House committee substitute to the 1st edition makes the following changes. Makes conforming changes to the act’s titles.

Adds the following new content, except where provided.

Part I.

Section 1.1

Appropriates $882,291,773 in recurring funds for 2025-26 from the General Fund for costs associated with Parts III (compensation of public school employees) and IV (salary and benefits increases). Allocates these funds among the listed entities.

Appropriates $27,843,825 in recurring funds for 2025-26 from the Highway Fund to the Department of Transportation for costs associated with implementing this act.

Appropriates departmental receipts for each year of the 2025-27 fiscal biennium up to the amounts needed to implement the legislatively mandated salary increases and employee benefit increases provided in this act.

Part II.

Section 2.1

Allocates funds from the Education Lottery Fund for the 2025-27 biennium for Noninstructional Support Personnel, Pre-kindergarten Program, Public School Building Capital Fund, Needs-Based Public School Capital Fund, Public School Repair & Renovation, Scholarship Reserve Fund for Public Colleges and Universities, Children of Wartime Veterans Scholarships, and School Transportation.

Reduces the funds appropriated pursuant to GS 143C-5-4(b) to the Longleaf Commitment Community College Grant Program from the Escheat Fund for each year of the 2025-27 biennium by $12,375,000 in recurring funds.

Reduces the funds appropriated pursuant to GS 143C-5-4(b) to the Children of Wartime Veterans Scholarship from the Escheat Fund for each year of the 2025-27 biennium by $11,070,964 in recurring funds.

Appropriates $98,418,512 in recurring funds from the Escheat Fund to the Need-Based Scholarship for Public Colleges and Universities program in recurring funds for each year of the 2025-27 biennium.

Reduces the funds appropriated pursuant to GS 143C-5-4(b) to the Need-Based Scholarship for Public Colleges and Universities program by $74,972,548 in recurring funds for each year of the 2025-27 biennium.

Reduces funds appropriated pursuant to GS 143C-5-4(b) to the Department of Public Instruction (DPI) for the State Public School Fund for school transportation by $160,807,612 in recurring funds for 2025-26 and by $164,647,612 in recurring funds for 2026-27.

Allocates $101,040,000 in net revenues from the 2024-25 fiscal year to DPI for school transportation for the 2025-2026 fiscal year. Requires that funds remaining after the allocation be appropriated to the Needs-Based Public School Capital Fund. Effective June 30, 2025.

Reduces the funds appropriated pursuant to GS 143C-5-4(b) to DPI for school transportation by $101,040,000 for the 2025-26 fiscal year.

Effective July 1, 2025.

Section 2.2

Allocates funds for Textbooks and Digital Resources and the Classroom Materials Allotment from the Indian Gaming Education Reserve for 2025-27. Reduces the funds appropriated pursuant to GS 143C-5-4(b) to DPI for the Classroom Materials/Instructional Supplies/Equipment allotment by $2.5 million in recurring funds for each year of the 2025-27 biennium and $12 million in nonrecurring funds for the 2025-26 fiscal year.

Section 2.3

Allocates funds from the Civil Penalty and Forfeiture Fund for 2025-27 to the School Technology Fund, Drivers Education, and the State Public School Fund. Reduces the funds appropriated pursuant to GS 143C-5-4 to DPI for the State Public School Fund by $20 million for 2025-26.

Section 2.4

Reduces the funds appropriated pursuant to GS 143C-5-4 to the Community Colleges System Office for Nursing Faculty Salary Adjustments for each year of the 2025-27 biennium by $1,123,659 in recurring funds.

Section 2.4A

Appropriates the following recurring amounts for each year of the 2025-27 biennium from the General Fund to the Community Colleges System Office: (1) $94,935,267 in total requirements, and (2) $19,936,664 in receipts. Requires the funds to be used for an increase in enrollment at community colleges in the State.

Section 2.5

Increases receipts for DPI to the State Public School Fund for the 2025-26 fiscal year by $41,358,016 and for the 2026-27 fiscal year by $5,014,214. Reduces the net General Fund appropriation to DPI for each year of the 2025-27 fiscal biennium for the State Public School Fund by an amount equal to these receipt increases. Breaks down the increases, reflecting the transfer of sales and use tax proceeds and a transfer of funds from the State Textbook Fund.

Reduces the funds appropriated pursuant to GS 143C-5-4(b) to DPI for the 2025-26 fiscal year by $11,347,184 and for the 2026-27 fiscal year by $11,347,184, and allocates specific reductions to the following programs: reduced-price meal copays, NC Association of School Business Officers, small specialty high schools, learn and earn, Plasma Games, and Beginning for Parent of Children Who are Deaf or Hard of Hearing, Inc.

Section 2.5A

Appropriates $104,248,624 in recurring funds for each year of the 2025-27 biennium from the General Fund to DPI for changes in average salaries, special population headcounts, and other technical adjustments.

Section 2.6

Amends GS 115C-264 to require local boards of education operating school nutrition programs to provide school meals for free to students qualifying for reduced-price meals under the national School Lunch Program or School Breakfast Program. Allows DPI to use funds appropriated to the State Aid for Public Schools Fund if funds form alternate sources are insufficient to provide the free meals. Defines school meal as lunch, and if the local board participates in the School Breakfast Program, breakfast.

Repeals Section 7.58 of SL 2023-134 which required for reduced-price school meal copays to be used to provide school breakfasts and lunches at no cost to students of all grade levels that qualify for reduced-price meals under the National School Lunch Program in the current school year.

Section 2.7

Repeals Section 7.69 of SL 2023-134, as amended, which established the Plasma Games Grant Program.

Section 2.8

Repeals Section 7.28(b) of SL 2023-134, which required Beginnings for Parents of Children Who are Deaf or Hard of Hearing, Inc., to report on specified information to the Joint Legislative Education Oversight Committee.

Section 2.9

Reduces the funds appropriated pursuant to GS 143C-5-4 to the UNC Board of Governors for 2025-26 by $3,625,000 and for 2026-27 by $3,625,000, with the reductions allocated as cuts to the Longleaf Commitment Community College Grant Program and Graduate Tuition Waiver.

Section 2.10

Reduces the funds appropriated pursuant to GS 1143C-5-4 for the 2025-27 biennium to the Department of Health and Human Services (DHHS), Division of Central Management and Support, for the North Carolina Loan Repayment Program by $2 million in recurring funds for each year of the biennium.

Section 2.11

Reduces the funds appropriated pursuant to GS 143C-5-4 for each year of the 2025-27 biennium to the DHHS, Division of Child Development and Early Education, for the Child Care Subsidy program by $8 million in recurring funds, to be offset by the TANF block grant for each year of the 2025-27 biennium currently budgeted for Work First Family Assistance.

Section 2.12

Repeals Section 12F.3 of SL 2016-94, which established the Mental Health and Substance Use Task Force Reserve Fund (Reserve Fund).

Requires the DHHS, Division of Mental Health, Developmental Disabilities, and Substance Use Services (DMH/DD/SUS) to transfer the Reserve Fund’s unrestricted fund balance, less obligations for services provided in 2024-25, to the DMH/DD/SUS General Fund. Reduces the funds appropriated under GS 143C-5-4 for 2025-26 to DMH/DD/Sus for single-stream funding by an equivalent amount in nonrecurring funds. Requires funds remaining in the Reserve Fund for obligations for services provided in 2024-25 to be transferred to the DMH/DD/SUS General Fund and specifies that they do not revert.

Reduces funds appropriated under GS 143C-5-4 for each year of the 2025-27 biennium to DMH/DD/SUS for the Reserve Fund by $10 million in recurring funds.

Reduces departmental receipts appropriated from the Reserve Fund to DMH/DD/SUS to provide funding for the non-federal share of the Projects for Assistance in Transitions from Homelessness (PATH) by $460,000 in recurring funds for each year of the 2025-27 fiscal biennium.

Appropriates $460,000 from the General Fund to DMH/DD/SUS in recurring funds for each year of the 2025-27 fiscal biennium to offset the reduction in departmental receipts for funding the non-federal share of the PATH grant.

Reduces departmental receipts appropriated from the Reserve Fund to the DHHS, Division of Child and Family Well-Being, for Child Case Management by $4,875,000 in recurring funds for each year of the 2025-27 fiscal biennium.

Appropriates $3,447,205 from the General Fund to the DHHS, Division of Child and Family Well-Being, in recurring funds for each year of the 2025-27 fiscal biennium to partially offset the reduction in departmental receipts for Child Case Management.

Section 2.13

Reduces the funds appropriated pursuant to GS 143C-5-4(b) for each year of the 2025-27 fiscal biennium to DMH/DD/SUS for inpatient psychiatric treatment at local community hospitals (three-way bed contracts) by $15,675,205 in recurring funds.

Section 2.14

Reduces the funds appropriated pursuant to GS 143C-5-4(b) for each year of the 2025-27 fiscal biennium to DMH/DD/SUS, for single-stream funding by $18,562,645 in recurring funds.

Requires, each year of the 2025-27 fiscal biennium, that each LME/MCO offer at least the same level of service utilization as during the 2024-25 fiscal year across its catchment area.

Section 2.15

Reduces the funds appropriated from the General Fund pursuant to GS 143C-5-4(b) for the 2025-27 fiscal biennium to the DHHS, Division of Social Services, for the State-County Special Assistance Program (SA Program) by $8,647,002 for the 2025-26 fiscal year and by $2,250,000 for the 2026-27 fiscal year.

Reduces departmental receipts budgeted by the DHHS, Division of Social Services, for the SA Program by $750,000 for the 2025-26 fiscal year and by $2,250,000 for the 2026-27 fiscal year.

Appropriates departmental receipts of $2,897,002 in recurring funds for the 2025-26 fiscal year and $10,794,004 in recurring funds for the 2026-27 fiscal year, to be used for the SA Program.

Section 2.16

Transfers from the Talc Settlement funds (funds received by the State in the specified case and relating to claims regarding deceptive marketing about the safety and purity of products containing talcum powder) to the DHHS, Division of Public Health, $7,000,905 for 2025-26 and $13,475-394 for 2026-27; appropriates those funds for the fiscal year in which they are transferred.

Reduces funds appropriated pursuant to GS 143C-5-4(b) for the 2025-27 fiscal biennium to the DHHS, Division of Public Health by $7,000,905 for 2025-26 and $13,475,394 for 2026-27; requires the reductions to be offset with the Talc Settlement funds.

Section 2.19

Requires the DHHS, Division of Health Benefits (DHB) to transfer $19,302,000 for 2025-26 from the Health Advancement Receipts Special Fund to the DHB General Fund.

Reduces the funds appropriated pursuant to GS 143C-5-4 for 2025-26 to DHB to support Medicaid by $19,302,000.

Section 2.20

Reduces funds appropriated pursuant to GS 143C-5-4(b) for 2025-26 fiscal year to the DHHS, Division of Social Services, for the operations and maintenance of a new County Administration Reimbursement System (CARS) by $1,578,905 for the 2025-26 fiscal year.

Section 2.21

Reduces funds appropriated pursuant to GS 143C-5-4 for 2025-26 to the Department of Public Safety for the Medically Assisted treatment in jails program by $2 million in recurring funds.

Section 2.22

Transfers $2,168,020 in recurring funds from the Insurance Regulatory Fund to the General Fund for 2025-26, effective July 1, 2025.

Section 2.23

Require by October 1st of each year of the 2025-27 biennium for the following agencies with vacancies to eliminate those positions that remain vacant at the end of the 2024-25 fiscal year, in order to meet the specified budgeted reductions: DPI, UNC, Department of Environmental Quality, and Department of Information Technology. Requires state agencies with vacant position reductions to report to the Fiscal Research Division annually for each year of the 2025-27 biennium on actions taken to achieve the budgeted reductions; specifies what is to be included in the report.

Part III.

Section 3.1 (was, Section 1)

Reduces the salary range of the monthly teacher salary schedule for "A" teachers for 2025-26 for licensed public school personnel classified as teachers, based on years of experience, so that it now ranges from $4,800 (was, $5,000) for teachers with 0 years of experience to $5,711 (was, $6,823) for 25 or more years of experience. Makes clarifying change. Removes appropriation of $1.597 billion in recurring funds for 2025-26 from the General Fund to the Department of Public Instruction (DPI) to increase salaries for teachers and support personnel.

Section 3.2 (was, Section 2)

Removes appropriation of $8 million in recurring funds for 2025-26 from the General Fund to DPI to reinstate education-based salary supplements for teachers and instructional support personnel.

Removes directive to NC Collaboratory to study and report to the specified NCGA committee on the feasibility and advisability of implementing a system of allotting funds to local school administrative units for the compensation of teachers, instructional support personnel, and assistant principals based on the average daily membership of the unit instead of guaranteed positions.

Adds the following new content.

Section 3.3

Directs the State Board of Education (SBE) to establish a consolidated teacher bonus program for 2025-26 and directs the Department of Public Instruction (DPI) to administer bonus pay to qualifying teachers whose salaries are supported from State funds in January of 2026, based on data from the 2024-25 school year. Sets forth defined terms. Defines qualifying teacher based on whether the teacher remains in the qualifying public school unit (or a Virtual Public School program) or retired after the last school day of the relevant school year. Defines qualifying public school unit to include local school administrative units, charter schools, regional schools, and elementary or secondary schools operated by UNC.

Grants $50 to qualifying advanced course teachers, as defined, for each student taught in each advanced course who meet or exceeds specified scores on College Board Advanced Placement Exams, International Baccalaureate course exams, or Cambridge AICE program exams. 

Directs the Department of Commerce (Department) to consult with SBE to assign a value ranking of either $25 or $50 for each industry certification and credential based equally on academic rigor and employment value. Describes required elements of both academic rigor and employment value. Grants qualifying career and technical education teachers, as defined, a $25 or $50 bonus for each student taught by a teacher who provided instruction in a course that led to the attainment of the industry certification or credential as ranked by the Department.

Allocates specified sums for bonuses to eligible growth teachers based on employment status, EVAAS (Education Value-Added Assessment System) student growth index score percentage rank for third grade reading, divided as specified. Grants $2,000 bonuses to qualifying teachers (1) meeting the threshold EVAAS student growth index score for fourth or fifth grade reading, or fourth through eighth grade math, at qualifying public school units or local school administrative units; or (2) when employed at a local school administrative unit that employed three or fewer total teachers in that teacher's grade level, with EVAAS student growth scores that exceeded expected growth in third grade reading, fourth or fifth grade reading, or fourth through eighth grade math. Sets limitations on the quantity and amount awarded for qualifying teachers eligible to receive grants under multiple provisions of the act. Specifies that bonuses awarded are not compensation for retirement purposes.

Directs SBE to study the effect of the program on teacher performance and retention. Requires SBE to report its findings to the specified NCGA leadership, committee, and division by March 15, 2026. Details required content of the report.

Section 3.4

Instructs SBE to allocate funds to eligible local school administrative units for 2025-26 to provide salary supplements to teachers and qualifying school administrators in those units as described. Defines seventeen terms, including eligible county (a county that has an adjusted market value of taxable real property of less than $63 billion). Provides a process with formulae for allocation of the funds for salary supplements to eligible local school administrative units in eligible counties. Caps salary supplements at $5,000 per State-funded teacher. Clarifies that the appropriated funds are subject to the allocation of funds for charter schools described in GS 115C-218.105 and encourages use of funds for salary supplements. Clarifies that the formula set forth in the act is solely a basis for distribution of supplemental funding to eligible local school administrative units, with no other purpose. Prevents local school administrative units from using funds received under the act to supplant (defined) non-State funds provided for salary supplements for teachers and qualifying school administrators. Prevents SBE from allocating any funds under this section to a local school administrative unit if it determines that the unit has supplanted non-State funds in violation of the act.

Requires SBE to submit a report on the described matters for the applicable fiscal year to the named NCGA committee and the Fiscal Research Division by April 15, 2026.

Section 3.5

Sets an annual principal salary schedule, applicable to 2025-26 beginning July 1, 2025. Sets out the schedule based on average daily membership (ADM) with amounts increasing from the base amount to those for meeting and then for exceeding growth; sets out provisions for determining which category to use. Amounts range from $79,737 for an ADM of 0-200 base salary to $119,604 for an ADM of 1,601 or more that exceeds growth. Sets out provisions governing placement on the salary scale. Provides processes for determining ADM and school growth scores. Starting in 2017-18, in lieu of providing annual longevity payments to principals paid on the principal salary schedule, the amounts of those longevity payments are included in the annual amounts under the principal salary schedule. Details how compensation should be determined under the section.

Section 3.6

Directs DPI to administer a bonus in 2025-26 to any principal who supervised a school as a principal for a majority of the previous school year if that school was in the top 50% of school growth during the previous school year as calculated by SBE. Bonus amounts range from $15,000 for principals with schools in the top 5% to 1,000 for principals with schools in the top 50%. Limits bonuses to no more than one per this subsection of the act. Clarifies that bonuses are in addition to any wages or other bonuses, and are not compensation under the Retirement System for Teachers and State Employees (TSERS).  Directs the bonuses to be paid no later than October 31, 2025, to qualifying principals employed as of October 1, 2025.

Section 3.7

Sets a monthly salary schedule for assistant principals (AP’s) for 2025-26, beginning July 1, 2025, based on the salary schedule for teachers who are classified as "A" teachers plus 19%.  Specifies that an AP should be placed on the step on the salary schedule that reflects the total number of years of experience as a certified employee of the public schools Designates a an administrator with a one-year provisional AP certificate as equivalent to an AP. Provides for salary supplements ranging from $126 per month for AP’s with academic preparation at the six-year degree level to $253 per month for those with a doctoral degree. Provides for stipends for participants in an approved full-time master’s program. Sets the stipends at the beginning salary of an AP or, for a teacher who becomes an intern, at least as much as that person would earn as a teacher on the teacher salary schedule. Starting in 2017-18, in lieu of providing annual longevity payments to AP’s paid on the AP salary schedule, the amounts of those longevity payments are included in the annual amounts under the AP salary schedule. Details how compensation should be determined under the section.

Section 3.8

Beginning July 1, 2025, increases the annual salary for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers whose salaries are supported from State funds by 2.5% for 2025-26. Sets monthly salary maximums for all of the listed administrators except for superintendents for the 2025-2026 fiscal year ranging from $7,762 for those designated School Administrator I to $10,373 for those designated School Administrator VII. Directs local boards of education to determine the appropriate category and placement. Sets monthly salary maximums for superintendents for the 2025-2026 fiscal year ranging from $10,995 for those designated Superintendent I to $13,880 for those designated Superintendent V. Provides for longevity pay as determined under the NC Human Resources Act. Provides for salary supplements ranging from $126 per month for those with academic preparation at the six-year degree level to $253 per month for those with a doctoral degree. Prevents SBE from permitting local school administrative units to transfer State funds from other funding categories for salaries for public school central office administrators.

Section 3.9

Beginning July 1, 2025, increases the annual salary for noncertified public school employees whose salaries are supported from State funds for 2025-26 by either: 2.5% or an equitable amount based on the 2.5% increase for the specified categories of employees (permanent, FTE employees on a contract of 12 months or less, permanent, part-time employees, and temporary and permanent hourly employees).

Part IV.

Section 4.3

Allows state employees subject to statutory salary schedules to move up and receive automatic step increases during the period of continuing budget authority beginning July 1, 2025. Authorizes state employees to receive automatic step increases, annual, performance, merit, bonuses, and other applicable increments during the same.

Section 4.4

Sets three criteria that if met authorizes State agencies to implement salary adjustments during the period of continuing budget authority that begins July 1, 2025, within its authorized personal services appropriations.

Section 4.5

Provides for a legislative salary increase of 2.5% and any other authorized or directed salary adjustment, effective July 1, 2025, for persons whose salary are set under Part IV and who are employed in a State-funded position on June 30, 2025. Lists nine categories of employees excluded. Provides for prorated raises for part-time employees. Specifies that the increase applies regardless of the maximum salary range prescribed by the State Human Resources Commission.

Section 4.5A

Establishes five requirements that must be met for agencies to award salary adjustments to identified employees from appropriated Labor Market Adjustment Salary Reserve funds, including capping any increase at the greater of $15,000 or 15%. Authorizes the Director of Budget to adjust agencies’ budgeted receipts as specified, subject to availability. Deems necessary agency receipts to implement the section appropriated. Directs the Office of State Human Resources (OSHR) to compile a single report detailing fund distribution to agencies as well as developing a uniform reporting mechanism for agencies displaying salary increases made for each position classification, the average increase in each, and the market-based justification for the increase. Directs agencies receiving Labor Market Adjustment Salary Reserve appropriations to report to OSHR by December 15, 2025. Directs OSHR to report to the Fiscal Research Division by January 15, 2026 on agency responses.

Section 4.5B

States legislative findings. Reduces the net General Fund appropriations for 2025-26 by $162,634,593 in recurring funds that support vacant positions across State agencies, departments, and institutions being eliminated. Specifies that the reduction represents a 20% reduction of vacant State-funded position as of April 1, 2025, and directs allocation by the Office of State Budget and Management to the same budget code for Labor Market Adjustment Reserve salary adjustments and additional adjustments to salary schedules. Excludes State-funded local community college, local public school units, and General Assembly employees. Specifically directs that $575,228 of the funds allocated to the Administrative Office of the Courts (AOC) for 2025-26 go to Magistrate salary schedule increases set forth in the act.

Section 4.6

Effective July 1, 2025, provides for increases to the annual salaries of the Governor ($208,150) and Councils of State ($172,594) set forth in GS 147-11.

Section 4.7

Effective July 1, 2025, establishes a salary schedule for the annual salaries of listed executive branch officials ranging from $140, 590 to $201,022.

Section 4.8

Effective July 1, 2025, establishes a salary schedule for the annual salaries of listed judicial branch officials, ranging from $172, 779 to $208,150. Establishes a cap of $104,439 for the average annual salaries of assistant district attorneys and public defenders, with no salary below $56,054, effective July 1, 2025.

Section 4.9

Effective July 1, 2025, increases the salary schedule for clerks of superior court set forth in GS 7A-101, with a range of $115,190 to $154,597 based on the number of assistants and deputies.

Section 4.10

Effective July 1, 2025, increases the salary ranges for assistant clerks, head bookkeepers, and deputy clerks set forth in GS 7A-102, ranging from $37,441 to $77,111.

Section 4.11

Effective July 1, 2025, increases the salary schedule for magistrates set forth in GS 7A-171.1, ranging from $48,881 to $78,055.

Section 4.12

Effective July 1, 2025, increases the annual salary of the Legislative Services Officer and nonelected NCGA employees by 2.5%. Specifies that the provision has no effect on the provisions of GS 120-32.

Section 4.12A

Effective July 1, 2025, increases the annual salary of NCGA principal clerks set forth in GS 120-37 to $137,284. Makes technical change.

Section 4.13

Effective July 1, 2025, increases the weekly salary of NCGA sergeants at arms and reading clerks set forth in GS 120-37 to $541.

Section 4.14

Effective July 1, 2025, provides for a 2.5% legislative increase for community college faculty and non-faculty personnel. Establishes a minimum salary schedule faculty based on educational level, ranging from $44,198 to $53,255. Provides requirements for the calculation of full-time and part-time faculty members.

Section 4.15

Effective July 1, 2025, provides UNC SHRA employees and EHRA employees, and teachers employed by the School of Science and Math a 2.5% salary increase.

Section 4.16

Effective July 1, 2025, establishes a 2025-27 salary schedule for correctional officers in the Department of Adult Correction and employees of the Department of Public Safety, Division of Juvenile Justice and Delinquency Prevention based on described work experience, ranging from $40,281 to $57,901. Provides for an increase whereby the increase exceeds the scheduled salary level.

Section 4.17

Effective July 1, 2025, establishes a 2025-27 salary schedule for law enforcement officers of the State Highway Patrol based on described work experience, ranging from $57,602 to $84,048. Provides for an increase whereby the increase exceeds the scheduled salary level.

Section 4.18

Effective July 1, 2025, establishes a 2025-27 salary schedule for law enforcement officers of the State Bureau of Investigation and Alcohol Law Enforcement based on described work experience, ranging from $55,878 to $81,537. Provides for an increase whereby the increase exceeds the scheduled salary level.

Section 4.19

Effective July 1, 2025, establishes a 2025-27 salary schedule for probation and parole officers, as well as juvenile court counselors, based on described work experience, ranging from $48,633 to $70,964. Provides for an increase whereby the increase exceeds the scheduled salary level.

Section 4.20

Effective July 1, 2025, directs payment of employees of schools operated by the Department of Health and Human Services, the Department of Public Safety, the Department of Adult Correction, the Governor Morehead School for the Blind, the Eastern North Carolina School for the Deaf, the North Carolina School for the Deaf, and the State Board of Education who are paid based on the Teacher Salary Schedule as authorized by the act.

Section 4.21

Effective July 1, 2025, increases annual salaries as provided by the act of persons not otherwise expressly provided for, according to salaries in effect on June 30, 2025, for permanent full-time State officials and persons whose salaries are set pursuant to the State Human Resources Act; permanent full-time State officials and persons in positions exempt from the State Human Resources Act; permanent part-time State employees; and temporary and permanent hourly State employees.

Section 4.22

Requires payment of legislative salary increases effective on July 1, 2025. Excludes persons separated from service prior to June 30, 2025. Grants the Director of Budget flexibility to administer the increased compensation provided by the act and allows the Director to deem enacted employer contribution rates for retirement and related benefits effective July 1 for administrative purposes and as described. Applies to all employees paid by State funds, regardless of application of the Human Resources Act.

Section 4.23

Deems the Office of State Budget and Management responsible for ensuring the appropriations for legislative salary increases and employee benefits are used for those exclusive purposes. Authorizes the Director of Budget to reallocate appropriated funds in excess of amounts required by agencies for the specified purposes to other agencies that received insufficient funds for the same purposes. Prohibits using appropriated funds to adjust the budgeted salaries of vacant positions, to provide salary increases beyond those legislatively required, or to increase the budgeted salary of filled positions to the minimum of the position’s respective salary range. Requires crediting excess funds appropriated for the legislatively mandated salary increases and employee benefit increases to the Pay Plan Reserve. Directs OSBM to report to the Fiscal Research Division by May 1, 2026. Details required content of the report.

Section 4.24

Effective July 1, 2025, provides a cost-of-living retirement supplement payment payable to, or on account of, beneficiaries whose retirement commenced on or before September 1, 2025, in the amount of 1% of the allowance payable on September 1, 2025, under the Teachers and State Employees’ Retirement System (TSERS-GS 135-5), the Consolidated Judicial Retirement Act (JRA-GS 135-65), and the Legislative Retirement System (LRS-120-4.22A). Does not provide for a prorated amount and requires payment between September 1, 2025, and October 31, 2025. Effective July 1, 2025.

Appropriates $41,038,783 from the General Fund to the Retiree Supplement Reserve in OSBM in nonrecurring funds for 2025-26 to fund the cost-of-living adjustments described.

Part V.

Section 5.1

Provides that the act preempts GS 143C-5-4 (procedures for when the Current Operations and Appropriations Act does not become law prior to the end of certain fiscal years). Deems the act effective until the Current Operations and Appropriations Act for the fiscal year becomes law, at which time that act will govern appropriations and expenditures and the Director of Budget can adjust allotments to give effect to that act from July 1 of the fiscal year.

Section 5.2

Establishes July 1, 2025, as the effective date of the act, unless otherwise provided.