Bill
HB 1167
Establishes base General Fund operating appropriations for 2025-27, funds education and health services, expands literacy and SRO programs, and reorganizes instructional materials
HB 1167 Summary — 2026 Governor's Budget (North Carolina)
Overview
- Type: Public act establishing base budget appropriations for current state operations for fiscal years 2025-2027, plus related funding, reserves, and programmatic changes.
- Purpose: Set operating appropriations for state agencies/departments, outline revenue availability, and implement various policy and program changes across education, health and human services, public safety, infrastructure, and governance.
Key Provisions and Changes
1) General Fund Current Operations (Education, Health, Public Safety, etc.)
- Provides year-by-year General Fund base appropriations for each agency/department in FY 2025-2026 and FY 2026-2027.
- Notable education line items include funding for:
- Public Instruction and UNC-system institutions (with specific adjustments in several university line items).
- Community College System funding (Propel NC alignment; targeted changes to enrollment and workforce alignment).
- State-supported programs (School for the Deaf, Governors School, Morehead School, and private aid).
- Health and Human Services receives sizable increases, especially in Health Benefits, Mental Health/Developmental Disabilities/ Substance Abuse services, and Child Development/Early Education.
2) Revenue Availability and Fiscal Policy
- Establishes total net General Fund availability for the two years, incorporating tax revenue, non-tax revenue, and adjustments (including Keeping or adjusting certain tax parameters, standard deduction, and targeted credits).
- Adjustments to revenues include: maintaining individual income tax at 3.99%, increasing standard deduction, and refundable credits (Working Families, Child/Dependant Care), plus a Back-to-School Sales Tax holiday.
- Sets aside and/or reallocates reserves (Savings Reserve, Contingency/Emergency Reserve) and designates a portion of the Federal Infrastructure Match Reserve for agency matches and emergency needs.
- Transfers from IT Reserve to OSBM for specified IT modernization projects and agency needs.
3) Medicaid and Federal/Infrastructure Provisions
- Medicaid Contingency Reserve balance dedicated.
- Federal Infrastructure Match Reserve allocations to support environmental cleanup, disaster recovery, and other federal-match-supported activities.
- Creation of nonrecurring funds for 2026-27 for disaster response within the Department of Public Safety/Emergency Management.
4) Highway Fund and Highway Trust Fund
- Appropriations and availability for DOT maintenance, construction, ferry operations, public transportation, and capital improvements.
- Outlays reflect a consolidated funding plan for infrastructure and transportation programs.
5) Education and Public Instruction Reform (Chapters 7.x updates)
- Repeals the state Textbook Commission and consolidates functions into new instructional materials governance.
- Establishes Instructional Materials funding allotment (July 1, 2026) with a dedicated, non-reverting pool for instructional materials and related resources.
- Reforms for Exceptional Children funding (weighting, stabilization reserve) to address fluctuations in state support for students with disabilities.
- Introduces School Resource Officer Allotment for school safety, consolidating SRO funding through DPI starting July 1, 2026, and establishing training standards.
- Expands literacy initiatives across grades K-8, including Early Literacy Program enhancements, EVAAS data usage, and individualized reading plans.
- Expands diagnostic/formative reading assessments to grades 4-5 and strengthens IRPs (Individual Reading Plans).
- Proposes a School Performance Grade Redesign Pilot (2026-27 through 2027-28), with expansion to all K-12 schools by 2028-29 and a final evaluation in 2029 to consider permanent changes.
6) Propel NC and Enrollment Growth
- Reforms for Propel NC funding to shift CC system funding toward a labor-market-driven model aligned with high-demand sectors.
- Creation of an Enrollment Growth Reserve to support colleges experiencing enrollment increases beyond baseline projections.
7) Other Provisions
- Caps on nonprofit salaries funded by the state at $140,000 per employee per year.
- Disaster recovery and floodplain safeguards for 100-year floodplain areas, including insurance prerequisites for homeowners receiving assistance.
- Various adjustments to other funds (Lottery, Indian Gaming Education, Civil Penalty/Forfeiture funds) to support specified education and safety programs.
Who is Affected
- State agencies and departments funded through the General Fund.
- Public schools, local education agencies, charter and laboratory schools, and the Department of Public Instruction (via changes to funding formulas, materials, SROs, and literacy programs).
- Community college system and workforce development initiatives.
- Health and human services recipients and providers (via program funding and rates).
- Local governments and disaster response entities through contingency and reserve provisions.
- Transportation and infrastructure programs via Highway Fund and Trust Fund allocations.
Timeline Highlights
- July 1, 2026: Transition for several education-related reforms (Instructional Materials funding allotment, SRO funding consolidation, and customized training provisions).
- 2026-2027: Implementation window for literacy expansion, reading interventions, and School Performance Grade Redesign Pilot (pilot years).
- 2028-29: Planned statewide expansion of school performance measures.
Note: The bill contains numerous line-item details and numerous cross-references to existing statutes; this summary captures the principal shifts in funding, education reform, and state governance.
Compiled from official sources — confirm details with the bill’s official record.
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