Senate committee substitute to the 1st edition eliminates the previous provisions and instead provides the following. 

Part I. Omitted Membership Service

Amends GS 135-4 (concerning the Teachers' and State Employees' Retirement System) and GS 128-26 (concerning the Local Governmental Employees' Retirement System) with regard to omitted membership service to require employers to provide written notification of the total hours worked by an employee in the preceding 12 months to an employee classified as part-time upon request. Additionally requires employers to provide a copy of the notification upon request of the Retirement Systems Division. Adds a new requirement for employers to pay the applicable employer contributions specified if an employee classified as part-time was classified in error and ineligible to earn membership service due to that error, and the employee has paid a lump sum equal to the applicable employee contributions specified within one year of the omission. Applies to the purchase of service for work performed on or after January 1, 2020. 

Part II. Unclaimed Real and Personal Property

Renames Article 1 of GS Chapter 116B as General. Recodifies GS 116B-1 as GS 116B-2.1 and places it under new Article 1A, Escheats, of GS Chapter 116B. Recodifies GS 116B-2 as GS 116B-2.2 and amends it to make conforming changes. Amends GS 116-3 and GS 29-12 to also makes conforming changes reflecting the new statute numbers.

Enacts new GS 116B-1.1, Stating the state's policy to recover and transfer property to rightful owners in a way that is consistent with the interest of rightful owners. When the rightful owner cannot be determined, states that it is the policy that all benefits realized from any unclaimed or abandoned property accrue to the benefit of higher education. 

Amends GS 116B-64 to require that when property is delivered or paid to the Treasurer under GS Chapter 116B (Escheats and Abandoned Property), the Treasurer must hold it without liability for loss, as well as income or gain.

Amends GS 116B-75 by expanding upon the things that the Treasurer can call upon a person required to report, pay, or deliver property under the Chapter (or related specified individuals) to do, to also include producing reports (in addition to records), make the required payments, and make the required delivery of property.

Amends GS 116B-60 to require all abandoned property holders to file reports electronically (was, only those holders reporting 50 or more property owners' records were required to file the report electronically). Applies to reports filed on or after January 1, 2020.

Amends GS 116B-60 to make exceptions to the requirement that amounts due to an owner may be reported in an aggregate amount without furnishing any of the specified information; those exceptions are for property subject to GS 116B-53(c)(4)(security or other equity interest in a business association, including a security entitlement unclaimed three years after the earlier of specified events), (c)(5) (debt of a business association, including debt evidenced by a matured or called bearer bond or an original issue discount bond, unclaimed three years after the date of an interest or principal payment unclaimed by the apparent owner), and (c)(5a) (any dividend, profit, distribution, interest, redemption, payment on principal, cash compensation held or owing by a business association for or to its shareholder, certificate holder, policyholder, member, bondholder, or other security holder who has not claimed it, or corresponded in writing with the business association concerning it, within three years after the date prescribed for payment or delivery).

Amends GS 116B-63 by adding that a holder who has in good faith paid or delivered property to the Treasurer in error may request a refund, and allows the Treasurer to issue a refund after the holder has filed a form on proof of the error. Makes additional technical and clarifying changes.

Part III. Require Stress Testing of the Retirement System as Recommended by the PEW Foundation

Amends GS 135-6 to require at least once in each five-year period that the actuary completes an actuarial experience review of (was, make an actuarial investigation into) the mortality, service, and compensation experience of the members and beneficiaries of the Retirement System for Teachers and State Employees. Adds that before undertaking each quinquennial actuarial experience review, the Board of Trustees must report to the NCGA and the Governor on 12 items concerning the Retirement System, including projections of assets, liabilities, pension debt, service costs, employee contributions, employer contributions, net amortization, benefit payments, payroll, and funded ratio for the Retirement System for each of the next 30 years based upon the then-current actuarial assumptions, including the assumed rate of return, the market value of the assets controlled by the Board of Trustees and an explanation of how the actuarial value assigned to those assets differs from the market value of those assets, and an assessment of how the changes of assumptions adopted by the Board of Trustees in the experience review affect any of the other results in the report. Allows the Retirement System Division to increase receipts from the retirement assets of the corresponding retirement system or allows the payment of costs directly from the retirement assets for payment for the administration of the required actuarial experience review, required report, and annual valuation of the assets and liabilities of the System funds.

Part IV. Technical Changes

Amends GS 135-48.8, which sets out statements of public interest on health insurance by removing references to group insurance and benefits. Makes conforming changes to GS 135-48.40.

Amends GS 135-48.40 by adding that nothing is to be construed to either permit a person to enroll, or require the State Health Plan for Teachers and State Employees (Plan) to enroll, a person in the plan when doing so would jeopardize the Plan's preferential tax exempt status as a governmental plan. 

Amends GS 135-66 by adding that the assets of the Consolidated Judicial Retirement System include employers' contributions held with the Pension Accumulation Fund and employees' contributions held in the Annuity Savings Fund. Requires that the Board of Trustees have performed an annual actuarial valuation of the System and gives it the responsibility for maintaining the System on a generally accepted actuarial basis. Requires that an actuarially determined employer contribution be calculated annually by the actuary using the specified method. Allows the Board of Trustees to adopt a contribution policy that would recommend a contribution not less than the actuarially determined employer contribution. Prohibits the recommended employer contribution rate from being less than the actuarially determined employer contribution.

Removes provisions governing the North Carolina National Guard Pension Fund from GS 127A-40(f) into new GS 127A-40.1 and adds the following. Specifies that the Fund is to include General Fund appropriations made to the State Treasurer and held with the Pension Accumulation Fund of the Teachers' and State Employees' Retirement System. Requires an actuarially determined employer contribution to be calculated annually by the actuary using the specified method. Allows the Board of Trustees to adopt a contribution policy that would recommend a contribution not less than the actuarially determined employer contribution. Prohibits the recommended employer contribution rate from being less than the actuarially determined employer contribution.

Amends GS 135-8 (concerning the Retirement System for Teachers and State Employees) and GS 128-30 (concerning the Retirement System for Counties, Cities and Towns) by adding that if an employer made contributions on account of a retiree subject to the contribution-based benefit cap under GS 135-8(f)(2)f and that retiree later forfeits retirement benefits under the specified statutes concerning the forfeiture of retirement benefits for committing certain felonies, then the Retirement Systems Division may provide a credit to the employer. 

Enacts new GS 135-5.5 (applicable to the Retirement System for Teachers and State Employees) and GS 128-23.1 (applicable to the Retirement System for Counties, Cities and Towns) to consider an employer as an inactive employer if the four specified criteria are met, including that the employer has no employees that qualify for membership in the System. Requires annual reporting on all employers determined to be inactive employers. 

Amends GS 159-33.1 by amending the items to be included in the semiannual report of financial information to require that it include the total revenues received from building inspections, by sources (was, by type), and the total expenditures paid from all revenues received, by object (was, by type). Effective June 30, 2019.

Amends GS 135-18.1 by removing outdated provisions. Provides that prior to retirement, any person who was a member of the North Carolina Governmental Employees' Retirement System (local system) and who becomes a member of the Retirement System for Teachers and State Employees is entitled to transfer to the system his or her credits for membership and prior service in the local system.

Repeals the following statutes: GS 135-5.2 (concerning retirement of Chapel Hill utilities and telephone employees), GS 135-13 (which specified certain laws were not repealed and concerning suspension of payments and compulsory retirement), GS 135-14 (concerning pensions of certain former teachers and State employees), GS 135-14.1 (concerning retirement benefits for certain school superintendents and assistant superintendents), GS 135-16 (employees transferred to the North Carolina State Employment Service by act of Congress), GS 135-18.3 (conditions under which amendments to the system are void), and GS 135-18.5 (provision for emergency expenses of integration of System).

Amends GS 135-16.1 by removing provisions concerning the enrollment of blind or visually impaired DHHS employees in the Teachers' and State Employees' Retirement System. Deletes outdated provisions. 

Amends GS 128-23 to refer to the levy of property taxes as authorized by GS Chapter 153A, Article 7, instead of under GS 153-65.

Amends GS 115D-25.4 by adding that the administrative costs of the North Carolina Public School Teachers' and Professional Educators' Investment Plan may be charged to members or deducted from members' accounts. 

Amends GS 135-6.1 (applicable to the Retirement System for Teachers and State Employees) and GS 128-33.1 (applicable to the Retirement System for Counties, Cities and Towns) by adding that the Retirement Systems Division of the Department of State Treasurer may disclose to employers and former employers that made a contribution for an employee or former employee to the Retirement System any information that is not public under this statute regarding that employee necessary to conduct the business of the Retirement System. 

Amends GS 135-8(f)(2)f and GS 128-30(g)(2)b to specify that the reports received under the statute are not public records. Also provides that pension-spiking reports are not public records. 

Amends GS 135-48.47 to make a local government's election to participate in the State Health Plan irrevocable. 

Amends GS 147-69.7(b)(1)f to correct a statutory cross reference. 

Corrects a statutory cross-reference in GS 1-359.

Part V. Water/Wastewater Public Enterprise Reform

Makes the following changes to GS Chapter 159G, Water Infrastructure.

Amends GS 159G-20 to define distressed unit and Viable Utility Reserve. Modifies the term local government unit to include a metropolitan water district, a metropolitan sewerage district, and a county water and sewer district. Makes organizational changes and updates GS Chapter 162A Articles and GS Chapter 160A references.

Amends GS 159G-22 to establish the Viability Utility Reserve (Reserve) account within the Water Infrastructure Fund to receive State appropriations. Specifies that credited revenue to the account is neither received from the federal government nor provided as a match for federal funds. Directs the Department of Environmental Quality (DEQ) to establish accounts within the Reserve to administer grants for public water systems or wastewater systems owned by local government units. 

Amends GS 159G-30 to include the administration of grants made from the Reserve, through the Division of Water Infrastructure (Division), in DEQ's responsibilities. Makes clarifying and technical changes.

Amends GS 159G-31 to establish that a local government unit, as now defined, is eligible to apply for a grant from the Reserve.

Amends GS 159G-32 to specify five authorized uses for grants from the Reserve, including rehabilitating existing public water or wastewater infrastructure, decentralizing an existing public water or wastewater system, and funding a study of rates or merger and regionalization options.

Enacts GS 159G-34.5, detailing three types of authorized Reserve grants: (1) an asset assessment and rate study grant, (2) a merger/regionalization feasibility grant, and (3) a project grant. Requires separate accounts in the Reserve for each type of grant. Allows for grants to be awarded to a regional council of government or a regional planning commission if DEQ and the Local Government Commission determine it is in the best interest of the local government unit.

Amends GS 159G-35 to require the Local Government Commission and the State Water Infrastructure Authority (Authority) to jointly develop evaluation criteria to review grant applications and award grants from the Reserve as provided in GS 159G-39, as amended. Makes clarifying changes.

Amends GS 159G-36 to prohibit the amount of a Reserve grant from exceeding the construction costs of a project. Specifies that grant availability is limited to the extent that other funding sources are not reasonably available to the applicant. Caps grants from the Reserve to any single local government unit at $15 million, and at $30 million where two or more governmental units are merging into a single utility.

Expands the application provisions set forth in GS 159G-37 concerning loans and grants from other Reserves under the Chapter to include applications for grants from the Reserve.

Amends GS 159G-39 to require the Local Government Commission to approve the grant award and terms before a grant can be awarded. Authorizes DEQ and the Local Government Commission to impose specific performance measures or conditions on a Reserve grant, in their discretion.

Enacts GS 159G-45 to require the Authority and the Local Government Commission to develop criteria for assessment and review of local government units to identify distressed units, defined as a public water or wastewater system exhibiting signs of failure to identify or address those financial or operating needs necessary to enable that system to become or to remain a local government unit generating sufficient revenues to adequately fund management and operations, personnel, appropriate levels of maintenance, and reinvestment that facilitate the provision of reliable water or wastewater services. Details five components the criteria should address, including whether the public water or wastewater system has an established, operational, and adequately funded program for its repair, maintenance, and management. Requires distressed units to take certain actions, as described, including developing an action plan for short- and long-term infrastructure repair, maintenance and management; continuing education of the governing board and system operating staff; and long-term financial management. Also requires distressed units to conduct an asset assessment and rate study, and participate in a training and educational program. Provides that once the requirements are met, the local government unit is no longer identified as a distressed unit for the remainder of that assessment and review cycle. Requires the assessment and review cycle of local government units to be no less than every two years, with frequency to be established by the Authority and the Local Government Commission.

Enacts Article 10, Dissolution and Merger of Units, to GS Chapter 162A. Defines unit to mean any of the following entities created pursuant to GS Chapter 162A: a water and sewer authority, a metropolitan water district, a metropolitan sewerage district, a metropolitan water and sewerage district, or a county water and sewer district. Details information which must be provided to the Environmental Management Commission (Commission) prior to any action under the Article to merge or dissolve. Requires the Commission to provide a copy of the information submitted to DEQ and the Local Government Commission upon receipt of a request to dissolve or merge. Specifies notice requirements for district boards of affected units and any other governing boards affected upon confirmation of the time and place for a public hearing on dissolution or merger. 

Authorizes a unit to merge with any other unit, county, city, consolidated city-county, sanitary district, or  joint agency, as described, (1)  if the merger is a condition of receiving a grant from the Reserve or (2) upon approval of the Commission, in consultation with DEQ and the Local Government Commission. Provides for the the transfer of assets, liabilities, and obligations by resolution of the Commission, as specified, and details dissolving a unit upon satisfaction of certain criteria. 

Authorizes a unit to be dissolved (1) if the merger is a condition of receiving a grant from the Reserve or (2) in order to merge with another unit, county, city, consolidated city-county, sanitary district, or joint agency, as described, and establish a new entity upon approval of the Commission, in consultation with DEQ and the Local Government Commission. Provides for the transfer of assets, liabilities, and obligations by resolution of the Commission, as specified, and dissolving a unit.

Establishes the effective date for merger or dissolution upon the adoption of a resolution by the Commission to be fixed as of June 30 following the adoption or the second June 30 following the adoption of the resolution. Details the effect of a merger or dissolution upon adoption of a resolution by the Commission and authorizes all governing boards and district boards to take actions and execute the documents necessary to effectuate the described provisions. 

Enacts Article 5, Water and Wastewater Systems, to GS Chapter 160A. Sets forth defined terms. Authorizes interlocal cooperation between local government units for any purpose. Specifies that interlocal cooperation contracts for one or more undertakings under Part 5 are governed by the provisions of Part 1, Joint Exercise of Powers, Article 20, GS Chapter 160A.

Makes all of the above provisions of Part V effective August 1, 2019.

Directs DEQ to study the statutes and rules governing subbasin transfers. Details requirements of the study, including whether the costs of complying with specific statutory requirements are worth the benefits of the requirements. Requires DEQ to submit a report to the Commission by October 1, 2019.

Directs the State Treasurer and Secretary of State to study the feasibility of authorizing historical charts for local government units that have become or may become defunct. Details requirements of the study, including the consequences of such charters. Requires the State Treasurer and the Secretary of State to report to the General Assembly by March 1, 2020.

Makes conforming changes to the act's titles.