNC constituent institutions need in order to increase capacity in educator preparation programs to recruit, prepare, support, and graduate annually (1) at least 5,000 in-State trained teachers annually; and (2) more educators of color. Requires the State Board to report on the findings to the specified NCGA committee, division, and the OSBM by March 15, 2027. Appropriates $25,000 for 2026-27 from the General Fund to DPI to conduct this study.

Appropriates $5.8 million in recurring funds for 2026-27 from the General Fund to DPI to support the Grow-Your-Own and 2+2 teacher recruitment education programs. Appropriates $1 million in recurring funds for 2026-27 from the General Fund to DPI to establish new Grow-Your-Own and 2+2 teacher recruitment education programs in high-need public school units.

Requires the State Board to develop a plan to implement and fund a statewide system or entity to coordinate, enhance, and evaluate efforts to recruit, place, and retain teacher candidates and beginning teachers between institutions of higher education and local school administrative units. Sets out issues the study is to focus on. Requires the State Board to submit plan details and recommended legislation to the specified NCGA committee and division and the OSBM by March 15, 2027. Appropriates $25,000 for 2026-27 from the General Fund to DPI to support the development of the plan.

Removes the terms qualifying licensure area and STEM from the definitions under GS 116-209.60, which defines terms for use in Part 3 of Article 23 of GS Chapter 116, which governs the North Carolina Teaching Fellows Program (Program). No longer limits the Program to providing loans to individuals interested in preparing to teach in the State's public schools in those previously specified qualifying licensure areas, instead opening it more broadly to those preparing to teach in the State's public schools; makes conforming changes to the definition of qualifying teacher. Makes changes throughout the Part by removing references to "STEM" and "qualifying licensure area." Requires Program recruitment efforts to include identifying and encouraging students of color and students who may not otherwise consider a teaching career to enter the program. Requires the recruitment activities to include a strategy that attracts a diverse pool of applicants. Removes the cap on the number of participating institutions and specifies that the diverse selection of participating programs is to include minority-serving institutions. Adds the requirement that the Program provide planning, training, and ongoing support for Program leaders and recipients, including training on culturally responsive teaching, teaching students with disabilities, and trauma-informed teaching. Applies beginning with the 2026-27 academic year. Appropriates $37 million in recurring funds for 2026-27 from the General Fund to the North Carolina Teaching Fellows Program Trust Fund to revise and expand the Program in accordance with the above.

Requires the State Board to establish a grant program to assist local school administrative units in providing multiyear recruitment bonuses to certified teachers who commit to teach multiple years in a low-performing or high-need school. Requires bonuses to include at least: (1) awards over multiple years with a requirement that teachers remain in the school over multiple years to receive the bonus; (2) awards to licensed teachers who commit to teach in a school identified as low-performing, a school identified as continually low-performing, or a school where 75% or more of students qualify for free or reduced-price lunch. Requires the State Board annually, by September 1, 2026, to issue a Request for Proposal (RFP) for the grant program. Requires local boards of education to submit their proposals by December 1, 2026. Requires that the RFP require proposals to include specified information, including plans for financial sustainability once grant money is no longer available. Requires the State Board, by February 15, 2027, to review the proposal and select up to 10 local school administrative units for grants. Allows making grant awards for up to three years. Caps the grant amount to a local school administrative unit at $500,000 in a single fiscal year. Allows the State Board to use up to $300,000 to contract with an independent research organization to evaluate the impact of this grant program and then report to the specified NCGA committee and division and the OSBM by September 1, 2029. Requires DPI to report annually on program implementation, beginning March 15, 2027. Appropriates $7.7 million in recurring funds for 2026-27 from the General Fund to DPI for the grant program; allows unexpended funds to remain available for these purposes instead of reverting back to the General Fund.

Requires the State Board to establish a grant program to assist local school administrative units in the development of teacher preparation residency pilot programs. Requires teacher preparation residency programs eligible to receive grant funding through this program to include at least: (1) coursework in the candidate's area of licensure; (2) tuition and stipends; (3) faculty advising; (4) clinical training experiences; and (5) ongoing induction support. Allows programs to include partnerships between local school administrative units, educator preparation programs, local community colleges or universities, and other community organizations. Requires grant funds to be matched by the local school administrative units on the basis of $1 in nongrant funds for every $1 in grant funds. Requires the State Board, by October 1, 2026, to issue a Request for Proposal (RFP) for the grant program and requires local boards of education to submit their proposals by January 15, 2027. Requires the RFP to require that proposals include specified information, including plans for financial sustainability once grant money is no longer available. Requires the State board to review proposals and select up 10 local school administrative units as grant recipients by April 15, 2027. Allows making grant awards for up to three years. Caps the grant amount to a local school administrative unit at $500,000 in a single fiscal year. Allows the State Board to use up to $300,000 to contract with an independent research organization to evaluate the impact of this grant program and then report to the specified NCGA committee and division and the OSBM by September 1, 2030. Requires DPI to report annually on program implementation, beginning March 15, 2027. Appropriates $25 million in recurring funds for 2026-27 from the General Fund to DPI to implement the grant program; allows unexpended funds to remain available for these purposes instead of reverting back to the General Fund.

Appropriates $200,000 in recurring funds for 2026-27 from the General Fund to the UNC Board of Governors (BOG) to expand Partnership Teach to up to two additional hub sites.

Requires the State Board, in consultation with the Office of the Governor, The University of North Carolina System Office, and the Community College System Office, to establish a grant program to support strategic partnerships committed to increasing the pipeline of educators of color across the State. Requires the grants to be provided to local school administrative units, institutions of higher education, and community organizations to implement innovative initiatives that support the recruitment, preparation, support, and retention of racially, ethnically, and linguistically diverse educators. Sets out the purpose of the program. Requires grant applicants to demonstrate at least: (1) a partnership between at least two of the following: local school administrative units, Historically Black Colleges and Universities, Historically Minority-Serving Institutions, educator preparation programs, alternative certification programs, public and private colleges and universities, community colleges, and community or nonprofit organizations; (2) proposals for strategies that address one or more of the specified components of the educator development continuum as highlighted by the DRIVE Task Force's 2021 Report to the Governor. Allows grant funds to be used for: (1) strengthening existing high school dual enrollment programs to offer education-based college credit or honors courses as streamlined pathways for future careers in education; (2) implementing targeted school system–level and community-based recruitment programs for aspiring educators of color interested in traditional and alternative educator preparation programs; (3) using and leveraging existing financial aid programs that reduce the disproportionate financial burden incurred by aspiring candidates of color; (4) increasing preparation and supporting preservice educators of color through paid clinical learning experiences, with a commitment to teaching in North Carolina public schools; (5) offering support for job placement and licensure for candidates of color after completing their educator preparation program; (6) providing induction and mentoring programs that address the needs of educators of color that include sustaining networking and professional learning communities or affinity groups; and (7) encouraging and financially supporting educators of color interested in joining national professional organizations or attending national conferences. Requires the State Board, by October 1, 2026, to issue a Request for Proposal (RFP) for the grant program and for applicants to submit proposals by December 1, 2026. Requires that the RFP require proposals to include specified information, including plans for financial sustainability once grant money is no longer available. Requires a selection committee, by February 1, 2027, to select up to five grantees. Allows grants to be spent over a five-year period. Requires grant recipients to report annually to the State Board on the implementation of the program. Allows the State Board to use up to $300,000 to contract with an independent research organization to evaluate the impact of this grant program and then report to the specified NCGA committee and division and the OSBM by September 1, 2028. Requires DPI to report annually on program implementation, beginning January 1, 2028. Appropriates $2 million in recurring funds for 2026-27 from the General Fund to the DPI to implement the grant program. Allows unexpended funds to remain available instead of reverting to the General Fund.

Enacts new GS 115C-299.7, providing as follows. Requires education entities (public school units and educator preparation programs) to annually, beginning July 30, 2027, report to DPI on the following regarding diversity of educators and future educators in the entity from the previous school year: (1) total number of educators and future educators; (2) the number of persons who apply to work in or attend the education entity as an educator or future educator;  (3) the number of educators and future educators who are employed by or enrolled in an education entity; (4) retention rates of educators; (5) mobility rates of educators between schools in a public school unit; (6) the number of future educators who complete an educator preparation program, become licensed in North Carolina, and become employed in a public school unit; (7) qualitative data from educators and future educators on the diversity and inclusiveness of the education entity; and (8) recommendations from the entity to improve diversity of educators and future educators. Requires DPI to report annually, beginning October 15, 2027, on the information collected above to the specified NCGA committee, including the specified information. Requires DPI to include the collected information in the statistical profile of public schools on its website. Specifies that this statute does not require an education entity or DPI to report any data that reveals confidential or personally identifiable information about an educator or future educator. Makes conforming changes to GS 115C-12 by requiring the State Board to compile a report on the diversity of educators as provided in GS 115C-299.7; makes conforming changes.

Enacts new Article 6E, Office of Equity Affairs in GS Chapter 115C, providing as follows. Establishes the Office of Equity Affairs (Office) within DPI to provide internal oversight within DPI and the State Board specific to compliance with the State's constitutional role to provide each child the opportunity to receive a sound basic education and to direct the recruitment and retention of a diverse educator workforce. Requires the Office to review educational policies, programs, and initiatives and to provide an independent, objective source of information to be used in evaluating substantial compliance with sound basic education standards and the goal of recruiting and retaining a diverse educator workforce, with special attention and consideration to outcomes for at-risk students. Allows the Office to suggest adjustments to the content and delivery of educational policies, programs, and initiatives. Gives the Office authority to obtain full and unrestricted access to all records, information, and data available to DPI or the State Board. Requires a semi-annual report, beginning no later than January 15, 2027, to the specified NCGA committee on the implementation of the Article, DPI’s and the State Board’s progress in effectively providing each child the opportunity to receive a sound basic education, and the diversity of the educator workforce. Requires giving DPI and the State Board notice before the reporting of deficiencies and an opportunity to correct or improve them; requires reporting any efforts to do so. Creates the Deputy Superintendent of Equity Affairs to serve as the chief officer of the Office. Requires the Superintendent of Public Instruction to recommend the individual to be appointed as the Deputy with the recommended appointee appointed upon approval by the State Board. Sets out who the Deputy reports to and provides the process for removal. Appropriates $400,000 in recurring funds for 2026-27 from the General Fund to DPI to permit the Deputy Superintendent of Equity Affairs to appoint up to four full-time staff to assist in the administration of the Deputy Superintendent's duties. Requires one of the positions to be an administrative assistant position and at least one to be an attorney position.

Appropriates $48.5 million in recurring funds for 2026-27 from the General Fund to the UNC BOG for the New Teacher Support Program to provide mentoring and coaching support to beginning teachers employed in low-performing or high-poverty public schools at no cost to the local school administrative units.

Amends GS 115C-310.7 to allow, with the State Board’s approval, Advanced Teaching Roles schools to exceed the maximum class size requirements for grades K-3 (exceeding the limit was previously limited to up to three years in which State funds are awarded to the local school administrative unit where the school is located, with class size flexibility expiring at the conclusion of the term). Effective July 1, 2026, and applies beginning with the 2026-27 school year.

Establishes the Educator Professional Development Allotment in the State Public School Fund, effective July 1, 2026. Requires the State Board to establish the purposes for which the funds may be used, including at least: (1) educator professional development for targeted public school units and school requiring multitiered support for Pre-K through 3rd grade; (2) implementation of literacy training; and (3) mentoring programs for beginning educators. Appropriates $128,450,000 in recurring funds for 2026-27 from the General Fund to DPI to fund the Educator Professional Development Allotment.

Requires DPI to report to the specified NCGA committee and division and OSBM by March 1, 2027, on the findings of its study on alternative teacher compensation models and advanced teaching rules using funds awarded by OSBM for the NC Evaluation Fund.

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 $5,120 for teachers with 0 years of experience to $5.920 for 25 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 monthly salary supplement of $100 for school counselors licensed 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 salary supplement of the higher of $500 or 10%. 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 $731.8 million in recurring funds for 2026-27 from the General Fund to DPI for the teacher raises. States the NCGA’s intent to adjust compensation for teachers in 2027-28 and subsequent fiscal years according to information provided by DPI in March 2027 under the compensation study.

Appropriates $900,000 in recurring funds for 2026-27 from the General Fund to DPI to provide additional grants for reimbursement of the cost of the participation fee for National Board for Professional Teaching Standards certification.

Part II.

Appropriates $13.2 million in recurring funds from the General Fund to the North Carolina Principal Fellows Trust Fund for the 2026-27 fiscal year to provide forgivable loans to an additional 189 new principal candidates through principal preparation program provided grants under the North Carolina Principal Fellows and Transforming Principal Preparation Program (Program) (see GS Chapter 116, Article 5C). 

Directs the State Board to develop a plan for the creation of a School Leadership Academy that supports local school administrative units and school leaders that includes: (1) equity training for all local school administrative units and school leaders; (2) training and ongoing support for local board of education members focused on the needs of successful and turn-around schools; (3) mentorship and support for novice principals and for experienced principals in high needs schools focused on dismantling impediments to student success; (4) peer support networks such as facilitated partnership networks and rapid response hotlines to provide immediate assistance; and (5) aligned, ongoing, research-driven professional learning. Requires considering existing school administrator leadership training opportunities in creating the plan. Directs the State Board to report to the specified NCGA committee and division and the OSBM by February 15, 2027, on its proposal for the School Leadership Academy, including the plan for implementation and estimated costs. Requires DPI, beginning with the 2027-28 school year, to operate and support the Academy according to the plan developed by the State Board.

Sets an annual principal salary schedule, applicable to the 2026-27 fiscal year beginning July 1, 2026. Sets out the schedule based on average daily membership (ADM) with amounts increasing from the base amount for meeting and then for exceeding growth; sets out provisions for determining which category to use. Amounts range from $84,934 for an ADM of 0-200 base salary to $127,399 for an ADM of 1,601 or more that exceeds growth. Sets out provisions governing placement on the salary scale. Sets out provisions governing the calculations of average daily membership and school growth scores for the principal's school. Provides that in lieu of the amounts of annual longevity payments, beginning with the 2017-18 fiscal year, the amounts of those longevity payments are included in the salary. Details principal compensation for the applicable school year based on (1) the applicable salary schedule, (2) the sum of the salary received in 2016-17 and longevity pay for the 2016-17 school year, or (3) the salary received in 2016-17 if not eligible for longevity at that time. Appropriates $30.5 million in recurring funds for 2026-27 from the General Fund to DPI for the salary increases. States the NCGA’s intent to adjust compensation for principals in 2027-28 and subsequent fiscal years according to the DPI’s wage compensation study.

Provides that for 2026-27, beginning July 1, 2026, assistant principals are to receive a monthly salary based on the "A" teacher salary schedule plus 19%, with placement based on total years the assistant principal has spent as a certified employee. Requires assistant principals with certification based on academic preparation at the six-year degree level to be paid a salary supplement of $126 per month, and at the doctoral degree level to be paid a salary supplement of $253 per month. Provides for a 10-month stipend for participants in an approved full-time master's in-school administration program. Details limitations and required certification. Provides that in lieu of the amounts of annual longevity payments to assistant principals paid on the assistant principal salary schedule, beginning with the 2017-18 fiscal year, the amounts of those longevity payments are included in the monthly amounts provided to assistant principals pursuant to the act. Requires assistant principals paid under the salary schedule provided for the 2026-27 fiscal year to receive the greater amount of (1) the applicable amount provided in the salary schedule by the act, (2) the salary the assistant principal received in the 2016-17 school year under Sections 9.1 or 9.2 of SL 2016-94 plus the longevity that would have been received, or (3) the salary received in 2016-17 if not eligible for longevity at that time. Appropriates $14.3 million for 2026-27 from the General Fund to DPI for the salary increases. States the NCGA’s intent to adjust compensation for assistant principals in 2027-28 and subsequent fiscal years according to DPI’s compensation study.

Requires the State Board, by March 15, 2027, to develop and report to the specified NCGA committee and division on a plan to implement and evaluate the effectiveness of incentive programs to encourage well-qualified principals and assistant principals to work in high-need schools. Sets out components that may be included in the plan. States the NCGA’s intent to implement advisable components of the plan. Appropriates $50,000 from the General Fund to the Department of Public Instruction for 2026-27 for the study and report.

Requires DPI, by November 15, 2027, to survey local school administrative units on recommendations to increase autonomy and resources for principals and superintendents and report responses by February 15, 2028, to the specified NCGA committee and division. States the NCGA’s intent to implement advisable recommendations in the 2028-29 fiscal year and subsequent fiscal years.

Part III.

Amends GS 115C-105.25 to no longer prohibit local boards of education from transferring funds out of the: (1) children with disabilities allotment, (2) out of the academically or intellectually gifted child allotment category, or (3) limited English proficiency allotment category. No longer prohibits positions from being transferred out of the allocation for classroom teachers for K-12 grades; makes conforming changes. No longer prohibits positions from being transferred out of the allocation for program enhancement teachers for kindergarten through fifth grade. No longer limits the use of funds allotted for textbooks and digital resources to being used to purchase textbook and digital resources and no longer prohibits transferring those funds out of the allotment for other purposes. Applies beginning with the 2026-27 school year.

Amends GS 115C-111.05 by requiring the State Board, to the extent funds are available for this purpose, to allocate funds for child with disabilities to each local school administrative unit on the basis of reported cost of the services provided instead of on a per child basis. Appropriates $450,324,273 in recurring funds for 2026-27 from the General Fund to DPI to implement the plan for weighted funding for children with disabilities on the basis of the reported cost of service. Requires that DPI begin distributing funds based on this model beginning with the 2026-27 school year.

Amends GS 115C-472.22 concerning funds for local school administrative units located in whole or in part in counties in which the county wealth as a percentage of the State average wealth is less than 100%. Provides that the amount received per average daily membership for a county will be the difference between 110% of the State average current expense appropriations per student and the current expense appropriations per student that the county could provide given the county’s wealth and an average effort to fund public schools. Removes the provisions stating that the formula for distributing supplemental funding is not intended to reflect (1) any measure of the adequacy of the educational program or funding for public schools and (2) any commitment by the NCGA to appropriate any additional supplemental funds for low-wealth counties. Adds instead that it is the NCGA’s intent to incrementally increase appropriations for the low-wealth allotment to provide eligible counties supplemental funding equal to 110% of the statewide local revenue per student by fiscal year 2027-28. Requires the State Board to adjust the formula to ensure each local school administrative unit receives a pro rata share of the additional funds appropriated for the low-wealth allotment. Appropriates for $154.1 million in recurring funds for 2026-27 from the General Fund to DPI to implement the changes to the low-wealth allotment.

Requires the State Board to allocate additional funds for services to students with limited English language proficiency to local school administrative units and charter schools based on the three-year weighted headcount of students with limited English proficiency. Requires the adoption of a formula to compute the allotments that does not put a cap on the funds. Appropriates $140.7 million in recurring funds for 2025-26 and $181 million in recurring funds from the General Fund to DPI to implement this section.

Repeals Section 8.47(b) of SL 2015-241, which provided local school administrative units the dollar equivalent of teacher assistant positions based on specified ratios. Enacts new GS 115C-316.6 to require the State Board to establish a funding allotment for teacher assistant positions. Requires funds to be distributed based on: (1) an estimated statewide average salary and benefits per teacher assistant position and (2) the requirements of (d) of the statute, which requires funds to be allocated to increase positions for teacher assistants according to the specified schedule setting out the ratio of teacher assistant to students in grades K-3 for fiscal years 2026-27 and 2027-28 and thereafter.

Amends GS 115C-316.5 by appropriating specified amounts from fiscal year 2026-27 and fiscal year 2027-28 and subsequent years from the General Fund to DPI for the funding allotment for school health personnel positions. Requires local school administrative units to increase school health personnel positions each fiscal year until 2028-29 at the specified position-to-student ratios for nurses, counselors, social workers, and psychologists. Makes conforming changes.

Enacts new GS 115C-316.7 appropriating specified amounts from fiscal year 2026-27 through fiscal year 2027-28 and subsequent years from the General Fund to DPI to increase instruction support personnel positions. Requires these positions to be increased each fiscal year until the 2028-29 fiscal year at the specified position-to-student ratios for media coordinators.

Requires DPI to report no later than February 15, 2027, to the Joint Legislative Oversight Committee on a method to combine all dollar allotments distributed on the basis of ADM into a single allotment.

Appropriates $24.8 million in recurring funds for 2026-27 to DPI from the General Fund to increase the school building administration allotment and to increase the ratio of assistant principals to students in all local school administrative units.

Appropriates $29,355,355 in recurring funds for 2026-27 to DPI from the General Fund to support additional personnel and services provided by central office staff in local school administrative units.

Sets out the monthly salary maximums for assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for 2026-27, beginning July 1, 2026. Set the monthly salary maximums for superintendents for 2026-27, beginning July 1, 2026. Specifies that longevity pay for superintendents and central office administrators is as provided for state employees under the North Carolina Human Resources Act. Provides a salary supplement of $126 for central office administrators and superintendents who have certification based on a six-year degree level. Provides a salary supplement of $253 per month to central office administrators and superintendents with certification based on a doctoral degree. Directs the State Board of Education to prevent local school administrative units from transferring state funds from other funding categories to salaries for central office administrators.

Requires the DPI to include budget adjustments for inflation and other rising costs of providing a Sound Basic Education when submitting budget adjustment requests to the NCGA.

Amends GS 115C-218.105 (State and local funds for a charter school) as follows. Specifies that counties may provide direct capital funds (was, provide funds) to charter school by direct appropriation and makes conforming changes. Requires that for each child attending a charter school, the county in which the child resides must allocated to the charter school an amount equal to the average per pupil allocation for average daily membership. Requires counties to allocate funds to charter schools under GS 115C-437(Allocation of revenues to the local school administrative unit by the county). Eliminates the previous language requiring transfers from the local school administrative unit to the charter school for every student that attends the charter school and the previous system of allocating finances to charter schools in subsections (c) through (e). Defines local schools as it is used under Article 31, The School Budget and Fiscal Control Act, as all local school administrative units located in a county, plus any charter schools that are attended by children residing in the county. Amends GS 115C-430 by requiring all appropriations by the county to the local schools to be apportioned to the average daily membership; specified that county appropriations are properly apportioned when the dollar amount obtained by dividing the amount appropriated to each unit and each charter school a resident child is attending by the total membership of the unit or number of resident charter school attendees is the same.  Amends GS 115C-431 to require a joint meeting of the tow boards when the governing body of a local school determines that the amount of money appropriated to a local school administrative unit or charters school is not sufficient to support a system of free public schools. Makes conforming changes. Makes changes to the amount that is to be appropriated for a budget year in dispute when an agreement is not reached in mediation, by specifying provisions that related to calculations of a charter school’s amount. Amends GS 115C-437 by making conforming changes. Amends GS 115C-448(d) by prohibiting special funds of individual schools from being included in determining the per pupil amount to be appropriated from the county to a charter school. Amends GS 153A-461 to require each county to appropriate to a charter school the average per pupil allocation for each child that resides in the county and attends that charter school. Authorizes each count to appropriate direct capital funds and lease real property to charter schools; makes conforming changes.

Provides for the issuance of $4 billion in general obligation bonds for public school facilities through grants to counties for public school capital outlay projects, repairs, and renovations, subject to a vote of the majority of qualified voters in the state at the election in 2028 for the presidential primary. Outlines applicable definitions for the section regarding the capital bonds. Authorizes the State Treasurer, with consent of the Council of State, to issue and sell State of North Carolina Education Bonds if approved by the voters in the election held on the issue. Specifies restrictions on the use of funds from the bonds, and permits the combination of funds received from the federal government with the funds received from the sale of bonds in the Education Bonds Fund. Directs the State Board of Education to require counties to report annually on the impact of the funds on the property tax rate for that year, and makes the reports public records. Directs the State Treasurer to establish a system for tracking bond proceeds to properly account for the use of the proceeds for compliance with applicable requirements of the federal tax law or otherwise, and requires all recipients to comply with the tracking system. Provides for a statewide election to approve the $4 billion of education bonds during the statewide presidential election in 2028. Makes the election subject to the general election laws of the state, and provides required ballot language. Provides for the manner of issuing the education bonds, and limits maturity to 40 years or less. Outlines requirements for signatures, manner of sale, notes in anticipation of the bond sale, refunding procedures, exemption from state and local taxation, investment eligibility, and full faith and credit support for the bonds. Allows the State Treasurer to provide that any bonds have variable interest rates, and provides other flexibilities in issuance to the State Treasurer based around the redemption and requirements for credit facilities. Includes an interpretation section, specifying that the language in the section regarding the sale of bonds is in addition and alternative to any other applicable method of providing for the sale of the bonds under applicable law. Outlines statutory reference provisions, construction of the section regarding bond sales, makes the provisions of the act regarding the sale of bonds controlling over any inconsistent provisions in general law, and contains a severability clause. Permits the State Treasurer to enter into other agreements around the sale of the bonds as the Treasurer deems desirable. Establishes requirements for each entity receiving funds from the sale of bonds. Requires each local school administrative unit and corresponding board of county commissioners to jointly submit a plan to the State Board of Education outlining a plan for the use of funds in accordance with the requirements of the act. Allows the State Board of Education to disburse funds after determining the plans comply with the requirements of the act. Requires quarterly reports from each entity receiving funds beginning on January 1, 2027. Requires the State Board of Education to combine the reports and submit them to the Joint Legislative Capital Improvement Oversight Committee, the House Appropriations Committee, and the Senate Committee on Appropriations/Base Budget. Establishes requirements for the OSBM to retain a portion of the funds for escalation of costs, and to release funds for unforeseen contingencies and inflation costs. Requires the OSBM to report on any funds retained after a project’s completion. Directs any funds from the education bonds spent on school technology for public schools to be credited against the judgment in N.C. Sch. Bds. Ass'n. v. Moore.

Requires beginning with the 2026-27 fiscal year that State Board transfer the At-Risk Student Services/Alternative school allotment into the DSSF allotment and allocated the funds to local school administrative units under a formula the provides that no local school administrative until receives a decrease in combined funding. Amends GS 115-472.24 to allow supplemental funds appropriated to both disadvantaged or at risk students (was, disadvantaged students only) to be used for the specified purposes and expands upon those purposes to include providing funds for alternative learning and at-risk student programs. Appropriates $944.3 million in recurring funds for 2026-27 from the General Fund to DPI to implement this provision.

Appropriates $96.7 million in recurring funds for 2026-27 from the General Fund to DPI to increase the Classroom Materials/Instructional Supplies/Equipment Allotment.

Requires the Department of Instruction to study methods of implementing a weighted student funding formula that retains existing guaranteed position allotments; allows contracting with a third party to conduct the study. Requires a report to the specified NCGA committee by March 15, 2027. Appropriates $500,000 for 2026-27 from the General Fund to DPI to perform the study.

Part IV.

Amends GS 115C-83.15(d), which sets out guidelines to calculate overall school performance scores and grades, by requiring that the school achievement score account for 51% (was, 80%) and the school growth score account for 49% (was, 20%) of the total sum. Requires DPI to amend the State plan to reflect this change. Applies beginning with school performance scores issued based on data from the 2026-27 school year.

Requires the State Board, in consultation with DPI, to study methods of adding to the State school accountability system indicators that provide information on the opportunity of students to access a sound basic education. Requires a report with recommended changes to the specified NCGA committee by June 15, 2027.

Part V.

Appropriates $19 million in recurring funds for 2026-27 from the General Fund to DPI to continue to implement the District and Regional Support Model developed by the State Board to support the improvement of low-performing and high-poverty schools. Sets out further requirements for implementation.

Requires the State Board, by March 15, 2027, to review, update, and strengthen the state-level process for reviewing and adopting core curriculum resources. Requires providing support, resources, and professional learning opportunities to assist schools and districts in selecting and employing the specified types of resources and practices to assist educators in applying innovative practices promoting continuous improvement. Requires DPI, by June 30, 2027, to provide a model implementation plan. Appropriates $250,000 for 2026-27 from the General Fund to DPI to implement these provisions.

Enacts new GS 115C-209.2 requiring DPI to establish a program to support high-poverty schools that adopt a community school model or other evidence-based models to address out-of-school barriers to learning. Sets out deadlines for distributing an application form, for schools that use a community school model or other evidence based model, to address out-of-school barriers to learning to apply to participate, and for selecting participants. Gives priority to schools with high rates of student poverty. Requires each participating local school administrative unit to hire one full-time school-based coordinator per participating school. Sets out assessments the coordinator must make and requires the coordinator to submit to DPI a funding request for goods or services beneficial to meeting the goals of the community school model or other evidence-based model. Sets out the deadline by which DPI must evaluate the request and allocate funds. Requires DPI, in consultation with the coordinators, to report annually to the specified NCGA committee on six specified items, including the amount of funds allocated to each school and the use of those funds, and any effects of the model on school outcomes. Appropriates $65,513,621 in recurring funds for 2026-27 from the General Fund to DPI to implement the program. Applies beginning with the 2026-27 school year.

Enacts new GS 115C-264.6 requiring the State Board to report annually, beginning in 2026, to the specified NCGA committee on unpaid meal charges in local school administrative units; sets out what must be included in the report.

Enacts new GS 115C-264.15 requiring to any public school unit or school within a unit that is operating a school nutrition program that is eligible for the federal Community Eligibility Provision (CEP) to participate in CEP. Requires DPI, to the extent fund are made available, to reimburse participating public school units and school to supplement federal reimbursements of school meals, to be calculated as specified. Require DPI to report annually to the specified NCGA committee on the specified information about the CEP program participation, amount of money participating schools received, and any noted changes in student performance due to the increased availability of nutrition services. Appropriates $92.5 million in recurring funds for 2026-27 from the General Fund to DPI to implement this provision. Effective July 1, 2026, and applies beginning with the 2026-27 school year.

Part VI.

Appropriates $333.4 million in recurring funds for 2026-27 from the General Fund to the Department of Health and Human Services, Division of Child Development and Early Education (Division), to expand the NC Prekindergarten (NC Pre-K) program for eligible children who are 4 years old by allocating funds to: (1) begin incrementally increasing State funding for each NC Pre-K slot with the goal of paying 100% of the actual cost by the end of the 2027-28 fiscal year; (2) gradually increasing the number of eligible children with the goal of reaching at least 75% of eligible children in each county by the end of the 2027-28 fiscal year; (3) raising the rate for the county administrator to provide oversight, monitoring, enrollment, and support by 10% by the end of the 2024-25 fiscal year; and (4) phasing-in extension of the NC Pre-K program year from 10 to 12 months in accordance with this section. Amends Section 9D.1 of SL 2023-134 requiring the Division to develop and implement a plan that includes a pilot program to extend the NC Pre-K program year from 10 to 12 months and is based on county capacity to implement the extension. Sets out requirements for selecting three counties to participate in the pilot. Requires a report to the specified NCGA committee and division by December 31, 2027, and sets out required report content. Appropriates $300,000 in recurring funds for 2026-27 from the General Fund to the Department of Health and Human Services, Division of Child Development and Early Education, to increase State-level NC Pre-K staffing to manage the planned expansion of the NC Pre-K program, provide policy development and program oversight, ensure program quality, and manage any new, required studies. Appropriates $48.4 million in recurring funds for 2026-27 from the General Fund to the Department of Health and Human Services, Division of Child Development and Early Education, for transportation to all participants enrolled in the NC Pre-K program.

Appropriates $10 million in recurring funds for 2026-27 from the General Fund to the Division to increase funds for the child care subsidy program and provide for program improvements. Appropriates $78.7 million in recurring funds for 2026-27 from the General Fund to the Department of Health and Human Services, Division of Child Development and Early Education, to expand the Family Connects universal home visiting model to local agencies statewide that choose to implement the program for their community through local health departments or local Smart Start partnerships. Appropriates $40 million in recurring funds for 2026-27 from the General Fund to the Department of Health and Human Services, Division of Child Development and Early Education for a pilot program of a State model for high-quality early learning programs for eligible children from birth to 3 years of age, for 1,000 children each year, with the intent to expand the program to additional locations. Requires the program to focus on high-poverty school districts across the State.

Appropriates $20 million in recurring funds for 2026-27 from the General Fund to the Division of Child Family Well-Being, Early Intervention Section, for the North Carolina Infant-Toddler Program to take steps toward: (1) increasing State and local staffing in the provision of services to families with infants and toddlers with developmental delays and established medical conditions who are eligible for the NC Infant-Toddler Program, (2) expanding funding for interpreter services, (3) establishing a centralized provider network system, (4) providing professional development focused on early childhood mental health, and (5) addressing salary inequities affecting provider retention and recruitment. Appropriates $250,000 for 2026-27 from the General Fund to the Division of Public Health to be allocated in the specified amounts to: (1) conduct a feasibility study to examine eligibility criteria and cost implications for expansion of the NC Infant-Toddler Program and (2) conduct a system and infrastructure readiness assessment to determine areas of need and system challenges that need to be addressed before expanding the NC Infant-Toddler Program. Appropriates $162.5 million in recurring funds for 2026-27 from the General Fund to the Division of Child Family Well-Being, Early Intervention Section, for high-quality early intervention services and supports for up to an additional 10,000 children from birth to 3 years of age, who meet expanded eligibility criteria for the Infant and Toddler Program implemented as a result of the study. Allows 5% of the funds to be used for a public awareness campaign regarding expansion of eligibility for the NC Infant and Toddler Program, increase efforts to identify children eligible to receive services under the expanded program, and to create partnerships with family support agencies.

Appropriates $419.6 million in recurring funds for 2026-27 from the General Fund to the Division of Child Development and Early Education to gradually increase funding for the North Carolina Partnership for Children Inc. (Smart Start), with the goal of full funding by the end of the 2027-28 fiscal year. Sets out provisions governing the allocation of the funds.

Appropriates $32 million in recurring funds for 2026-27 from the General Fund to the Division of Child Development and Early Education to increase funding for and expand participation in the Child Care WAGE$ program and the Infant-Toddler education AWARD$ program. Appropriates $7.3 million in recurring funds for 2026-27 from the General Fund to the Division to implement strategies to recruit early childhood educators and provide ongoing professional development.

Appropriates $500,000 in recurring funds for 2026-27 from the General Fund to the Division of Child Development and Early Education to develop and implement a real-time workforce data system that supports building a pipeline of early childhood educators. Requires the Division to use $500,000, to expand and improve the North Carolina Early Childhood Integrated Data System (NC ECIDS) and the North Carolina Early Childhood Action plan data dashboards to track child outcomes and provide access to State data for users and researchers with the goal of connecting this data to the NC Longitudinal Data System (NCLDS). Appropriates $150,000 in recurring funds for 2026-27 from the General Fund to the Division for collaboration with the Divisions of Social Services and Public Health in developing and implementing a plan to provide technical assistance to build local capacity to use quality early childhood data across child health, child welfare, and early childhood education for local planning. Appropriates $500,000 for 2026-27 and $250,000 in recurring funds for 2026-27 from the General Fund to the Division of Child Development and Early Education to develop and implement a real-time data collection and sharing process to identify children eligible for early childhood programs, that allows for: (1) the disaggregation along multiple variables, such as race, ethnicity, and geography; and (2) helps identify the children most vulnerable to build a more equitable early learning system.

Appropriates $5 million in recurring funds for 2026-27 from the General Fund to the Division of Child Development and Early Education to scale up the Pre-K to K Transitions Program.

Appropriates $320,00 in recurring funds for 2026-27 from the General Fund to the Division of Child Development and Early Education for ongoing support and technical assistance for local collaborative family engagement plans for birth to third grade.

Requires the Division of Child Development and Early Education, to implement by July 1, 2027, a policy requiring all NC Pre-K lead teachers to held an appropriate state teaching license as specified the NC Pre-K policy; requires that these teachers be paid according to the public school salary schedule by the 2027-28 fiscal year.

Part VII.

Appropriates $16.7 million for 2026-27 from the General Fund to DPI to offset the costs for local administrative units and charter schools to remove barriers to student participation in North Carolina Virtual Public Schools. Gives priority to covering the costs of courses for students enrolled in public schools in low-wealth counties.

Amends GS 115C-84.2 by allowing a local board of education to align the calendar of schools in the local school administrative unit with the calendar of a community college serving the city or county where the unit is located. Applies beginning with the 2026-27 school year.

Requires that from the funds appropriated in this section, that the UNC Board of Governors make funds available to the National College Advising Corps Inc. (CAC) to support an expansion of the placement of college advisers in North Carolina public schools through its program over a three-year period. Provides more information about CAC. Appropriates $3 million in recurring funds for 2026-27 from the General Fund to the UNC BOG to be provided to CAC to expand the placement of college advisers. Requires CAC to focus the first two years of the expansion by placing college advisers in counties designated as tier one and tier two. For the third year of the expansion, requires CAC to use the funds provided to it to place college advisers in the remaining counties designated as tier three. Also requires CAC to select at least three additional postsecondary institutions to partner with in order to increase the number of recent graduates working as near-peer college advisers to meet the needs of the program expansion. Requires CAC to report in each year in which CAC spends State funds made available to it under this section to the specified NCGA committee and division on the progress of expanding the placement of college advisers, data on the effectiveness of the program in increasing access for students to postsecondary education, and the use of State funds.

Appropriates $100,000 in recurring funds for 2026-27 from the General Fund to DPI for a Career and Postsecondary Planning Director position to focus on career planning in grades 5-12 and $87 million in recurring funds for 2026-27 to increase the number of school-based career development coordinators for grades 6-12.

Appropriates $5 million in recurring funds for 2026-27 from the General Fund to DPI for additional costs for all economically disadvantaged students enrolled in the Career and College Promise Transfer Pathway Program in each year, including at least the full costs of textbooks, transportation, meals on college campuses, fees, and technology. Allows, if these funds are insufficient, DPI to use additional unspent funds in the State Public School Fund for this purpose.

Part VIII.

Reenacts the provisions of the State Budget Act, GS Chapter 143C, and incorporates them into this act by reference.

Explains the effect of the act’s headings.

Includes a severability clause.

Effective July 1, 2026.

Part I.

Amends GS 115C-595 to allow using scholarship funds from the State Education Assistance Authority (Authority) that have been deposited into a personal education student account for a student with disabilities enrolled in a Part 1 (Private Church Schools and Schools of Religious Charter) or 2 (Qualified Nonpublic Schools) nonpublic school to be used for education-related support services provided by a one-to-one classroom aide (as now defined in GS 115C-591). Sets out documentation requirements and prohibits the one-to-one classroom aide from providing services to other students during the instructional day. The funds cannot be used for services provide by a one-to-one aid who is a parent, guardian, legal custodian, sibling, or grandparent of the student, or who is an employee or independent contractor of the school where the student is enrolled. Applies beginning with the 2026-27 school year.

Part II.

Appropriates $1 million from the General Fund to the UNC Board of Governors (BOG) to be allocated to the Authority to increase the amounts of scholarships for the children of wartime veterans for the 2025-26 academic year up to the full amount allowed by law to the extent those awards were reduced by the Secretary of the Department of Military and Veterans Affairs under the award flexibility allowed in Part VI of SL 2025-72. Allows any remaining funds to be used to award additional scholarships to children of wartime veterans beginning in the 2026-27 academic year.

Appropriates $7 million from the General Fund to the UNC BOG in recurring funds for 2026-27 to support additional scholarships for children of wartime veterans beginning in the 2026-27 academic year.

Effective July 1, 2027.

Appropriates $197,760 for 2026-27 from the General Fund to the UNC Board of Governors (BOG) to be allocated to the Department of Parks, Recreation, and Tourism Management in the College of Natural Resources at NC State University to create and evaluate a community-based wellness initiative in eastern Wake, Halifax, and Lenoir counties that uses pickle ball to engage participants and encourage physical activity and social interaction at public recreational facilities in communities with limited access to recreational resources. Specifies that these funds do not revert.

Sets out responsibilities and qualifications for the program Leader and faculty members, who must collaborate with the North Carolina Cooperative Extension County Agents in Halifax and Lenoir counties. Requires the initiative to be implemented and evaluated using a delayed treatment design that includes community input, program development, marketing and outreach, three months of weekly pickleball instruction and play, an evaluation, and toolkit development, as discussed in the act.

Effective July 1, 2026.

Amends GS 116-209.25 establishing a matching program (the Program) by the State Education Assistance Authority (the Authority) for contributions to the Parental Savings Trust Fund (the Fund) for accounts opened under section 529 of the Internal Revenue Code (new subsection (e1)). The Authority will provide matching contributions of $100 for every $50 contributed by an eligible person, up to $500 per year, with a maximum of $1,500 per qualifying student. Defines eligible person (a qualified parent or interested party who is a resident of North Carolina and has a household income not exceeding 250% of the federal poverty guidelines) and qualifying student (resident of North Carolina who is 14 years of age or younger). Appropriates $180,000 in recurring funds from the General Fund to the Board of Governors of the University of North Carolina for 2026-27 to be allocated to the Authority to fund the Program. Effective July 1, 2026.

Amends GS 105-153.5(b) creating a new tax deduction of up to $2,000 for individuals who file as single and up to $4,000 for a couple filing a joint return (new subsection (12a)), for contributions to an account in the Parental Savings Trust Fund. Requires adding back to adjusted gross income any amounts previously deducted from the Fund if not used for qualified higher education expenses, unless withdrawn due to the death or permanent disability of the beneficiary. Applies to taxable years beginning on or after January 1, 2027. 

Part I.

Enacts Article 26, the “Digital Asset Financial Act” (DAFA), to GS Chapter 53. Sets forth sixteen definitions in new GS 53-441(terms pertaining to DAFA), including digital asset custody services (the safekeeping or custody of digital assets on behalf of customers by a financial institution, including maintaining control over the digital assets and any associated cryptographic keys), staking (committing digital assets to a blockchain network to participate in the network's operations by validating transactions, proposing and attesting to blocks, and securing the network), staking rewards (any interest, yield, or other compensation earned by a customer through staking digital assets on a blockchain network), digital asset transaction services (services that facilitate the execution of digital asset purchase or sale transactions on behalf of a customer), and regulating authority (either, in the case of a State-chartered bank, the Commissioner of Banks or in the case of a State-organized credit union, the Administrator of Credit Unions).

Requires, in new GS 53-442, for financial institutions intending to offer digital asset custody services (Services) to notify the regulating authority in writing as described, at least 60 days prior to the financial institution’s commencement of custody services. Prevents a financial institution from offering Services in a fiduciary capacity unless it is authorized to exercise trust powers under State law. Direct the institution to exercise its fiduciary authority in line with all applicable fiduciary duties and standards, including those governing custodians, trustees, and agents under State law. Requires the regulating authority’s approval before the financial institution begins offering Services in a fiduciary capacity. Requires the financial institution to establish it has satisfied all requirements to exercise trust powers and that it has the necessary expertise, policies, and procedures in place to safely conduct Services as part of its applications and allows the regulating authority to condition or limit the scope of a financial institution’s authority to engage in Services, including by imposing supervisory conditions as described. Requires a financial institution that provides Services in a fiduciary capacity using a sub-custodian to provide notice to the regulating authority.

Directs that when a financial institution provides Services in a non-fiduciary capacity, it acts solely as a custodian for safekeeping purposes and does not exercise discretionary authority over the customer's digital assets. Instructs the financial institution that it may act only upon the written instructions of the customer, and cannot independently manage, transfer or dispose of the digital assets.

Requires entering into a customer agreement with disclosures, including that digital assets are not insured by the FDIC or the NCUA or any other federal or State deposit insurance or share insurance pool. Allows for digital assets to be pooled so long as the financial institution maintains accurate records identifying each customer’s interest in the digital assets. Requires a financial institution providing Services to at all times maintain control over a quantity of each type of digital asset in its custody that equals or exceeds the total quantity of that digital asset owed to customers or required to be held on behalf of customer. Clarifies that pooled assets do not relieve the financial institution of the requirement to individually account for and fully reserve each type of digital asset for the benefit of customers. Requires independent annual audits, as described.

Authorizes subcustody of digital assets in new GS 53-443, limited to one of the following three entities: (1) a bank charted under the laws of the State, another state, or the United States; (2) a special purpose depository institution chartered under the laws of another state; or (3) a money transmitter licensed under Article 16B of GS Chapter 53. Specifies that a customer does not have to separately consent to engagement of a subcustodian so long as it is disclosed in the customer’s custodial agreement. Instructs that use of a subcustodian does not relieve the financial institution of its custodial duties. Requires written subcustodial agreement between the financial institution and subcustodian delineating the rights and responsibilities of the financial institution and the subcustodian and requires compliance with GS 53-443. Requires the financial institution to ensure that the subcustodian maintains at least 100% of reserve of each digital asset type held in subcustody, as described. Limits the types of subcustodians that a financial institution can use to one that maintains insurance coverage sufficient to protect against the loss of digital assets due to cybersecurity breaches, theft, or other similar events. Requires the financial institution to ensure that the subcustodian's insurance remains in effect and adequate to cover the value of assets held in subcustody. Specifies that a financial institution must retain control and custody of the assets placed in subcustody and that those assets are included in the scope of the financial audit described in GS 53-442.

Requires, in new GS 53-444 (staking of digital assets) for financial institutions intending to offer staking to notify the regulating authority in writing as described, at least 60 days prior to the financial institution’s initiation of services. Directs a financial institution to provide a customer with a clear and conspicuous written disclosure of the terms and conditions of the staking program before initiating staking services, including the five listed disclosures pertaining to automatic staking and opt-outs, risks of staking, lockup periods, customer rights, and fees. Authorizes a financial institution to stake digital assets held in custody on its customers’ behalf, as described. Provides for staking in both a fiduciary and non-fiduciary capacity. Specifies that a digital asset that a financial institution stakes on behalf of a customer remains the property of the customer. Prohibits staked customer assets, and any staking rewards associated with those assets from being recorded as assets or liabilities on the financial institution's balance sheet. Requires the financial institution to ensure that staked assets are safeguarded and not subject to any lien, security interest, or claim of the financial institution's creditors. Prohibits a financial institution from acting to encumber, hypothecate, or otherwise use a customer's staked assets for any purpose except for facilitating staking on the relevant blockchain or distributed ledger and from exposing the assets to risk of loss except to the extent inherent in the normal operation of the staking process. Authorizes use of subcustodians to facilitate the staking of digital assets on behalf of its customers, as described. In addition to complying with the reserve requirements, requires a financial institution to ensure that a sufficient portion of each digital asset type remains unstaked or otherwise available to promptly meet customer withdrawal requests, subject to any staking lock-up or unbonding periods disclosed to the customer under the section’s disclosure requirement. Provides for staking rewards, yields, or other benefits earned directly from the staking of a customer’s digital assets to be provided directly to the customer, as described. Instructs that the financial institution's staking activities must be included within the scope of its independent annual audits under new GS 53-442. Requires the institution to maintain insurance, as described.

Requires, in new GS 53-445 (digital asset transaction (DAT) services [DATS]) for financial institutions intending to offer DATS to notify the regulating authority in writing as described, at least 60 days prior to the financial institution’s initiation of services. Authorizes a financial institution to engage in DATS in a fiduciary capacity, as described. Directs a financial institution to provide a customer with a clear and conspicuous written disclosure of the terms and conditions of its DATS, before or a that the time of a digital asset transaction, including the methodology or basis used to determine the execution price of the DAT, any spreads, fees, commissions, or other charges applicable to the transaction, and the expected timeline. Only authorizes DAT if the DAT is executed pursuant to the express instruction of the customer and the DAT is executed in the exercise of discretionary investment authority granted to the financial institution under the governing fiduciary instrument or other law. Requires a financial institution to only facilitate DATS with counterparties with are also authorized to engage in DATS. Authorizes financial institutions engaging in DATS to use subcustodians or third-party execution agents to execute transactions on behalf of its customers, as described. Requires a financial institution that purchases a digital asset to ensure that the asset is transferred into its custody as soon as commercially practicable after execution of the transaction and held in custody in accordance with the fiduciary standards established by the act. Provides for recordkeeping and oversight.

Requires a financial institution to comply with State and federal laws governing its digital asset services, including those listed, in GS 53-446. Requires the financial institution to establish and maintain an anti-money laundering program and cybersecurity program, as described. Provides for notice to regulating authorities of any cybersecurity incidents as soon as possible, as described. Requires detailed recordkeeping of the institution’s compliance efforts and for the institution to designate individuals responsible for overseeing these programs.

Prevents rehypothecation of digital assets in new GS 53-447. Makes unclaimed digital assets subject to the Unclaimed Property Act in new GS 53-448. Authorizes the State Banking Commission and Credit Union Commission (Commission) to adopt rules to implement, clarify, and enforce the requirements of the new article, as described, in new GS 53-449.

Authorizes, in new GS 53-450, the regulating authority to exercise its enforcement powers (including, corrective action orders, temporary emergency orders, cease and desist orders, suspension or revocation of digital asset service authority, or civil penalties) if it determines that the financial institution has done any of the following:

• Violated any provision of the article or rule adopted or order issued under it.
• Engaged in any unsafe or unsound practice in connection with its digital asset services.
• Operated in a manner that threatens the safety or security of a customer's digital assets.

Provides for hearing and appeal rights.

Effective when the act becomes law.

Adds digital asset, digital asset account, exercise of an act of ownership interest, keys, and qualified custodian to GS 116B-52 (definitions pertaining to escheats and abandoned property).

Specifies, in GS 116B-53, that the presumption of abandonment of digital of property applies, five years after the earliest of the following dates: the last exercise of an act of ownership interest by the apparent owner, a second consecutive communication from the holder to the apparent owner is returned to the holder as undeliverable to the apparent owner, or the holder discontinued communications to the apparent owner. Provides for tolling, as described.  

Requires, in GS 116B-59, the holder of property held in a digital asset account presumed abandoned with a value of $25 or more to send notice as described to the apparent owner not more than 120 days or less than 60 days before filing the report required by law. Authorizes a holder to authorize a third party to perform the duties required by GS 116B-59, but that the holder bears responsibility for failure to comply with the statute.

Makes conforming changes to GS 116B-60 (report of abandoned property).

Enacts GS 116B-61.1 (delivery of abandoned digital assets), requiring holders of property held in a digital asset account presumed abandoned to report the property to the State Treasurer, and to either transfer such assets to the State Treasurer or maintain the assets until they can be transferred under the conditions described. Authorizes the Treasurer to determine if the asset should be liquidated. Specifies that a holder that delivers digital assets or pays proceeds to the Treasurer in good faith is relieved of all liability arising after the delivery or payment with respect to the digital assets delivered or proceeds paid.

Provides for a minimum three-year holding period by the Treasurer or qualified custodian designated by the Treasurer in GS 116B-65 (public sale of abandoned property). Provides for claims by the apparent owner of the digital assets. Prevents the Treasurer from selling a digital asset for less than the prevailing market price or if it doesn’t have a prevailing market price, by any commercially reasonable method. Directs that, after the expiration of the three-year holding period, a person making a claim is entitled to receive the digital assets, if they still remain in the custody of the Treasurer, or the net proceeds received from a sale, less any fees and expenses incurred in the sale.

Effective on or after 18 months after the act becomes law.

Directs that holders are not required to report or deliver digital assets under Article 4 of GS Chapter 116B until the first reporting cycle beginning on or after 18 months after this act becomes law. Requires the Treasurer to designate a qualified custodian and issue reporting instructions for digital assets before this reporting cycle.

The initial report filed under GS 116B-60 for digital assets subject to GS 116B-53(c)(15a) must include all digital assets that would have been presumed abandoned during the 10-year period immediately preceding the effective date of the above changes to GS Chapter 116B, as if GS 116B-53(c)(15a) had been in effect during that period.

Part II.

Enacts Article 27, the “NC Stablecoin Act”, to GS Chapter 53. Sets forth thirteen definitions pertaining to new Article 27 in GS 53-462, including payment stablecoin (digital asset (i) that is designed or marketed to be used as a means of payment or settlement, (ii) the issuer of which undertakes to convert, redeem, or repurchase for a fixed amount of monetary value, and (iii) that is not legal tender, a deposit, or a security registered under federal securities laws), permitted payment stablecoin issuer (licensed stablecoin issuer that is licensed or authorized under new Article 27, or a federally qualified payment stablecoin issuer chartered or licensed pursuant to the GENIUS Act), GENIUS Act (The Guiding and Establishing National Innovation for U.S. Stablecoins Act, Pub. L. No. 119-27, as amended).

Prohibits a person from issuing, circulating, offering or redeeming a payment stablecoin in the State unless the person is a permitted stablecoin issuer in new GS 53-463. Requires a person with a consolidated total outstanding issuance of payment stablecoins of not more than $10 billion who seeks to issue a payment stablecoin in this State to obtain a license as a stablecoin issuer from the NC Commissioner of Banks (Commissioner) unless the person is otherwise authorized to issue a payment stablecoin. Allows the Commissioner to authorize a trust company chartered in this State to issue payment stablecoins without obtaining a license under new Article 27 if the trust company submits an application to expand its business activities to include the issuance of payment stablecoins. Requires a State trust company to comply, on a continuing basis, with every operational, reserve, disclosure, redemption, and consumer protection requirement and the rules adopted under new Article 27 as though it were a licensed stablecoin issuer. Provides for periodic reporting to the Commissioner and for examinations issued by the Commissioner.

Authorizes a State qualified payment stablecoin issuer licensed by and subject to supervision of another state payment stablecoin regulator that has filed a current certification of substantial similarity under the GENIUS Act to issue payment stablecoins in this State without obtaining a separate license, so long as the issuer gives written notice to the Commissioner and complies with new Article 27 and with the State consumer protection laws.

Provides for reciprocity for state qualified insurers licensed by and subject to supervision of another state payment stablecoin regulator, as described.

Specifies that a State chartered insured depository institution or State chartered insured credit union may issue payment stablecoins only through a subsidiary that is a licensed stablecoin issuer under new Article 27 unless the institution obtains direct issuance approval, as described. Clarifies that GS 53-463 does not relieve an institution or its subsidiary of any requirement imposed by its primary federal banking regulator or limits the Commissioner's authority to enforce State consumer protection laws pursuant to the GENIUS Act.

Prohibits an entity organized under the laws of a foreign country (“foreign entity”) from offering or issuing payment stablecoins to persons in this State unless either of the following two things apply: (1) the foreign entity has incorporated or organized a subsidiary or affiliate in the United States and that subsidiary or affiliate has obtained either a provisional license issued under GS 53-463 or a full license as a licensed stablecoin issuer under new Article 26 and has a principal office in the United States; or (2) the entity is registered with the Office of the Comptroller of the Currency pursuant to the GENIUS Act and the Secretary of the Treasury has determined that the entity's home country regulatory framework is comparable. Clarifies that the principal office cannot be located at an individual's home or residence. Provides for a provisional license with expedited review, as described. Requires the Commission to provide technical assistance, including pre-filing meetings and published guidance to assist foreign entities in understanding new Article 27. Authorizes the Commission to grant a transitional exemption from this subsection to a foreign entity, not exceeding 12 months, solely to facilitate orderly compliance or to wind down.

Requires the Commissioner, in new GS 53-464 to (1) administer a licensing program for payment stablecoin issuers, including conducting oversight and issuing orders to implement the article and (2) to file an annual certification similarity required by the GENIUS Act and maintain objective criteria for that certification. Creates three categories of eligible licensure applicants: (1) a corporation or limited liability company organized under the laws of any state or of the United States that is neither an insured depository institution nor an insured credit union, (2) an insured depository institution or insured credit union chartered in this State, and (3) a US subsidiary or affiliate of a foreign organized entity that meets the requires pertaining to foreign entities, set forth above. Authorizes the Commissioner to participate in the Nationwide Mortgage Licensing System and Registry also known as the Nationwide Multistate Licensing System and Registry, including the State Examination System and any other electronic or successor systems developed and maintained by the Conference of State Bank Supervisors for the licensing, registration, and supervision of persons under new Article 27. Specifies that an application can only be approved by the Commission if it finds that all of the listed six standards for approval have been met by the applicant, including capital and liquidity requirements, reserve requirements, the applicant’s personnel have the described competence and integrity and are not on the US’s Specially Designated Nationals and Blocked Persons List or subject to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism, and the licensure will not adversely affect the safety and soundness of the financial system of this State. Lists seven ongoing obligations of licensees including continuous compliance with new Article 27 and its rules, monthly certificates as described, described notice to the Commissioner, and an annual examination of reserves by a registered public accounting firm and provide the report to the Commissioner within 10 days of receipt. Provides for licensing application, fees, quarterly reports by licensees, annual renewals, late renewals, and annual assessments under the fee schedule provided.

Limits the activities of a licensed stablecoin issuer to the following six things:

1. Issuing payment stablecoins in exchange for United States dollars or other eligible reserve assets.
2. Redeeming payment stablecoins.
3. Purchasing, selling, holding, and safeguarding eligible reserve assets backing the payment stablecoins.
4. Providing custodial or safekeeping services for payment stablecoins or the associated cryptographic keys.
5. If the issuer is a subsidiary of an insured depository institution or insured credit union, providing custodial or safekeeping services for reserve assets on behalf of the parent institution in connection with the stablecoin program.
6. Any other activity the Commissioner expressly authorizes in writing as directly incidental to the issuance or redemption of payment stablecoins.

Prevents a licensed stablecoin issue from doing any of the following four things:

• Engage in commercial lending, securities dealing, or derivatives dealing using any reserve asset or the proceeds thereof.
• Engage in proprietary trading of any asset that is not an eligible reserve asset.
• Purchase or hold, for its own account, any security or instrument issued by an affiliate except on market terms permitted by the Commissioner.
• Condition the availability of any product or service on a customer's purchase, holding, or use of a payment stablecoin.

Sets forth reserve requirements. Requires the licensee to monitor its assets daily. Provides for notice to the Commissioner if the assets fall below the minimum requires and requires the licensee to restore full coverage without delay. Prohibits a licensee from pledging, hypothecating, lending, or otherwise encumbering any reserve asset, except as provided in new Article 27. Sets forth five redemption obligations, including public and conspicuous disclosure of the licensee’s redemption policy and fees, a bar on imposing a minimum redemption threshold, and authorization for the license to request that the Commissioner authorize a temporary extension to the redemption period to facilitate orderly liquidation if a significant market stress or a redemption spike, as defined by rule, occurs.

Provides for custody, segregation and priority of reserves as described. Provides for monthly reports by licensee, certifications attesting to the sufficiency of its reserve assets filed with the Commissioner, annual examinations conducted by licensee, as described. Authorizes the Commission to require additional reports. 

Requires licensees to comply with any applicable federal laws under GS 53-466. Requires a licensee to comply with federal laws listed in GS 53-467 pertaining to money laundering and the Bank Secrecy Act. Requires the financial institution to establish and maintain an anti-money laundering program and customer identification program, as described. Provides for notice to the Commissioner of any federal enforcement action not later than five business days after the licensee receives the notice of enforcement, as described. Requires detailed recordkeeping of the institution’s compliance efforts as described. Specifies that a licensed stablecoin issuer is not required to obtain a State money transmitter license with respect to activities conducted in compliance with new Article 27.

Requires, in new GS 53-468, for the Commission to conduct a full scope examination of a licensee at least once every 24 months. Authorizes the Commission to examine any licensee at any time but cannot conduct more than two examinations in any 12-month period. Requires the examinations to address seven issues, including the licensee’s financial condition, compliance with Article 27 and federal law, corporate governance and internal controls, IT and cyber security safeguards, anti-money laundering, sanctions, and consumer protection programs, and any other factor addressing safety, soundness, or consumer protection. Designates applications, information, reports, and other confidential supervisory information as nonpublic records and that are required to be kept confidential, except as provided by Article 27. Provides for an annual Commissioner certification under the GENIUS Act to the Secretary of the Treasury and the Comptroller of the Currency. Requires a licensee to maintain complete books, records, and digital asset logs of its payment stablecoin business for not less than five years, or for a longer period if required by federal regulation, and to produce those records to the Commissioner upon request, as described. Specifies that licenses issued under Article 27 are not assignable without the Commissioner’s approval, as described. Provides for joint or coordinated Commissioner examinations.

Authorizes, in new GS 53-469, for the Commissioner to exercise its enforcement powers (including, cease and desist orders, licenses suspension or revocation, restitution or disgorgement, removal and prohibition of individuals, imposing a receivership or conservatorship or civil penalties, criminal penalties for unlicensed activities, injunctive relief) to protect payment stablecoin holders and the public. Provides for notice of enforcement, except for summary cease and desist orders. Provides judicial enforcement, as described. Provides for hearing and appeal rights, consent orders and criminal referrals. Clarifies that these provisions do not create a private right of action or limit any existing right of action under other laws.

Authorizes the Commissioner to enter into memoranda of understanding with any federal agency and conduct joint, alternate, or coordinated examinations and enforcement actions pursuant to Article 27. Requires licensees to also comply with federal interoperability standards. Directs that if a conflict arises between Article 27 and federal law, the federal law prevails to the minimum extent of the conflict. Instructs the Commission to apply and interpret Article 27 so that its requirements meet or exceed the minimum standards established under federal law for payment stablecoin issuers at all times.

Provides the Commission with rulemaking authority in new GS 53-471. Allows the Commission to temporarily waive or suspend its requirements if a national disaster or other national, regional, State, or local emergency occurs. Requires the Commissioner to provide a semi-annual report to the Commission on the status of all licenses issued, examinations conducted, and enforcement actions taken under new Article 27 during the reporting period.

Effective the earlier of January 18, 2027, or 120 days after the date on which the primary federal payment stablecoin regulators issue any final regulations implementing the GENIUS Act. Directs the Commissioner to notify the Revisor of the issuance date of those regulations.

Specifies that not less than six months after the effective date of this Part, the Commission must upon the recommendation of the Commissioner of Banks, adopt rules addressing at a minimum the following: application procedures, capital and liquidity standards, detailed reserve asset requirements, reporting formats, and any other matter that this act assigns to the Commission for specification. Directs the Commissioner to file its first certification within twelve months after Part II’s effective date. Instructs a foreign entity that, on the effective date of this Part, issues a payment stablecoin accessible by residents of this State and that does not meet the requirements of GS 53-463 to, not later than 12 months after that date, become a permitted payment stablecoin issuer or to cease offering its payment stablecoin in this State and shall provide holders of the payment stablecoin notice of their redemption rights.

Part III.

Contains a severability clause.

Amends GS 115C-263 to require public school units to have a school food authority to provide school nutrition services in the schools under their jurisdiction by offering students two meals per day, breakfast and lunch (was, local boards of education must provide to the extent practicable school nutrition services in the schools under their jurisdiction). Requires the State Board of Education, to the extent funds are available for this purpose, to allocate funds to school food authorities at public school units to provide students with free healthy nutrition services. Requires, in issuing the allocation, that the amount be determined based on an evaluation of the authority’s nutrition services (sets out minimum requirements for the method and criteria used for the evaluation), that funds be distributed on a fair and equitable basis, and the allocation be issued at the beginning of the fiscal year, with the Board allowed to reserve for future allocation an amount not to exceed 10%. Specifies that funds allocated under this statute supplement and do not supplant funds from other sources for the same purpose.

Amends GS 115C-218.75 by requiring charter schools, GS 115C-238.72 by requiring regional schools, GS 115C-150.14 by requiring schools for students with visual and hearing impairments, and GS 116-239.8 requiring laboratory schools, to provide school nutrition services according to GS 115C-263 and GS 115C-264 (setting out requirements for school nutrition programs, including that they participate in the National School Lunch Program). Makes conforming changes.

Amends GS 115C-264 requiring local boards of education operating school nutrition programs to also participate, if eligible in the Community Eligibility Provision Program.

Appropriates $116 million in recurring funds for 2026-27 from the General Fund to the Department of Public Instruction to provide nutrition services to students in public school units at no cost to the students. Allows the use of funds appropriated to State Aid for Public Schools for this purpose if this funding is insufficient for 2026-27.

Effective July 1, 2026. Applies beginning with the 2026-27 school year.