NC Senate Republicans unveiled and approved their 2025–27 biennium budget proposal this week, which would allow planned tax cuts to roll forward, provide modest pay increases for school personnel and state employees, include more funds for hurricane recovery needs, and make targeted reductions that include a $5.5 million cut to school district Central Office funding. The Senate proposal now crosses to the House, which will roll out its own budget proposal in the coming weeks ahead of negotiations with the Senate on the final state spending plan.

The Senate proposes spending $32.6 billion in 2025-26, which would increase to $33.3 billion the second year, with $18.6 billion in 2025-26 and $18.9 billion in 2026-27 for education. In the $15,043,864,593 proposed budget for public schools in 2025-26, $2,979,142,635 would come from receipts including those from the Education Lottery, and the $12,064,721,958 remainder would come from the state’s General Fund. The K-12 total would increase to $15,140,028,934 in 2026-27.

Senate Budget Documents:

•  Senate Budget Bill Text (S257, 3rd Edition)
•  Senate Budget Committee “Money” Report

Some top highlights of the budget include:

• Funding to replenish the Rainy Day Fund to $4.75 billion, putting it back to what it was prior to Hurricane Helene.
• Setting aside $700 million for Hurricane Helene Recovery needs, plus $633 million in temporary and permanent repurposing of funds within the Department of Transportation to support recovery.
• Providing an across-the-board 1.25% pay increase in the first year of the biennium for most state employees and school personnel, plus a $3,000 bonus over the biennium.

 
Employee Raises — all salary-related appropriations are recurring and would be effective July 1, 2025, unless otherwise noted.

• Teachers and Instructional Support Personnel — Provides an average 2.3% pay increase in FY 2025–26 and an average increase of 3.3% over the biennium, plus a $1,500 bonus each year.
  • Establishes the monthly schedule for 2025-26 and sets $4,151 as beginning teacher pay and $5,665 as top of pay scale for those with 25+ years of service; also retains all current supplements for eligible employees and salary requirements for psychologists and others tied to the scale.
  • Increases average teacher pay to $62,407.
  • Provides an additional recurring appropriation of $30 million for the state-funded teacher supplement to revise that total funding to $230 million, with a maximum supplement of $5,000.
  • Provides $16.2 million in the first year and $20.1 million in the second year for salary supplements of up to $10,000 for certain teachers in districts participating in the Advanced Teaching Roles Program, and that program would be expanded by $1 million recurring to make $6.5 million available in grants each year.
  • Increases the state match to $2 in state funds for each $1 in local funds provided for the  teacher signing bonus program to strengthen local teacher recruitment efforts.
  • Consolidates all previous teacher bonus programs into one including AP/IB/Cambridge AICE, Industry Certifications and Credentials, Third Grade Read to Achieve, Fourth and Fifth Grade Reading, Fourth to Eighth  Grade Math, Advanced Course and CTE, and Student Growth; makes the bonuses eligible to teachers in any public school unit; and applies with bonuses to be paid in January 2026 based on data from the 2024-25 year.
  • Increases, on average, additional compensation of 8.9% for teachers over the biennium, when bonuses and supplements are factored in with their adjusted base pay.
• Assistant Principals —Provides increases tied to the teacher pay schedule, plus a $1,500 bonus each year of the biennium.

• Principals — Would receive raises of 1.25% in 2025-26, plus a $1,500 bonus each year of the biennium; also continues the existing bonus program for principals whose school scores in the Top 50% in growth and provides awards ranging from $1,000 to $15,000, payable no later than Oct. 31 to those who qualify.

• Noncertified Personnel and Central Office — Would receive raises of 1.25% in 2025-26, plus a $1,500 bonus each year of the biennium.

 
Health Care & Retirement

• Retirement Employer Contribution — Sets rates of 24.6 % for 2025-26 and 25.40% for 2026-27.
• State Health Plan Employer Contributions — Sets the annual rate of $8,500 in 2025-26 and $8,905 for 2026-27.
• Retiree Cost-of-Living Supplement — Provides no cost-of-living supplements to retirees.

 
Highlights Of Committee “Money” Report Changes Affecting Public Schools

• Central Office — Provides a 5% cut of $5,524,010 recurring to leave only $105 million for supporting central offices in the 115 school districts and reflecting less than 1% of the state’s total spending on public schools.
• Learning.com — Eliminates $4 million recurring for DPI’s contract with Learning.com, which provides online digital literacy resources for students and teachers.
• Small Specialty High Schools – Eliminates $1,817,968 recurring for this program that previously supported the school-within-a-school model.
• NC Association of School Business Officers — Eliminates $2.2 million recurring for DPI to contract with the NC Association of School Business Officers “to provide technical assistance to PSUs with regard to maximizing the benefit of their fiscal resources.”
• Plasma Games, Inc. — Eliminates $1.8 million recurring for Plasma Games, Inc., which provided science, technology, engineering, and mathematics (STEM) materials and career and technical education (CTE) classes.
• TeachNC — Repeals $980,000 in recurring funds for TeachNC, an online platform used to recruit teacher candidates and teachers.
• Coding and Mobile Application Grant Program — Eliminates $800,00 recurring for the Coding and Mobile Application grant program.
• Advanced Placement Partnership — Eliminates $1.5 million recurring for the Advanced Placement Partnership between DPI and the College Board.
• Literacy Professional Development – Provides $1,560,000 non-recurring in 2025-26 and $110,000 recurring for professional development in the science of reading for low-performing schools. All grades 6-8 teachers teaching English Language Arts and exceptional children should receive training. Funds may be used for initial program implementation support and to provide stipends for each teacher who completes the training.
• School Health Support Personnel – Reflects the transfer of school nurse positions and $13.9 million in recurring funds from the Child and Family Support Teams allotment to the School Health Personnel allotment. These funds represent approximately 160 positions for school health personnel, which include school psychologists, school counselors, school social workers, and school nurses. The revised net appropriation for the School Health Personnel allotment, including technical adjustments, is $233.5 million in each year of the biennium.

 
Special Provisions In Bill Text Affecting Public Schools

• Sec. 4.3, Education Lottery Funds - Provides the following in 2025-26: $385,914,455 for Noninstructional Support, $78,252,110 for Pre-K, $ 100 million  for the Public School Building Capital Fund, $280,120,000 for the Needs-Based Public School Capital Fund (to make $347.5 million available for new grants in 2025-26), $70 million for the Public School Repair & Renovation Fund, $28,819,733 for the Scholarship Reserve Fund for Public Colleges and Universities, and $182,193,702 for School Transportation. Funding for the Needs-Based Public School Capital Fund and School Transportation would increase to $282,680,000 and $186,033,702 respectively in 2026-27.
• Sec. 4.4, Indian Gaming Education Revenue Fund Appropriations —Provides the following: $10 million in both years for Instructional Materials and $25.5 million for Classroom Materials in 2025-26. The latter would drop to $3.5 million in 2026-27.
• Sec. 4.5, Civil Penalty And Forfeiture Fund – Provides the following in both years: $18 million for School Technology, $31,493,768 for Drivers Education, and $186,041,640 for the State Public School Fund, except the latter would decrease to $166,041,640 in 2026-27.
• Sec. 5.9, Schools Permitted Use In Commercial Zones – Allows special use permits for buildings used for instruction under the control of a public school unit.
• Section 5A.1.(a)(1), Helene Related Funding: Competitive Grant Prioritization – Waives the matching requirements for qualifying impacted school districts applying for Needs-Based Public School Capital Fund grants.
• Section 5A.5, Helene Related Funding: Public School Capital – Directs $39.6 million in expected interest earnings from the Needs-Based Public School Capital Fund to be shifted to the capital fund created in 2024 for Helene-impacted school buildings.
• Sec. 6.5, Reorganization Of High School Programs – Reorganizes Chapter 115D (Community Colleges) that details statutory requirements for the following: Career and College Promise Program, Cooperative Innovative High Schools, Noncredit Courses, Gateway to College Program, NC Career Coach Program, and Driving Eligibility Certificate.
• Section 7.7, Modify Eligibility To Receive AP, IB, And AICE Test Fees – Limits free testing for these courses to students who are economically disadvantaged; also cuts $14 million recurring from the state funding for AP tests to leave $4.7 million, and cuts $1.8 million recurring for IB tests to leave $500,000.
• Section 7.8, Streamline Limited English Proficient Allotment – Revises the allotment to provide funds to LEP students in public school units based on a three-year average of their enrollment.
• Section 7.9, Repeal Textbook Commission – Does as title indicates and rewrites Part 3 of Article 8 of Chapter 115C to replace “textbook” throughout with “instructional materials” and to add new 115C-98.5. requiring local boards of education to create a community media advisory committee to investigate and evaluate challenges to supplementary and instructional materials and delineating that process.
• Section 7.10, Stabilization Of Low-Wealth Allotment – Requires the Department of Public Instruction (DPI) to develop a new Low-Wealth Supplemental Funding formula that provides more predictable yearly allocations to eligible school districts and allocating no more than provided in 2025-26, with the proposal to be submitted to the General Assembly’s Fiscal Research Division by Feb. 15, 2026.
• Section 7.11, Technical Adjustment To Administrative Licensure Requirements – Clarifies that the portfolio requirement for an administrator license is limited to those seeking licensure as a principal.
• Section 7.12, Various Education Report Changes – Makes changes to due dates of various reports required of the State Superintendent of Public Instruction or the State Board of Education, and changes names and/or components required for some reports.
• Section 7.13, Changes To Literacy Instruction – Provides $1,390,800 recurring both years and $966,508 non-recurring in 2025-26  to expand the Dynamic Indicators of Basic Literacy Skills (DIBELS) reading diagnostic to 4th and 5th grade; also extends to these grades the Individual Reading Plans and requires notification of parents or guardians of students in those grades who are not reading on grade level.
• Section 7.14, Fiscal Responsibility And K-12 Tech Planning – Requires all public school unit to evaluate long-term costs when buying new technology and to report on the break/fix rate of school technology devices.
• Section 7.15, Automatic Enrollment In Advanced English Language Arts Courses – Requires local boards of education to automatically enroll eligible students – those who score at the highest level on an EOG or EOC test – in advanced learning opportunities and courses in English Language Arts.
• Section 7.16, Highly Effective Limited License Teachers – Would allow a teacher with a limited license who has available EVAAS growth data to convert the license to a Continuing Professional License (CPL) if the teacher has a positive average growth score for two of the three most recent years; teachers with a negative average growth score but who still meet expected growth could continue to request a renewal of the limited license.
• Section 7.17, Competency-Based High School/Healthcare And High-Tech 11 Pathways Program – Provides $2 million non-recurring both years and establishes the Competency-Based High School/Healthcare and High-Tech Pathways Program (Program) that Mooresville Graded Schools and Mitchell Community College are directed to partner and implement to create pathways that will utilize competency-based education and result in students obtaining either an associate degree or an industry recognized credential, certification, or licensure based on the student's goal of employment or enrollment.
• Section 7.18, Lighthouse Math Project – Provides $500,000 non-recurring for the Wake County Public School System (WCPSS) to use at East Wake High School and Knightdale High School to work with Khan Academy, Inc. to create a gateway college math course to be offered at the high-school level using the AI student tutoring program Khanmigo; directs WCPSS to partner with Wake Technical Community College and SparkNC for assistance with implementing the initiative.
• Section 7.19, Competency-Based Education And High School Redesign Strategic Network – Directs Mooresville Graded School District, Mitchell Community College, Wake Technical Community College, Wake County Public School System, Fayetteville Technical Community College, Wilkes Community College, and SparkNC to collaborate to create a Competency-Based Education and High School Redesign Strategic Network (Network) to share lessons learned, with a goal of developing a Competency-Based Education approach to education across the state.
• Section 7.20, North Carolina Competency-Based Education Innovation Grant Program – Provides $5.3 million non-recurring in 2025-26 to DPI to create a grant program for competency-based education models that focus on mastery of learning, rather than instructional seat time. Each participating school will receive a grant of $330,000, of which they shall use $95,000 each school year for training on the implementation of competency-based education in the school. Phase 1 of the program would run for selected grant recipients from 2025-26 through 2028-29.
• Section 7.21, AI Academic Support Program – Establishes the program to allow public school units to contract with Khan Academy, Inc., (Khan Academy) for use of the artificial intelligence academic support service Khanmigo, in grades six through 12; also provides $5 million recurring the first year and $10 million the second year.
• Section, 7.22, Cooperative Innovative High Schools – Provides supplemental funding for 5 Cooperative Innovative High Schools (CIHSs). 2 CIHSs, Dare Early College High School and Rockingham County CTE Innovation High School were approved in S.L. 2024-57. This item also funds 3 new CIHSs approved by the State Board of Education: Hawthorne Academy of Health Sciences, Martin Innovative Early College of Health Sciences, and Moore County Cooperative Innovative High School.
• Section, 7.24, Reduced Price School Meals – Maintains coverage of copays for reduced-priced school meals under the federal National School Lunch and School Breakfast programs.
• Section 7.25, Charter Schools Review Board  Amendments – Grants additional power to the Charter Schools Review Board (CSRB), including requiring CSRB approval of all rules and policies related to charter schools prior to SBE approval; shifts authority from the state superintendent to the CSRB for establishing standardized procedures around the transfer of local funds from districts to charters; allows the CSRB to require school improvement plans from low-performing or continually low-performing charter schools, and exempting other charter schools from state requirements regarding school improvement plans; requires the Office of the Charter School (OCS) director to report to the CSRB rather than the state superintendent. Parameters for remote charter academies would also shift, with academies enrolling 250 students or more able to receive their own charter on an expedited timeline. Charter schools operating in person and remote academies would receive separate performance grades for each school model.
• Section 7.26, School Business Systems Modernization Plans – Budgets $45 million in non-recurring receipts transferred from the Information Technology Reserve to advance the School Business System Modernization Plan as directed by S.L. 2016-94 and S.L. 2017-57. The plan includes an Enterprise Resource Planning (ERP) system for integrated payroll and human resources information, an integrated State-level licensure system, and reporting of financial information for increased transparency and analytics. These funds are specifically to be used to complete ERP transitions at PSUs. Requires that for a public school unit to receive an allocation from the nonrecurring funds appropriated to the Department of Public Instruction for the 2025-2026 fiscal year for business systems modernization, the Department shall require the public school unit to submit a letter of intent to the Department no later than September 1, 2026. The letter of intent must (i) verify that the public school unit has not previously received funds for business systems modernization, (ii) specify the platform the public school unit intends to use, and (iii) state the projected implementation timeline. Any platform chosen must integrate with the Department's Licensure and Uniform Education Reporting System and analytics system.
• Section 7.27, Shifts Funds From GoGuardian To Gaggle – Shifts funds from GoGuardian to Gaggle.Net, Inc., to provide technology and services to mitigate cyberbullying, monitor student internet activity, and assist with suicide prevention services.
• Section 7.28, Feminine Hygiene Products Program – Directs the Department of Public Instruction to contract with the Diaper Bank of North Carolina to provide feminine hygiene products to all public school units that elect to participate in the program based on their number of female students in grades six through 12.
• Section 7.29, Advanced Teaching Roles – Grants a public school unit participating in the Advanced Teaching Roles (ATR) in the 2024-2025 school year authorization to exceed the maximum class size requirements for kindergarten through third grade for the 2025-2026 school year. Sets the ATR funding formula to provide $150,000 to the PSU the initial year of participation and $10,000 each subsequent year. Directs DPI to create designations in the student information system for teachers serving in advanced teaching roles.
• Section 7.30, Charter School Relocation – Permits charter schools to relocate within a 10-mile radius inside the same local school administrative unit identified in the charter without being considered a material revision of a charter and prior approval of the Charter School Review Board.
• Section 7.31, No Alternate Meals Based On Student Pay Status – Prohibits providing alternate school meals to students receiving free or reduced-price lunch or students that have unpaid meal debt.
• Section 7.32, CEP Timeline Shift and Breakfast Location – Provides that the federal Community Eligibility Provision (CEP) program that provides students with a healthy, cost-free breakfast and lunch can operate where funds are available each year and requires participating schools to make breakfast consumption available in the classroom.
• Section 7.33, SparkNC Extension – Provides $3,450,839 non-recurring in 2025-26 and $3 million non-recurring in 2026-27 to support and expand the SparkNC Program, which is a partnership between SparkNC and PSUs that offers CTE-related school-based labs and infrastructure, resulting in microcredentials that are aligned with high-tech career pathways. Of the funds provided in FY 2026-27, SparkNC shall use $500,000 to implement a middle-school program. Extends the program through the 2031-2033 biennium.
• Section 7.34, Wireless Devices – Requires local governing boards to establish a wireless communication policy, which at a minimum, shall prohibit students from using, displaying, or having a wireless communication device turned on during instructional time; provides exceptions for emergencies, IEP requirements, or managing student health care.
• Section 7.35, Public School Enrollment Stability For Military Students – Permits a student who is not a domiciliary of a local school administrative (LEA) unit but resides with a parent or legal guardian that is on active military duty to register to enroll remotely, under certain conditions, in that LEA’s schools prior to commencement of the student's residency.
• Section 7.36, Extended Learning And Integrated Supports Competitive Grant Program – Establishes the program “to fund high-quality, independently validated extended learning and integrated student support service programs for at-risk student that raise standards for student academic outcomes.” Directs DPI to use up to $7 million from the At-Risk Student Services Alternative School Allotment each year to fund the program.
• Section 7.37 Teacher Apprenticeship Program – Establishes a Teacher Apprenticeship Program as a competitive grant program to increase the number of professionally licensed teachers in the state; requires the Department of Public Instruction (DPI) to administer the program in collaboration with ApprenticeshipNC at the Community College System; directs the first RFP to be issued by Nov. 1, 2025, with applications to established apprenticeship programs beginning in the 2026-27 school year; and repeals GS 115C-269.32, the Teacher Apprentice Grant Program. The revised program would allow districts participating in the Advanced Teaching Roles program to employ apprentices under the supervision of a mentor teacher.
• Section 7.38, Repeal Internship Requirements For Students In Administrator Preparation Programs – Does as title indicates to drop the requirement for an internship of at least 500 hours and cuts $6,236,038 in recurring funds.
• Section 7.39, Increase State Match For Small County And Low-Wealth Signing Bonus Program – Does as title indicates by increasing the state match for teacher signing bonuses to $2 in state funds for each $1 in local funds and limits the maximum state amount to $2,000.
• Section 7.40, Treasurer To Award Grants From Needs-Based Public School Capital Funds – Moves control of awarding grants from this fund from the Department of Public Instruction (DPI) to the Department of State Treasurer but directs DPI to continue managing the grant application process and disbursement of funds once the Treasurer names the recipients, effective for awards for 2025-26.
• Sec. 8.6, Laboratory Schools – Establishes standards for agreements between University Of North Carolina System schools and Local School Administrative Units for the operation and maintenance of laboratory schools.
• Sec. 8.7, Mentor and Coaching Support Teaching Fellows – Repeals funds for mentoring and coaching support for the North Carolina New Teacher Support Program and North Carolina Education Endowment Fund.
• Section 8.13, Office of Learning Research – Establishes the Office of Learning Research (OLR) to identify and evaluate the efficacy and efficiency of programs, activities, initiatives, procedures, and any other factors related to elementary and secondary education in the state. The OLR shall be housed within the North Carolina Collaboratory and funding shall be administered by the Collaboratory pursuant to the provisions of G.S. 116-255 (c).
• Sec. 8A.1(g), Student-Based Educational Wallet Pilot Program – Establishes the Student-Based Educational Wallet Pilot Program (Pilot) for the 2026-2027 fiscal year to be administered by the State Education Assistance Authority (Authority) in coordination with one public school unit selected by the Authority to participate in the Pilot. The purpose of the pilot is to foster personalized learning pathways and expand access to educational enrichment by providing funds for high school students to participate in eligible activities and credit-bearing activities.
• Sec. 8A.2, Opportunity Scholarship Domicile – Revises certain Opportunity Scholarship domicile verification requirements.
• Sec. 9M.1, Maternal And Child Health Block Grant – Requires federal funds for Maternal and Child Health Block Grant for abstinence education, if received for FY 2025-26 or FY 2026-27, to be transferred to the State Board of Education, to be administered by DPI, to establish an abstinence until marriage education program.
• Sec. 20.5, Extend Reversion Date of School Safety Funds – Extends the date School Safety Grant Funds need to be reverted to the General Fund from June 30, 2025, to June 30, 2027.
• Sec 20.7 , School Safety Grants – Provides $35 million non-recurring in both FY 2025-26 and FY 2026-27 for grants to be used on students in crisis, school safety training, and the purchase of safety equipment.
• Sec. 35.3, Armed Forces To Include United States Space Force – Requires the State Board of Education to add “Space Force” to the list of military branches to be used to annually identify enrolled military-connected students using the Uniform Education Reporting System (UERS).
• Section 38.2, North Carolina Investment Authority – Creates the North Carolina Investment Authority to take over investment responsibilities previously held solely by the State Treasurer, transitioning our state away from the sole fiduciary model.