Enacts new Article 7A, titled Achievement School District and Innovation Zones, in GS Chapter 115C, Elementary and Secondary Education. Includes five definitions for use in the Article: achievement school, achievement school district (ASD), achievement school operator (AS operator), ASD superintendent, and qualifying school.  Provides that under the administration of the State Board of Education (SBE), the ASD is established in order to assume supervision, management, and operation of elementary schools that have been selected as achievement schools. Sets out the process for selecting a superintendent to serve as an executive officer of ASD.

Specifies the selection process for qualifying schools to be included in the ASD, including that the SBE, upon the recommendation of the ASD superintendent, will select no more than five qualifying schools to be transferred to the ASD, provided that the five schools represent geographic diversity, including urban and rural schools. Establishes a selection process based on an analysis of performance of a particular school over the most recent three-year period. Also included in the process are public hearings. Provides that the ASD superintendent must identify the chosen schools by November 15, with the SBE selecting the final schools no later than January 15.

Provides that after selection by the SBE, the local board of education can determine to either (1) close the selected qualifying school, (2) transfer the school into the ASD, or (3) request adoption of the principal turnaround reform model for the school. Requires the local board to hold public hearings in regards to the final decision, with the local board adopting a resolution by March 1 in regards to the final decision.

Establishes the selection process by which the SBE selects an AS operator for prospective achievement schools. Provides that the SBE, on the recommendation of the AS superintendent, can select an entity as an AS operator only after the entity has demonstrated either that (1) the school(s) operated by the entity show a record of improved performance in a substantial number of persistently low-performing schools or (2) the entity has a credible and specific plan for dramatically improving student achievement in low-performing schools, along with evidence that it operated schools with such growth over the prior three years. Further provides that once selected, an AS operator will have direct management over an achievement school for the period of a five-year contract, with a direct role in decisions about finance, human capital, curriculum, and instruction.

Provides that the schools, once chosen as an achievement school, remain open with enrollment as was established prior to the transfer. Also sets out certain facility and capital expenditure expectations, including that the local board of education remains responsible for facility and capital expenditures at the school.

Sets out procedures and understandings covering various aspects of school operation, including procedures for transportation, student records, procedures for the selection of employees, or the employment of employees of the local board of education. Also requires reasonable amounts of liability insurance and that the achievement school participate in the National School Lunch Program.

Establishes requirements for funding for achievement schools, providing for allocations from the SBE as well as from the local board of education. 

Sets out accountability and governance requirements for achievement schools, including setting clear goals, empowering and equipping teachers and school leaders, as well as selecting and managing the school's principal.

Provides that an achievement school must remain under the supervision of the ASD for a minimum of five years by way of a contract with an AS operator. Specifies terms and options that must be included in such a contract, including early termination of contract based on performance, closure of an achievement school based on performance, state board optional extension of contract for three years, AS Operator option to extend contract for three years, and termination of contract based on other grounds. Provides that no achievement school can remain under the supervision of the ASD for more than eight years. Requires the SBE to make all decisions related to contracts for AS operators no later than May 1.

Establishes the procedure for creating innovation zones, whereby a local board of education that has transferred a qualifying school to the ASD can ask the SBE to create an innovation zone for up to three continually low-performing schools within its local school administrative unit. The SBE must grant such requests. Sets out five requirements that each innovation zone must meet, including the development of a clear and specific plan for improving schools in that innovation zone.

Amends GS 115C-105.37A concerning low-performing schools, requiring the SBE to report to the superintendent of the ASD on any schools identified as a qualifying school.

Amends GS 115C-105.37B., Reform of continually low-performing schools, making conforming changes and establishing the principal turnaround model for continually low-performing schools or any qualifying school that was not made into an achievement school. This model is comprised of eight requirements, including replacing the current principal with a turnaround principal, and giving the turnaround principal the authority to select staff assigned to the school. Provides that the SBE can only authorize the principal turnaround model in no more than 10 schools statewide.

Amends GS 115C-321(a) concerning school employee personnel files, adding language that allows AS operators and the superintendent of the ASD to inspect and examine personnel records of specified employees.

Requires the SBE to contract with an independent research organization to evaluate the implementation and effectiveness of the ASD at the conclusion of the initial five-year contracts in 2022.  Sets out requirements of the contract and reporting requirements.

Appropriates $400,000 for 2016-17 from the General Fund to the Department of Public Instruction for salary and benefits for the ASD Superintendent, staff, and other expenses associated with the ASD. State the General Assembly's intent to appropriate $400,000 to the Department of Public Instruction for the 2017‑18 fiscal year and annually thereafter for salary and benefits for the ASD Superintendent, staff, and other expenses associated with the ASD.

States the General Assembly's intent to appropriate $375,000 for the 2017‑18 fiscal year and annually thereafter to the Department of Public Instruction for principal turnaround reform model grants. Upon appropriation of funds, requires the State Board of Education to award principal turnaround reform model grants of up to $75,000 per fiscal year for five years to local boards of education who (1) have been authorized to adopt the principal turnaround reform model by the State Board for a school and (2) provide a dollar‑for‑dollar match with non‑State funding for the requested grant amount. Requires principal turnaround reform model grants to be used by local boards of education to provide substantial incentives for turnaround principals and to provide additional discretionary funds for use by the turnaround principal to address specific issues in the school.

State the General Assembly's intent to appropriate $450,000 to the Department of Public Instruction for the 2017‑18 fiscal year and annually thereafter for innovation zone model grants. Upon appropriation of funds, requires the State Board of Education to award innovation zone model grants of up to $150,000 per fiscal year for five years to local boards of education who (1) have been authorized to adopt the innovation zone model by the State Board for up to three schools and (1) provide a dollar‑for‑dollar match with non‑State funding for the requested grant amount. Requires innovation zone model grants to be directed by local boards of educations to the innovation zone office to address specific issues in innovation zone schools.

Provides that this act becomes effective only if funds are appropriated for the ASD in the Current Operations Appropriations Act of 2016.  Once effective, supervision of achievement schools by the ASD begins with the 2017-18 school year, with the timeline for the selection of achievement schools to take place as specified.