Senate committee substitute deletes the content of the 5th edition and replaces it with the following.

Part I.

Enacts Article 29E, Interscholastic Athletic Activities, to GS Chapter 115C as follows. Directs the State Board of Education (State Board) to adopt rules governing interscholastic athletic activities conducted by public school units pursuant to the Article's provisions. Authorizes the State Board to enter into a memorandum of understanding (MOU) for a term of up to four years with one or more nonprofit organizations to administer and enforce the requirements of the Article and the rules adopted by the State Board for interscholastic athletic activities at the high school level. Alternatively, requires the State Board to assign the administration of high school interscholastic athletic activities to the Department of Public Instruction (DPI) and establish administrative fees. Upon assignment to DPI due to a termination of an MOU during any school year or following July 1 of any school year due to the inability of the state Board to finalize negotiations for an MOU, authorizes the State Board to establish fees for that school year through emergency rulemaking. Directs the DPI to administer State Board rules adopted for interscholastic athletic activities at the middle school level.

Requires the State Board to adopt student participation rules to be consistent with provisions of the Article relating to concussions and head injuries and emergency actions plans, including six components, such as academic standards, enrollment requirements, medical eligibility requirements, and recruiting limitations. Directs the State Board to either adopt gameplay rules or provide the responsibility for adoption of such rules to an administering organization through the MOU. Enumerates eight required components of gameplay rules, including (1) classification of all participating schools into one of four athletic divisions based solely on daily average membership, with specified parameters for charter or nonpublic schools; (2) classification of all participating schools into conferences based solely on geography, division classification, and average daily membership; (3) game rules and administration; and (4) season and conference schedules and requirements, as described. Directs the State Board to either adopt penalty rules or provide responsibility to adopt such rules to an administering organization through an MOU, specifically establishing a system of demerits for infractions of student participation rules and gameplay rules that may result in certain described actions, absent monetary penalties. Mandates the State Board to require an appeals process in the enforcement of student participation, gameplay, and penalty rules, including an independent appeals board appointed by the State Board. Allows for the appeals process to be coordinated by an administrating organization subject to the terms of an MOU. Also requires the State Board to establish a mechanism for participating schools to report intimidation or harassment of the participating school or its employees or students by an administering organization. 

Provides provisions that mandate public school unit compliance with State Board rules as administered by DPI or an administering organization, as appropriate. Specifically bars public school units from being regulated by any other entities for regular and postseason interscholastic athletics. Requires public school units to obtain catastrophic insurance for interscholastic activities as provided in new Part 2, Article 31A, GS Chapter 58, as enacted by the act. 

Provides for the following, some of which is substantively transferred from GS 115C-12(23), which empowers the State Board to adopt rules governing interscholastic athletic activities by local boards. Details requirements for rules concerning concussions and head injuries that must be adopted by the State Board for middle and high schools, including requiring (1) annually providing all coaches, school nurses, athletic directors, first responders, volunteers, and students who participate in interscholastic athletic activities and their parents with an information sheet on concussions and head injuries, as defined, which students and parents must sign and return prior to participation and (2) requiring removal and barring return for the day of a student participating in an interscholastic athletic activity when exhibiting signs or symptoms consistent with concussion until the student is evaluated and cleared for participation by one of five licensed health professionals. Requires schools to maintain records of compliance with the requirements concerning concussions and head injuries. Requires the State Board to adopt a rule that requires middle and high schools to develop a venue-specific emergency action plan to deal with serious injuries and acute medical conditions in which the patient may deteriorate rapidly. Specifies required form and content, including approval by the school principal and annual review and rehearsal. 

Details 13 requirements of an MOU entered under the Article, including requiring the administering organization to (1) make publicly available at no cost on the organization's website the organization's handbook for participating schools, all student participation rules, all gameplay rules, and information on the appeals process; (2) agreeing to adopt requirements for membership of the nonprofit board that require equal representation on the board from each educational district; (3) adopting an ethics policy that requires board members to avoid conflicts of interests and the appearance of impropriety; (4) agreeing to adopt procedures for its operations that are comparable to state open meetings and public records laws, subject to the confidentiality of personnel records; (5) entering into contracts with participating schools as to the monetary requirements for participation, with authority to vary annual fees based on the division to which the school is assigned; (6) agreeing to reduce annual fees to participating schools by at least 20% when the total fund balance for the administering organization is 250% of the organization's total expenses from the prior fiscal year, with authority to increase annual fees when the total fund balance is 150% of the organization's total expenses from the prior fiscal year; (7) agreeing to retain no more than 33% of the net proceeds of any State tournament game; (8) agreeing to an annual audit by the State Auditor; (9) agreeing not to engage in nine specified activities, including providing grants to schools regulated by the administering organization; and (10) annually reporting specified information to the State Board. 

Authorizes the State Board to terminate any MOU for noncompliance with the Article or terms of the MOU, whereby the organization must return a pro rata share of the funds paid by that school for the year pursuant to the participating school's contract with the organization. Authorizes the State Auditor to conduct audits of any administering organization in the same manner as State agencies as specified in GS Chapter 147. 

Mandates each public school unit with one or more participating schools to annually report the specified categories of information for the three school years completed prior to July 15 to the State Board regarding amounts spent on and received from interscholastic athletic activities. Directs the State Board to provide a summary of the reports by public school units and a copy of each public school unit report to the specified NCGA committee no later than October 15 annually. Requires all public school units to submit the first annual interscholastic athletic report to the State Board by July 15, 2023, and include data from the 2018-19, 2019-20, 2020-21, 2021-22, and 2022-23 school years. 

Makes the above provisions effective October 15, 2021. 

Requires the State Board to review and adopt new or revised emergency rules on interscholastic athletics in accordance with the new Article by October 15, 2021, for use in the 2021-22 school year, with emergency rules effective until June 30, 2022. Bars the State Board from requiring, for the 2021-22 school year, students to meet any academic requirements for participation, and requires the provision of hardship waivers for age eligibility requirements due to the impacts of COVID-19 during the 2020-21 school year. Provides that no findings of need are required for an emergency rule adopted for the 2021-22 school year and clarifies that the State Board is not required to adopt temporary rules to replace an emergency rule for use in the 2021-22 school year. Directs the State Board to submit all emergency rules pursuant to the North Carolina Administrative Code. Directs the State Board to adopt new or revised permanent rules for use in the 2022-23 and following school years. 

Requires an MOU entered into during the 2021-22 school year by the State Board with an administering organization to terminate by June 30, 2023. Specifically bars the State Board from authorizing any nonprofit organization to apply and enforce the State Board's rules for participation in interscholastic activities during the 2021-22 school year or thereafter except by an MOU entered compliant with the act. Adds that if the State Board enters into an MOU with the North Carolina High School Athletic Association (NCHSAA) for the 2021-22 school year, requires the NCHSAA to waive collection of all fees for participating schools for that school year, except post-season conference game fees, in recognition of decreased access to sports for participating schools in the 2020-21 school year due to COVID-19.

Directs the State Board to study (1) whether an administering organization should be responsible for overseeing the conduct of middle school interscholastic athletics for public school units and (2) factors that should be considered in home school and cooperative high school students' participation in interscholastic athletics as well as nonpublic schools. Specifies required considerations and workgroups for study input. Directs the State Board to report to the specified NCGA committee by April 1, 2022. 

Part II.

Makes conforming changes to the following statutes to provide for the enactment of new Article 29E to GS Chapter 115C, and repeal redundant language substantively transferred to or replaced by the new Article: GS 115C-12(23) (regarding the State Board's power to adopt eligibility rules for interscholastic athletic competition, now applicable to public school units rather than local boards); GS 115C-47(4) (regarding local boards' power to regulate extracurricular activities); and GS 115C-366(f) (regarding student transfers between local school administrative units).

Enacts new GS 116-235(b)(4) to require the NC School of Science and Math to conduct any program of interscholastic athletics it elects to provide in accordance with rules adopted by the State Board pursuant to new Article 29E, GS Chapter 115C. 

Repeals GS 143-291(c), which deems the NCHSAA a State agency for purposes of Article 31, governing liability in tort claims against State departments and agencies. 

Makes the above provisions effective October 15, 2021. 

Part III.

Makes organizational changes to Article 31A of GS Chapter 58, placing existing language relating to State insurance of public education property into new Part 1. Enacts new provisions, organized as Part 2 of the Article, which charges the Commissioner of Insurance (Commissioner) with offering catastrophic insurance coverage for covered persons to participating schools for covered activities, defined as interscholastic athletic activities that are authorized, sanctioned, or scheduled by a participating school or by an administering organization. Defines covered persons to mean students or school personnel participating in or responsible for supervising covered activities. Requires participating schools to pay premiums for catastrophic insurance for covered activities at rates fixed by the Commissioner. Authorizes the Commissioner to purchase necessary insurance from insurers admitted in the State.