SB 257 – 2026 Appropriations Act
After a year of waiting, on June 30th, the final day of the fiscal year, lawmakers released a budget. On July 2, the bill was sent to Governor Stein, and he signed it on July 7, 2026.
“Going forward, there is more work to be do. We must continue to invest even more in public safety, public education, and other public services to be competitive with other states and to serve our people well.” Governor Stein
The 600+ page Senate Bill 257- 2026 Appropriations Act contains plenty of policy items as well as budget items that we’ll be sharing more about in upcoming weeks. Here are some highlights:
Teachers receive an average of 8% pay increase, but the increases fall primarily at the early years of the pay scale. Beginning teachers get a 17% bump and veteran teachers receive approximately 5%.
School principals and non-certified staff will receive a 3% raise.
Assistant principals, who are paid based on the teacher salary schedule, will receive an average 6.3% salary increase
State salaries for beginning teachers increase from $41,000/year to $48,000/year for 2026-27, bringing North Carolina in line with surrounding states and just $500/year below South Carolina’s 2025-26 starting salary. The pay raises are not retroactive to make up for last year’s salary freeze.
All other school employees will receive an average 3% raise. Noncertified and central office staff will also earn a one-time bonus. Those earning less than $65,000 will receive $1,750, while staff earning more than $65,000 will receive $1,000. It is important to note bonuses are taxed at a higher rate (~30%) than salaries.
Retirees will also receive a one-time cost of living adjustment (COLA) of 2.5%, which falls far short of recent cost increases.
The budget allocates $30 million more in salary supplements to pay teachers for Advanced Teaching Roles and to add more schools to the program.
Scheduled income tax cuts remain in place, which drops our current 3.99% to 3.49% in 2027. Earlier in June, lawmakers added a proposed constitutional amendment that will prevent future lawmakers from raising individual income tax cuts above 3.5%.
The 2023 Appropriations Act required the state to calculate how much public schools lost in funding from students moving from public school to private school through the Opportunity Scholarship voucher program and to reinvest the lost dollars in public schools. Earlier this year, DPI reported that the state owed public schools slightly more than $35 million for the past two years.
The 2026 Appropriations Act allocates the $35 million to three areas: one-time bonuses of $1,750 for school nutrition and custodial staff, middle school literacy professional development, and the purchase of a K-8 math curriculum which the NC Collaboratory will have to adapt to make it align with the NC Standard Course of Study.
In the past two years, private schools have received more than $617 million in voucher funding from the state. Approximately 90% ($555 million) paid the tuition for students who had never attended public school.
POLICY PROVISIONS INCLUDED IN THE BUDGET: Many of these provisions were from bills that did not advance in the session. This practice allows leadership to bypass the traditional approval process and institute policies that were not resolved by both the House and Senate. For example, this budget changes public record laws and repeals healthcare certificate-of-needs rules and more, all advanced through the budget process.
We will be updating the page with a more complete list of policies included in the budget. Below are a few of the policies in the budget that impact public schools are:
Public schools will be required to allow students to miss class for religious instruction. Currently, the law allows students two excused absences per year for religious observances. The religious instruction must take place off school property and must not exceed more than four hours per week.
Statewide AI rules for public schools: The NC Dept. of Public Instruction is to develop a model AI policy that all local schools districts, charter schools, and laboratory schools must adopt. Educators will be required to complete AI training by June 30, 2028.
Public schools will be required to serve the same meal to all students regardless of whether they have unpaid meal debt. Currently, some districts serve an alternative meal to students who have meal debt. Although this provision will be good for student health, it does not come with funding, so it will further strain district budgets. Note that charter schools and private schools are not required to provide school lunches.
The budget also makes it easier for teachers in other states to get a teaching license in NC and expands elementary K-6 licenses to grades 7 and 8.
Students who score at the highest level on end-of-grade reading tests will be automatically enrolled in the most advanced ELA class available at the next grade level (unless a parent intervenes). This policy is already in place for math courses.
A chronic absenteeism pilot program will be led by NC DPI to test attendance intervention systems in several school districts.
A new statewide process for challenging instructional materials: Challenges (including library books) must be filed by local parents, guardians, teachers, or residents within the school’s attendance zone. This provision requires school districts to establish “Community Media Advisory Committee” and explicitly eliminates the ability of national advocacy groups to challenge materials. More details on the committee and process found here and here.
Suicide and Crisis Lifeline and the Statewide Peer Warmline: Increases funds to support prominently displaying both the 988 and NC Peer Warmline phone numbers (855-733-7762) across all levels of education, including public schools, charter schools, community colleges, and universities.
Preliminary Budget Agreement Reached (May 13, 2026)
In a press conference on Wednesday, House leader Destin Hall and Senate leader Phil Berger announced that they had reached an agreement on the key issues that had blocked last year’s budget. As a compromise to the House, which held firm on higher teacher salaries than the Senate leaders wanted last year, teachers are set to receive average pay raises of 8%, but no back pay to make up for last year’s flat rate. Beginning teacher pay will increase from $41,000 to $48,000 per year, which gets North Carolina close to the 2025-26 beginning teacher pay of $48,500 in South Carolina.
Pay increases for veteran teachers weren’t revealed, but are likely to be fairly small given that the average increase is 8% and beginning teachers are receiving a 17% increase. The NC Association of Educators had requested a 25% increase for all teachers to bring salaries to competitive ranges at all experience levels.
To satisfy the Senate, which wanted tax rates to drop faster than the current schedule, the House agreed to more modest tax decreases. The personal income tax cut triggers are phased in over a longer timeline but the corporate income tax rate cut will continue until it reaches zero in 2030. Part of the agreement included putting a constitutional amendment on the ballot in November that caps the state personal income tax rate at 3.5% and limits local property tax increases.
While the proposed budget does increase teacher pay, it will not eliminate the pay gaps.The proposed raises will not be retroactive for educators or state employees. The proposal does solve long-term retention concerns, address the pay plateau for experienced teachers, or include a plan for restoring master’s pay. Sadly, retired educators are also woefully neglected. The tax policy provisions in this budget deal are truly troublesome and will place serious constraints on local government to fund the services their communities need. Until the full budget proposal is released to the public, the impact of these funding and policy decisions will not be fully known.
Below are a few highlights from the budget proposal:
Moratorium on Opportunity Scholarship vouchers. Ends all future awards. Voucher funding will continue only for current recipients in families making less than 150% of reduced-price-lunch eligibility. This move is expected to save more than $1 BILLION that can be redirected to public schools.
Educator Salaries and Support:
- Average 11% raise for all teachers
- Restores master’s degree pay
- Eliminates salary freeze for teachers in years 15-24
- $1,000 bonus for teachers and staff, plus $500 more for those making less than $75,000.
- Expands Advanced Teaching Roles by investing $40 million/year
- Funds 360 more school health professionals (counselors, nurses, psychologists, social workers)
- Funds beginning teacher support program
- Funds a $300 tax-deductible supply stipend for each teacher
Early Childhood
- Raises NC Pre-K reimbursement rates by 6% in all settings
- Increases child care provider subsidy reimbursement rates
- Adopts a refundable child and dependent care tax credit
Additional Public School Supports
- Funds a new tiered funding formula for students with disabilities
- Provides free breakfast to all K-12 students
- Recommend $15 million on top of federal funding to strengthen the Supplemental Nutrition Access Program
- Fully funds the Medicaid rebase for 2026-27
- Funds a school resource officer for every middle school and adds new standards for training.
- Adds support for low-performing districts
- Reinstates the back-to-school sales tax holiday
Governor Stein’s budget represents an important first step, but it will need to be followed by additional steps/funding to move North Carolina forward in its support for public schools and communities and up the national rankings.
2025 Budget Proposal Comparison (House/Senate/Gov) Highlights
See a chart of teacher salary schedule proposals in each budget.
Teacher Salaries (p. 175-176) Beginning teacher pay is increased from $41,000 to $48,000 in 2025-26 and to $50,000 in 2026-27. This bump brings North Carolina from the lowest of our surrounding states to one of the highest in the southeast.
Salaries for veteran teachers increase much less than for starting teachers. The salary for teachers with 10 years of experience increases from the current $49,350 to $52,000in 2025-26 and $52,650 in 2026-27.
The salary for teachers with 15 years of experience gets a small bump from the current $53,880 to $54,960 in the first year and to $55,650 in 2026-27. Across all years of experience and including the annual step increases, the House budget increases represent an average increase of about 8.7% over the next two years..
Teacher Apprenticeship Program (p. 120) established to provide competitive grants for schools that have Advanced Teaching Roles programs. The grants provide up to $7,500 per apprentice per year and an additional $5,000 per year for training/education.
Teaching Fellows Program (p.187-188) Adds three higher-education educator preparation programs (EPP) to the ten already approved to administer the Teaching Fellows Program to now include all HBCUs in the state. The eligible licensure areas are expanded to include Middle Grades Language Arts, English 9-12, and Career/Technical Ed (CTE). Currently, only special education, STEM, and elementary education (K-6) are eligible.
Class Size Flexibility (p. 143) Allows all districts in the state to exceed the current class size maximums in kindergarten through third grade by three students. Growing districts—defined as growing by .5% (half of one percent) for two consecutive years— are allowed to add an additional three students per class, for a total of up to six additional students per class. Growing schools that have also received a performance grade of A or B can add two more students, bringing the total additional students to 8.
School Lunch (p. 116) Requires schools to provide children with a standard school lunch, regardless of how much debt they have. Currently, some schools provide an alternate meal to students whose accounts are not fully paid.
Visual/Performing Arts Requirement (p. 124) Requires all elementary schools to provide performing arts and visual arts at least once per week, lasting at least 30 minutes.
Digital Literacy (p. 98-99) The state board of Education, DPI, and other identified organizations must collaborate to develop digital literacy instruction in K-8th grade.
Cell Phone Restrictions (p. 117) All public schools must adopt a cell phone-free education policy to eliminate or severely restrict student access to cell phones during instructional time.
Elementary and Middle School Literacy (p.108) Expands the focus on early literacy from K-3 to grades 4 and 5 by directing the State Board of Education to provide to public schools assessments aligned with the North Carolina Standard Course of Study to help diagnose reading difficulties and inform instruction.
Adds $10 million annually for training middle school teachers and principals in research-backed reading instruction. This training supplements the training teachers in Pre-K through 5 received from 2021-2024 in early literacy research and instruction. Teachers received intensive training on this from 2021 through 2024.
Charter Schools (p. 112-113) Moves the power to hire the executive director of the Office of Charter Schools from Superintendent of Public Instruction to the Charter School Review Board and the authority to approve new charter school rules from the State Board of Education to the Charter School Review Board.
(p. 115) A charter school may relocate, expand a campus, or establish a satellite location within 10 miles
Governor Stein’s budget recommendations released in March will be refined over the next few months and a Hurricane Helene relief proposal will be released separately, but his proposal highlights key priorities.
Beginning teacher pay is increased from $41,000 to $44,500 in 2025-26 and $51,200 in 2026-27. This bump brings North Carolina from the lowest of our surrounding states to one of the highest in the southeast. Salaries for veteran teachers also increase; teachers with 5 years of experience will receive an $8,450 increase over two years, while those with more than 15 years will receive about $3,200. These increases represent an average increase of about 10.6% over the biennium.
Governor Stein’s proposal takes many more steps to support students and educators:
- Restores 10% master’s pay supplements to teachers whose advanced degrees are in the subjects they teach.
- Funds all students with disabilities, even in districts whose numbers exceed the 13% cap.
- Funds a 6.5% raise for correctional officers and youth counselors
- Adds a child tax credit of up to $300 for a family of four.
- Provides funding for 330 additional school health personnel, including school counselors, nurses, social workers, and psychologists.
- Funds 330 new elementary and middle school resource officers positions each year.
- Funds free school breakfast to all students.
- Enables public schools to continue providing K-12 students with a laptop.
- Reinstates a sales tax holiday for school supplies (removed by lawmakers in 2014).
Governor Stein’s proposal also includes a $4 billion bond to modernize old and outdated school buildings. However, his proposal lacks a clear pathway for meeting the requirements of fully funding the Comprehensive Remedial Plan (Leandro Plan) as ordered by the 2022 N.C. Supreme Court.
To help fund his initiatives, Governor Stein has suggested cutting the private school voucher program so tax dollars flow to the public rather than private interests. He also recommends freezing corporate income tax cuts. Currently at 2.25%, the corporate income tax is set to drop to 0% by 2030.
Total Appropriations
Fiscal Year 2023-24: $29,707,123,024
- Education: NC Community College System: $1,474,240,607
- Department of Public Instruction (K-12):$11,564,559,926
- The University of North Carolina: $4,265,143,244
- Total Education: $17,303,943,777
Fiscal Year 2024-25: $30,823,313,998
- Education: NC Community College System: $1,514,102,757
- Department of Public Instruction (K-12):$11,949,016,128
- The University of North Carolina: $4,407,489,063
- Total Education: $17,870,607,948
Page numbers below refer to the 2023 Appropriations Act
Teacher Salaries (p. 143)
- Teacher salaries increase an average of 4% this year and 3% next year for a total of about 7% over the next two years. Early career teachers receive larger increases than veteran teachers, but the numbers are low for everyone.
- Starting salaries for beginning teachers increase from $37,000 to $39,000/year in 2023-24 and to $41,000/year in 2024-25.
- Teachers with the most experience (25+ years) will see their salaries grow just $1,950 over two years, from $54,000 to $55,100 in 2023-24 to $55,950 in 2024-25. This is the current maximum base salary.
- Salaries for teachers who are in their 15th through 24th years of teaching increase $1,880 over the two years (about 2% in 2023-24) and have no step increases for years of experience until they reach 25 years. The chart shows the two-year adjustments and percent increase for each year on the scale.
No Master’s Pay for teachers. There is still no supplement for earning a master’s degree or any other higher degree. The General Assembly ended master’s degree (and other higher degree) benefits years ago for teachers who began working toward their degree after 2013. Most other states do pay higher salaries for teachers with higher degrees, so this is a distinct competitive disadvantage for North Carolina.
Salary supplements for teachers in Advanced Teaching Roles (p. 126) were allocated $10,900,000 each budget year (Money Report #59) for school districts to provide supplements for teachers in advanced teaching roles. The roles may be defined by the local district but include two specified in the budget:
- Adult leadership teacher (+$10,000/year) leads a team of 3-8 teachers, works in the classroom at least 30% of the day and is not a school administrator
- Classroom excellence teacher (+$3,000/year) has responsibility for at least 20% more students than the most recent year for which they did not serve as a classroom excellence teacher. They serve in an advanced teaching role and are on a team led by an adult leadership teacher.
Principal Salaries (p.152)
Principals receive a 4% salary increase in 2023-24 and an additional 3% increase in 2024-25 for a total of 7% across the two budget years.
In addition, principals of the top 50% schools based on growth are eligible to earn bonuses based on the following schedule.
Statewide Growth Percentage
- Top 5% – $15,000
- Top 10% – $10,000
- Top 15% – $5,000
- Top 20% – $2,500
- Top 50% – $1,000
Other State Employees receive a 4% salary increase in FY2023-24 and 3% in FY 2024-25. The Teachers’ and State Employees’ Retirement System (TSERS) provides a one-time cost-of-living supplement to retirees of 4% in FY 2023-24 using receipts from the Retiree Supplement Reserve.
Tuition Assistance for Teacher Assistants (p. 110) Establishes a grant program to provide tuition assistance to teacher assistants who pursue a four-year degree at an education preparation program (EPP) to become a teacher. DPI will administer the program and teacher assistants will be able to apply for up to $4,600 per year for four years to pay for college expenses.
Teacher Apprentice Grant Program (p. 112) Directs DPI to establish a grant program to provide school districts funds to pay teacher apprentices pursuing teacher licensure at an educator preparation program up to $4,600 per semester for tuition and fees for up to four years. The grant program may also be used to provide salary supplements to teacher apprentices who become licensed teachers and accept employment in the same district.
National Board Certification (p. 104) Reestablishes a grant program to reimburse teachers for the cost of obtaining national board certification and retains the 12% salary increase for teachers who receive certification (p. 142).
NC Teaching Fellows (p. 182)
- The Teaching Fellows Program gains two new universities, bringing the participating schools to 10. This number is still far below the 17 schools participating in the original program.
- Adds educators seeking licensure in elementary education (K-6) to the current program, which applies to teachers seeking licensure in special education or STEM areas.
- Awards up to $40K in forgivable loans for completion of eight semesters ($5,000 per semester).
- For each year the qualifying teacher remains an active teacher in NC, the amount of the loan received per year (plus accrued interest) is forgiven.
Mandatory Training Contributes to CE Credits (p. 86) For all teachers, hours spent attending mandatory training programs will now contribute toward continuing education credits as long as the training is required by State law or districts as a condition of employment and the teacher has met other requirements for their subject area or other license renewal requirements.
Supplemental Funds for Districts in Low-Wealth Counties and Small Counties (p. 80) School districts in low-wealth counties that meet specified eligibility requirements and small districts (i.e. fewer than 3,300 students) are eligible to receive additional state funding for the purposes of providing additional instructional and support staff as well as salary supplements. These funds aim to help close the gap in what poor and wealthy counties can offer to attract teachers and other personnel.
Opportunity Scholarship Voucher Expansion (p. 187+) See our fact sheet on vouchers in North Carolina.
- Expands eligibility to all private school students, removing any requirement for previous public school attendance.
- Removes income restrictions, so even wealthy families qualify for the vouchers. The amount provided for the vouchers is set on a sliding scale with 100% of the average per-pupil allocation going to families earning 100% or less of the federal free/reduced lunch qualifying income ($55,000 for 2023-24).
- Reduces the percentage of applications to be selected for income verification from 6% to 4% for families applying to receive 60% to 100% of PPE (i.e., reporting incomes below 450% of F/RL eligibility).
- Funds appropriated to the Opportunity Scholarship Grant Fund Reserve increased substantially (p. 192).
Supplemental Appropriations to the Opportunity Scholarship Reserve Fund (see Money Report p. B45) add $87 million in 2023-24 and $163 million in 2024-25. This brings the appropriations to:
- 2023-24: $176,540,000 (previous) + $87M = $263,540,000
- 2024-25: $191,540,000 (previous) + $163M = $354,540,000
Up to 2.5% of the funds allocated may be used each year by the Authority for administrative costs associated with administering the program ($10 – $13 million starting in 2025-26).
Up to $1,000,000 may be used by the Authority to contract with one or more nonprofit organizations for outreach, education, and application assistance for parents and students.
State Education Assistance Authority (SEAA) will select 6% of the applications to verify the residence of the applicants for eligibility purposes (p. 193).
The Superintendent of Public Instruction must report by March 1 2024 on the following:
- A recommendation for a “nationally standardized” test for private school voucher students and public school students to take in grades 3 and 8 beginning in 2024-25 so their performance can be compared.
- The alignment between the nationally standardized test selected and the standard course of study for grades 3 and 8. The alignment should include a crosswalk of the standards assessed.
- Feasibility of developing a through-grade assessment for grades 3 and 8 that assess the NC standard course of study, consist of multiple tests across the year instead of one at the end of the year, and would replace the current EOG tests for grades three and eight.
Personal Education Savings Account (PESA) Voucher Changes (p. 201+)
The budget changes payment for Personal Education Savings Account voucher funds to a pre-approval system for all but the first payment. Funds are paid electronically into a parental account in equal amounts twice a year. The first deposit occurs at the beginning of the school year after the parental agreement is approved and completed. Subsequently, all requests for qualifying expenses are subject to a pre-approval process. Expense reports are no longer required for expenses that have been pre-approved.
A portion of the funds must be used to provide an education for at least 140 days/year (p.201).
Each year, the appropriation to the PESA fund increases by $1,000,000 until 2032-33 where it is scheduled to remain at $57,943,166 for each subsequent year.
- 2023-24 – $48,943,166
- 2032-33 – $57,943,166
High School Graduation Requirements and Early Graduation Scholarship Program (p. 195)
The budget calls for the State Board of Education to develop a sequence of courses that allows students to complete graduation requirements within three years.
This option must be available at all traditional public schools. Charter schools may also choose to provide the three-year pathway. This pathway must be available to students no later than November 2023 and must enable students in 10th grade in 2023-24 to complete the sequence to graduate in the 2024-25 school year.
In addition, an Early Graduation Scholarship Program is established to pay for postsecondary education costs for up to two semesters in the two years following the graduation of students who completed high school in three years.
Career Exploration and Development Pathways (p. 86)
The State Board of Education is required to develop standards for an elective middle school course in which students learn about career pathways.
In addition, all middle and high school students in local districts must now complete a career development plan. The State Board of Education will establish the minimum requirements for the plan. Students must develop their initial plan by the end of 6th grade to be promoted to 7th grade and must revise it in 9th grade to be promoted to 10th grade. Charter schools are encouraged, but not required to follow these requirements.
A pilot program including at least 20 districts in 2023-24 will help develop the plan, including professional development requirements needed to implement the career development plans statewide in 2024-25.
Remote Charter Academies (p. 93)
As part of their initial application or as a modification a charter school may now apply to offer a remote academy. These charter schools can offer remote instruction to all of their students, (essentially become another virtual academy) or provide remote instruction to some of their students and in-person instruction to others. A student receiving more than half of their instruction remotely, must be classified as enrolled in the charter school’s remote academy.
The charter school can choose to be a statewide remote academy that accepts students from across the state or a regional remote academy that admits students only from the county in which the school is located and all adjoining counties.
The budget also requires that beginning with the 2026-27 school year, the Review Board shall approve a minimum of two statewide remote charter academies if they meet the necessary qualifications.
The pilot program for the two statewide virtual charter schools (North Carolina Cyber Academy & NC Virtual Academy) was extended for an additional year, bringing the total pilot length to 11 years. In addition, the enrollment maximum was increased to 20% growth each year.
*In separate legislation enacted in August (See 2023 Key Education-Related Legislation), the State Board of Education lost most of its authority to a newly created Charter School Review Board, which has essentially the same membership as the former Charter School Advisory Board. Under the new law, the State Board retains authority to rule on appeals of the Charter School Review Board’s decisions and also allocate funds to charter schools. However, the 2023 Appropriations Act (p. 141) limits the State Board to withholding or reducing distribution of funds under only three conditions:
The change in funding is due to an annual adjustment based on enrolment or is a general adjustment not specific to the charter or actions of the charter school.
The Review Board notifies the State Board has materially violated a term of its charter, a State statute or federal law, or has had its charter terminated or nonrenewed.
The Superintendent of Public Instruction notifies the State Board that the charter school has failed to meet generally accepted standards of fiscal management or violet a State or federal requirement for receipt of funds.
Early Childhood Education
There is no new state funding to help extend federal pandemic relief funds used to help child care providers raise wages and recover from the pandemic. In NC, the federal funding will expire in June 2024 and child care centers have already announced closures.
The budget also lacks additional funding for Smart Start and does not expand the WAGES program, which provides salary supplements to people who work with young children (ages birth-5) in participating counties.