Conference report to the 3rd edition removes the content of the previous edition, except where indicated, and replaces it with the following. Changes the act’s long title.

Part I. Appropriations

Section 1.1

Appropriates State funds for each year of the 2025-27 fiscal biennium to all budget codes listed in the Governor’s recommended Based Budget for the 2025-27 fiscal biennium, up to the amounts specified, and as adjusted by the NCGA in this or another act.

Section 1.2

Amends Section 2A.3 of SL 2025-26 by correcting a cross-reference to SL 2025-2.

Section 1.3

Amends the provision previously found in Section 5.10, concerning funding for the Agricultural Disaster Crop Loss Program (Program) to now require that $142 million be transferred from the Stabilization and Inflation Reserve to the Department of Agriculture and Consumer Services (DACS) for 2025-26 for the Program for verifiable losses from an agricultural disaster in 2024; appropriates those transferred funds. No longer provides that these funds that are not expended or encumbered on the date that the Program expires revert to the Savings Reserve.

Section 1.4

Requires that those receiving funds under Section 1.3 [Agricultural Disaster Crop Loss Program (Program)] use best efforts and take reasonable steps to obtain alternative funds that cover the losses or needs for which the State funds are provided, including funds from insurance and available federal aid; for institutions of higher education, alternative funds include private donations. Declares State funds paid under Section 1.3 to be excess over funds received by a recipient from the settlement of a claim for loss or damage covered under the recipient's applicable insurance policy in effect or federal aid. Requires agencies awarding State funds for disaster relief to include a notice to the recipient of these requirements. Requires recipients obtaining alternative funding to remit the funds to the agency from which they were received, which must transfer those funds to the Savings Reserve. These requirements are to be included in any contract entered into by a recipient for receipt of funds under Section 1.3.

Prohibits the Governor from using funds in Section 1.3 to make budget adjustments. Requires the Governor to ensure that funds allocated in Section 1.3 of this Part are expended in a manner that does not adversely affect any person's or entity's eligibility for federal funds that are made available, or anticipated to be made available, as a result of natural disasters. Also requires the Governor, to the extent practicable, to avoid using State funds to cover costs that will be, or likely will be, covered by federal funds.

Requires OSBM to add the appropriations and allocations in Section 1.3 to the reporting requirements Section 4.1(g) of SL 2025-2.

Requires the Governor’s Office to continue reporting requirements in Section 4.2 of SL 2025-2 for funds described in Section 1.3. Requires the State Auditor to include all funds appropriated and allocated under Section 1.3 of this Part in their report to the Joint Legislative Commission on Governmental Operations and include the expenditure of these funds in the public dashboard.

Part II. Transfers, Reductions, Adjustments, and Offsets

Part II-A. Education

Section 2A.1

Includes the provisions previously found in Section 3.13, concerning Education Lottery Fund Allocations and Adjustments to the Appropriations from the Escheat Funds, with the following changes. No longer reduces the funds appropriated for the Longleaf Commitment Community College Grant Program from the General Fund by $125,000 for each year of the 2025-27 biennium. Increases the amount that is appropriated from the Escheat Fund to the Need-Based Scholarship for Public Colleges and Universities program from $96,445,964 to $98,418,512 in recurring funds for each year of the 2025-27 fiscal biennium. Increases the reduction in funds appropriated to the Need-Based Scholarship for Public Colleges and Universities program from $73 million, to $74,972,548 in recurring funds for each year of the 2025-27 fiscal biennium.

Section 2A.2

Allocates funds in the specified amounts for 2025-26 and 2026-27 from the Indian Gaming Education Revenue Fund, to be used for textbooks and digital resources, and classroom material allotment. Reduces the funds appropriated to the Department of Public Instruction (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 2025-26.

Section 2A.3

Allocates funds in the specified amounts for 2025-26 and 2026-27 from the Civil Penalty and Forfeiture Fund, to be used for School Technology Fund, Drivers Education, and State Public School Fund. Reduces the funds appropriated to DPI for the State Public School Fund by $20 million for the 2025-26 fiscal year.

Section 2A.4

Reduces the funds appropriated 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 2A.5

Retains the provisions from previous Section 3.1, which makes adjustments form Community College enrollment growth.

Section 2A.5A

Increases the amount previously appropriated in Section 3.9 from the General Fund to the Community Colleges System Office from $5 million to $10 million for 2025-26 to provide funds to Wilson Community College for operation of the biologics training center.

Section 2A.6

Increases receipts for DPI to the State Public School Fund for 2025-26 by $41,358,016, and for 2026-27 by $5,014,214. Reduces the net Genera Fund appropriates to DPI for each year of the 2025-27 biennium for the State Public School Fund by an amount equal to this increase in receipts. Specifies how those increases are allocated.

Reduces funds appropriated to DPI for 2025-26 by $9,122,184, and for 2026-27 by $9,122,184 and allocates those reductions across Reduced-Price Meal Copays, Small Specialty High Schools, Learn and Earn, Plasma Games, and Beginnings.

Section 2A.7

Retains the provisions from previous Section 3.2 concerning an appropriation to DPI for changes in average salaries, special population headcounts, supplemental funding in low-wealth counties, and other technical adjustments.

Section 2A.8

Amends GS 115C-264 to require local boards of education operating school nutrition programs to provide school meals (including school lunch and, if the local board of education participates in the School Breakfast Program, school breakfast) at no cost to students who qualify for reduced-price meals under the federal National School Lunch Program or School Breakfast Program. Allows DPI, if funds from alternate sources are insufficient to provide school meals at no cost to students who qualify for reduced-price meals, to use funds appropriated to the State Aid for Public Schools Fund for this purpose.

Section 2A.9

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

Section 2A.10

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 2A.10A

Retains the provisions from previous Section 3.6, appropriating funds for the Uniform Education Reporting System.

Section 2A.10B

Amends Section 2A.3 of SL 2025-26 to change the allowable use of the $25 million from interest earned as of June 30, 2025, from the Needs-Based Public School Capital Fund, that was allocated to Yancey County so that it is now to be used for constructing new or upgrading existing school facilities (was, for total rebuilds of destroyed public school infrastructure and buildings damaged by Hurricane Helene and required public school units to have sought insurance coverage and have damage that  is not reimbursable under federal aid). Effective retroactively to June 27, 2025.

Section 2A.11

Reduces the funds appropriated 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 2A.12

Retains the provisions from previous Section 3.4, concerning funds for the NC Promise Tuition Plan.

Section 2A.13

Retains the provisions from previous Section 3.7, concerning UNC Building Reserves.

Part II-B. Health and Human Services

Section 2B.1

Reduces the funds appropriated 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 2B.2

Reduces the funds appropriated 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 2B.3

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 for 2025-26 to DMH/DD/Sus for single-stream funding by an equivalent amount, no less than $41,816,351 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 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 2B.4

Reduces the funds appropriated 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 2B.5

Reduces the funds appropriated 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 2B.6

Reduces the funds appropriated from the General Fund 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.

Section 2B.7

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 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 2B.8

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 for 2025-26 to DHB to support Medicaid by $19,302,000.

Section 2B.9

Reduces funds appropriated 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 2B.10

Amends the provisions previously fund in Section 4.1, appropriating funds for the General Fund to the Department of Health and Human Services, Division of Health Benefits, by reducing the amount from $640 million to $600 million. Also expands upon the allowable uses of these funds to also include contracts needed to operate the State’s Medicaid managed care program.

Section 2B.11

Exempts qualified ambulatory surgical facilities in counties with a population greater than 125,000 that were licensed prior to November 21, 2025, from GS 131E-147.5’s charity care requirements.

Section 2B.12

Retains the provisions from previous Section 4.2, which pertains to gross premium tax offset changes, except for the following change. Sets the effective date of the act’s changes to GS 108A-147.11 (health advancement reconciliation adjustment components) to the first day of the next assessment quarter after the act becomes law and applies to assessments imposed on or after that date.

Section 2B.13

Retains the provisions from previous Section 4.6, accounting for Medicaid receivables as nontax revenue.

Part II-C. Agriculture and Natural and Economic Resources

Section 2C.1

Retains the provisions from previous Section 5.11 but removes CSS Neuse as one of the sites in the Sunday Opening State Historic Site Pilot Program established under the section.

Section 2C.2

Retains the provisions from previous Section 5.8 (economic development project funds), except for the following changes. Removes the appropriation of $133.9 million for 2026-27 to be allocated for acquisitions and improvements at the project site. Instead declares the NCGA’s intent to appropriate that amount in 2026-27. Makes conforming changes to the allocated amounts.

Part II-D. Justice and Public Safety

Section 2D.1

Retains the provisions from previous Section 6.1 (addressing the Private Assigned Counsel-PAC shortfall) except for the following changes. Removes the appropriation of $4.5 million in recurring funds beginning in 2025-26 to the Administrative Office of the Courts, Office of Indigent Defense Services to be used for PAC.

Section 2D.2

Appropriates $421,544 from the General Fund to the Department of Public Safety (DPS), North Carolina National Guard (National Guard) in recurring funds beginning in 2025-26 and $5,266,000 in 2025-26 to support the opening of the McLeansville Readiness Center, scheduled to open in January 2026.

Appropriates $400,000 from the General Fund to the National Guard in 2025-26 to be used for furniture, fixtures, equipment, and other needs to support the opening of the North Wilkesboro Readiness Center.

Part II-E. General Government

Section 2E.2

Retains the provisions from previous Section 7.7, establishing the Division of Accountability, Value, and Efficiency within the Department of the State Auditor.

Section 2E.3

Retains the provisions from previous Section 7.9, pertaining to SBE exemptions and funding, except for the following changes. Reduces the total number of exempt positions (was, exempt positions, policymaking and managerial) from ten to seven under GS 126-5.

Section 2E.4

Retains the provisions from previous Section 7.11, pertaining to litigation funds for the State Board of Elections (SBE).

Section 2E.5

Appropriates $15 million for 2025-26 from the Information Technology Reserve to SBE to complete the State Election Information Management System upgrade and campaign finance software update. Tasks SBE with developing and issuing a request for proposal for the Statewide Elections Information Management System Modernization Project Plan.

Part II-F. Transportation

Section 2F.1

Retains the provisions from previous Section 11.2, pertaining to DMV driver license examiner positions.

Section 2F.2

Appropriates (1) $1,836,223 in recurring funds in 2025-26; (2) $11,471,966 in 2025-26; and (3) $2,754,334 in recurring funds for 2026-27 from the Highway Fund to the Department of Transportation to:

• Establish new DMV offices inf the four listed counties.
• Create 24 full-time equivalent (FTE) positions in 2025-26 and 12 additional FTE positions in 2026-27 fiscal year within the new offices.

Directs DMV to execute contracts that provide for the operation of the new DMV offices by no later than October 1, 2025. Requires DMV to report on the contract terms, including the staffing, capital, and operational needs of the new offices to the specified NCGA committee and division by December 1, 2025.

Part II-G. Miscellaneous Reductions and Adjustments

Section 2G-1

Directs State agencies by October 1 of each year of the 2025-27 biennium to eliminate positions that remain vacant at the end of 2024-25 to achieve the listed General Fund budgeted reduction in the Department of Public Instruction, Department of Environmental Quality, and Department of Information Technology in each of those years. Requires each State agency with vacant position reductions to report to the Fiscal Research Division by December 1 of each year of the 2025-27 biennium on the actions taken to achieve the budgeted reduction for vacant position eliminations for that fiscal year as specified.

Part III. Salary and Benefits

Section 3.1

Retains the provisions from previous Section 9.1, consisting of appropriations to support employee benefits.

Section 3.2

Retains the provisions from previous Section 9.2, transferring the listed funds Insurance Regulatory Fund in the Department of Insurance to the General Fund to support the provisions laid out in Part III.

Section 3.3

Retains the provisions from previous Section 9.3, consisting of authorizations related to compensation of State employees and public school personnel.

Section 3.4

Retains the provisions from previous Section 9.4, consisting of authorization to State agencies to implement salary adjustments during the period of continuing budget authority.

Section 3.5

Retains the provisions from previous Section 9.5, pertaining to use of funds appropriated for employee benefits.

Section 3.6

Retains the provisions from previous Section 9.6, consisting of the specified salary-related contributions.

Part IV. Department of Information Technology

Section 4.1

Expands the entities exempt from the provisions of Article 15 (Department of Information Technology) of GS Chapter 143B under GS 143B-1320 to include the State Highway Patrol (SHP), and the State Board of Elections unless they elect to participate in the information technology programs, services, or contracts offered by the Department of Information Technology (DIT). Designates the Executive Director of the State Board of Elections and the Commander of the SHP as the persons authorized to make the elections.

Amends GS 143B-1320 further, if H 549 becomes law, by making conforming and technical changes.

Amends Section 38.4 of SL 2023-134 by removing the State Highway Patrol and State Bureau of Investigation from those entities that must initiate the pilot project, leaving the Division of Emergency Management as the sole entity that will be deemed under the project as a separate, stand-along entity within DPS in matters related to information technology and will manage its own information technology infrastructure and associated services. Makes additional conforming and technical changes. Changes the expiration of Section 38.4 from June 30, 2025, to June 30, 2027.

Amends GS 143B-1325 by no longer excluding the State Bureau of Investigation from those with DPS that are to transfer information technology personnel, operations, projects, assets, and funding to DIT.

Section 4.2

Retains the provisions from previous Section 8.1, concerning the Broadband Pole Replacement Program, but adds the following. Amends Section 38.10(b) of SL 2021-180, as amended, to also allow a communications service provider paying or incurring the cost of placing facilities underground to better protect the critical infrastructure from natural disasters, in connection with a qualified project to apply for reimbursement in an amount equal to 50% of those costs. Further amends Section 38.10(j) by amending the definition of qualified project to also include those specified activities occurring in an undeserved area. Adds that the project may be affiliated with a cooperatively organized entity owning utility poles but must not be affiliated with a city owing utility poles. Prohibits a pole owner whose affiliate seeks reimbursement from passing through the costs for which reimbursement is sought to unaffiliated communications service providers and requires scheduling and performing all work in a nondiscriminatory way.

Section 4.3

Repeals GS 143B-1373.2 (the GREAT program fixed wireless and satellite broadband grants) and GS 143B-1374 (satellite-based broadband grant program). Instructs the Department of Information Technology (DIT) to use funds appropriated for the Growing Rural Economies with Access to Technology (GREAT) program for fixed wireless and satellite broadband grants, established in GS 143B-1373.2, to award grants to eligible entities to purchase installation materials for satellite internet service and for the provision of satellite internet service for a period of up to one year. Specifies that installation materials and internet service must be for the grantee's own use and not for distribution to other parties. Requires DIT to prioritize grant applicants that operate in one of the 39 counties designated as a disaster area due to Hurricane Helene. Defines eligible entity to include a State agency, local government entity, a volunteer firefighter, or an anchor point (defined).

Authorizes DIT to provide emergency funding to communications service providers to rebuild, repair, or replace broadband infrastructure damaged by Hurricane Helene, including reimbursement of costs already incurred for rebuilding, repairing, or replacing broadband infrastructure so long as three listed criteria are met, including prioritization of restoration of broadband service. Allows DIT to use up to $50 million of the funds available from the Broadband Make Ready Accelerator appropriation in SL 2021-180 for this purpose. Authorizes DIT to use its emergency procurement authority.

Amends Section 38.15 of SL 2021-180, so that DIT’s flexibility to transfer funding between the specified programs commences after the intent of the original appropriation has been satisfied to the extent practicable. Removes requirements that the total allocations for the program remain the same.

Section 4.4

Retains the provisions from previous Section 8.2, concerning the BEAD Deployment changes, but adds the following. Amends Section 10.2(p) of SL 2024-55 by providing that the BEAD Fund (Fund) is established (was, the State Controller must establish a BEAD Reserve) to maintain federal funds received from the IIJA for the BEAD Program. No longer requires the State Controller to transfer funds to the Fund. Allows monies received in the Fund to be used for purposes set out in the section, subject to applicable federal rules and regulations, and appropriates those funds for those purposes.

Section 4.5

Enacts GS 62-30.1, authorizing the Utilities Commission (UC) to, solely upon petition of any provider or reseller of mobile radio communications service, designate the petitioning provider or reseller of mobile radio communications service as an eligible telecommunications carrier for purposes of providing Lifeline service. Permits the UC to adopt rules to effectuate the purposes of this statute. Clarifies that GS 62-30.1 does not confer any regulatory jurisdiction upon the UC over providers or resellers of mobile radio communications service previously designated as eligible telecommunications carriers for purposes of providing Lifeline service prior to the enactment of the statute.

Part V. Capital

Section 5.1

Amends the provisions from previous Section 10.1 by reducing the amount appropriated from the State Capital and Infrastructure Fund to OSBM from $1,750,477,389, to $823,565,897, for 2025-26 and reduces the number of listed projects that are to receive funding from 64 to 34. No longer require that $100 million be used exclusively for repairs and renovations at NC Central University and removes related language.

No longer requires that $11.3 million of the funds allocated for project code R&R21 for 2025-26 be allocated to the Legislative Services Office for renovations and upgrades to the downtown education complex chilled water system.

No longer assigns a project code to the funds allocated to NCSU for the purpose of rehabilitating or replacing Poe Hall in Section 2H.6 of SL 2024-57 and removes the cap on the authorization for the project at $185 million.

No longer transfers $208.5 million from the ARPA Temporary Savings Fund to the State Capital and Infrastructure Fund for 2025-26.

Appropriates $1.6 million for 2025-26 from the State Capital and Infrastructure Fund to OSBM to be allocated to the North Carolina School of Science and Mathematics for temporary housing and caps the project authorization at $1.6 million.

Section 5.2

Amends Section 40.8 of SL 2023-134, as amended, to allow the funds for UNC Health Blue Ridge Hospital that is transferred from the ARPA Temporary Savings Fund in the amount of $1.5 million for each year of the 2023-25 biennium for capital improvements or equipment to also be used to offset expenditures incurred before July 1, 2023, for the purposes for which the funding was intended.

Transfers $8.3 million from the State Capital and Infrastructure Fund to the Highway Fund for capital improvements, equipment, and Sate Highway patrol aviation relocation at Johnston Regional Airport and appropriates those funds.  

Part VI. Miscellaneous

Section 6.1

Retains the applicability statement previously in Section 12.1.

Section 6.2

Retains the severability clause previously in Section 12.2.

Part VII.

Clarifies that the act is now effective retroactively to July 1, 2025.