Democratic Gov. Josh Stein released his first budget proposal on Wednesday, calling among other things for an average 10.6% raise for teachers over the biennium, the restoration of master”s pay, and a $4 billion bond to address the more than $13 billion in public school construction and repair needs across the state.
Stein’s budget also proposes nearly $88 million per year for child care subsidies and free community college tuition for students seeking non-credit credentials in high-demand industries.
“To continue a trajectory of growth, the state must step up to invest in quality public education and robust opportunities for career and technical training,” Stein said in the proposal. “We must pay our teachers a competitive salary, make sure our schools are safe, and promote our students’ health and well being so they are ready to learn.”
For Fiscal Year (FY) 2024-25, the legislature approved state appropriations of $31.64 billion. Stein’s biennium budget proposal would appropriate $33.6 billion in 2025-26 and $34.3 billion in 2026-27.
His proposal adds more than $876 million in education funding for the first year of the biennium and $1.2 billion in the second, according to the budget document.
“Investing in North Carolina’s children is an investment in the state’s future,” Stein said.
The Office of State Budget and Management’s (OSBM) General Fund Revenue Forecast, which was released last month, anticipates a $34.71 billion budget in Fiscal Year 2024-25 and a $34.89 billion budget in FY 2025-26, representing 3% and 0.5% increases in collections, respectively. For FY 2026-27, however, the forecast estimates a -2.4% shortfall.
On Wednesday, Stein said the state “must create a balanced budget” to address that expected shortfall. Specifically, he proposed freezing the state’s corporate and personal income taxes at their current rates.
“It will take a collaborative effort for us to continue to deliver a sound and balanced budget that serves North Carolinians, providing opportunity and attracting people and businesses to our great state,” he said.
This year, the Republican-led General Assembly has a supermajority in the Senate and is one vote shy of a supermajority in the House. While Republicans may have to work across the aisle to override vetoes, the Republican majority means that Republican leaders will drive the two-year budget process.
“I’m grateful to the General Assembly for its consideration of the budget, and I’ll look forward to working with them in the coming weeks so that we can do right by North Carolina’s children and North Carolina’s families,” Stein said on Wednesday. “… I have been encouraged by the conversations I’ve been having with the leadership and both the House and the Senate… and I know they want to do right by the people of North Carolina as well. So we look forward to engaging with the legislature, and hopefully we can come to an agreement.”
Stein’s proposal says his budget will “affirm the state’s commitment to public education.” Below, you can find a look at the K-12 allocations included in Stein’s proposal.
In addition to its public education investments, Stein’s budget also includes tax cuts for working families, affordable housing initiatives, public safety investments, and more. You can read the full budget here, along with budget proposal summaries on Stein’s website.
Educator pay
Stein’s proposal includes an average raise of 10.6% for teachers over the next two years, with higher raises for beginning teachers.
The proposal includes about $1.05 billion over the biennium to implement raises for teachers and instructional support.
“Teachers outweigh all other classroom factors in determining how well students perform,” the proposal says. “For North Carolina to attract and retain excellent teachers, the state must pay them more.”
Here is a look at the salary schedule Stein is proposing:
Stein’s budget also includes $20 million to restore master’s pay for teachers, which includes a 10% monthly supplement. This initiative was funded in North Carolina until 2013. The House has included master’s pay in both of its budget proposals the last two years, but it has not made it into the Senate proposal or compromise budget.
Finally, the “budget also increases teachers’ take-home pay by providing every teacher and instructional support personnel with a $300 tax-deductible stipend to purchase school supplies.”
“The stipend will ensure teachers no longer have to use their own money for pencils and paper,” the proposal says.
The budget also includes raises for other educators.
There is $60.7 million to give existing principals a 6% raise over the biennium. The budget says that school health personnel — which includes school psychologists, nurses, and counselors — and assistant principals will receive raises based on the teacher salary schedule.
The proposal also includes a 3% raise for non-certified and central office staff.
All other state employees would receive a 2% raise in 2025-26, per the proposal, and a one-time $1,000 bonus. Principals, non-certified and central office staff, and DPI staff would also receive the bonus.
Stein’s proposal would also increase state funds to the State Health Plan, which provides health care coverage to nearly 750,000 teachers, charter school employees, community college employees, other state employees, retirees, and dependents.
The plan is currently facing a large deficit, leading the State Health Plan’s Board of Trustees to consider raising pricing and changing benefits for plan members.
Stein’s proposal allocates an addition $153 million in the first year of the biennium and $314 million in the second to “promote fiscal solvency and balance state funding with employee contributions to cover the budget gap.”
Finally, there is also a one-time 2% cost-of-living supplement in FY 2025-26 for state retirees.
Here is a look at other educator-related items in the proposal:
- More than $42 million to expand the Advanced Teaching Roles programs, which “supports novice teachers with coaching from highly skilled educators.”
- $8 million to the TA-to-Teacher Tuition Reimbursement program to make earning teaching credentials more accessible to professionals already working in the classroom.
- Nearly $3 million to the N.C. Center for the Advancement of Teaching to “expand methods, content, mental health, and STEM” professional development opportunities for teachers.
- $9 million in support for low-performing districts to offer “additional professional learning, coaching, systems design, and capacity building” to “further improve student learning and staff retention.”
Student health, safety, and achievement
Stein’s proposal includes $196 million in 2025-26 and $211 million in 2026-27 toward “student safety and well-being.”
This bucket includes funding to provides free breakfast to all public school students.
“Research shows that breakfast improves student health, learning and behavior, and this budget ensures that every public school student has access to a no-cost breakfast,” the proposal says.
Advocates from the nonpartisan School Meals for All Coalition NC celebrated Stein’s inclusion of no-cost breakfast in his proposal.
“We urge the NC General Assembly to continue to prioritize this vital policy measure, thereby ensuring that every child in North Carolina starts their day with a nutritious meal,” Executive Director Abby Emanuelson said in a statement. “… By funding school breakfast for all North Carolina students, the Governor and General Assembly send a clear message that North Carolina cares about its young people and is committed to removing the barriers that stand in the way of their success.”
Stein’s proposal also includes more than $65 million for schools to hire 330 more psychologists, social workers, nurses, and counselors in elementary and middle schools to help address student mental health.
These professionals play a key role in supporting students’ well-being, with evidence showing that they reduce absences and misbehavior and increase four-year college enrollment,” the proposal says.
There is also $156 million recurring and $10 million non-recurring to go toward school safety equipment, as well as school resource officers (SRO) and SRO training.
Finally, there is $5.1 million “to help districts implement strategies to limit cell phone use and an evaluation study to see which strategies work best.”
At the end of February, legislators discussed and then advanced two versions of a bill that would restrict student use of cellphones in North Carolina public schools. Last week, the Senate passed its version of the bill, Senate Bill 55. Stein has previously said he is pleased to see the bill making its way through the General Assembly.
Stein’s proposal also includes more than $456 million to “advance educational excellence and innovation.”
This includes nearly $230 million over the biennium to go toward classroom devices.
A recent survey by the Department of Public Instruction (DPI) showed that 100% of schools reported having a one-to-one computer ratio for their students. However, only 45% of schools said they have funds to refresh those devices.
State Budget Director Kristin Walker said Stein’s proposal means the state would pay for two-thirds of the device refresh, and local districts would cover the remaining one-third for every four-year refresh cycle.
“This is the way of the future,” Walker said. “This is the same as having textbooks in the past.”
The proposal also allocates about $57 million over the biennium for “cybersecurity, broadband, student information systems, and other operational support.”
Here’s a look at other student investments proposed in the budget:
- $100.5 million for K-12 enrollment growth in 2025-26 and $95.5 million in 2026-27
- $54 million in Exceptional Children funding to “removes the cap for exceptional children so all students with disabilities can receive needed services”
- Nearly $200 million for middle grades literacy and diagnosis assessments to expand the science of reading to 4th and 5th graders, and middle schoolers
- $12 million for high-dosage tutoring
School choice
Stein has previously called for a moratorium on private school vouchers through the Opportunity Scholarship Grant program until public schools are “fully funded.”
His budget proposal removes vouchers for families making more than $115,000 annually and calls for no new vouchers moving forward.
In 2023, the General Assembly removed income eligibility requirements for the voucher program and drastically expanded its funding. As a result, applications to the program have surged.
On Wednesday, Walker said the savings from those changes to the Opportunity Scholarship program allowed the governor to make recommendations for teacher pay raises and master’s pay restoration.
Other K-12 investments
According to the proposal document, DPI’s most recent facility needs survey identified “$13 billion in needs over a five-year period, a 62% increase over the previous survey. LEAs reported $5.2 billion in need for new schools, $1.7 billion for building additions, and $5.5 billion to renovate existing facilities.”
Stein’s budget proposal recommends a $4 billion general obligation bond to address those construction needs. Such a bond would need approval by the General Assembly and to be voted on by North Carolinians.
If approved, the proposal says that about $1.15 billion of the bond would be evenly distributed among school districts, and the remaining $2.85 billion would be allocated based on district size. You can view the proposed allocations on page 12 of the proposal document.
“Many of our schools are old, overcrowded, use trailers, have leaking roofs, broken heating and air,” Stein said. “We need safer, healthier, and more modern schools.”
Stein’s budget would also re-establish “a sales tax holiday for back-to-school shopping and hold local governments harmless for related local sales tax revenue loss.”
This would provide state and local sales tax exemptions for clothing and school supplies up to $100 per item, computers up to $750 per item, and computer supplies up to $250 per item.
Finally, there is $635,000 each year of the biennium for new Cooperative Innovative High Schools.
Community colleges
Community college faculty and staff would receive the same 2% raise for state employees in 2025-26 along with a $1,000 bonus that is included in his proposal for K-12 education. There is also a one-time 2% cost-of-living supplement in FY 2025-26 for state retirees.
The proposal includes $94 million for enrollment growth in 2025-26 and in 2026-27.
“Community college total enrollment increased by 6.8%, or 16,377 full-time equivalent students, from the budgeted amount in FY 2024-25,” the proposal says.
The budget also includes several investments in workforce.
Stein’s proposal includes “$138.2 million in FY 2025-26 and $117.7 million in FY 2026-27 to build a talented workforce and create pathways leading to high-demand, high-wage jobs.”
“Funds will support access to industry-valued workforce credentials for North Carolinians, including apprenticeships, work-based learning programs, training for health care professionals, and assistance for people returning from incarceration,” the proposal says.
There is about $40.3 million in each year of the biennium to implement Propel NC, the N.C. Community College System’s (NCCCS) new funding formula proposal.
This includes about $34.2 million each year to offer course parity by shifting curriculum and continuing education classes to the same workforce sectors. It also includes $6 million each year to establish an enrollment increase reserve, which is part of Propel NC’s request.
“This effort enhances workforce development programs at North Carolina’s Community Colleges for in-demand, high-wage workforce sectors, aligning the programs to business needs and bringing valuable career development opportunities to rural communities,” Stein said.
There is also nearly $70 million over the biennium to provide free community college for high-demand skills training “for students pursuing non-credit, short-term workforce credentials in high-demand fields.”
Stein is also proposing $800,000 over the biennium for a “Whole Systems Apprenticeship Mode,” between DPI, NCCCS, and the Department of Commerce.
“This investment will strengthen the state’s talent pipeline by funding one position at ApprenticeshipNC to work with the Department of Commerce and the Department of
Public Instruction to better prepare and connect North Carolinians to high-demand workforce opportunities,” the budget says.
The budget also funds at least 50 new apprenticeships across state government, the proposal says, by investing $5 million, recurring, into an apprenticeship reserve at the OSBM.
“The OSBM will work collaboratively with the Office of State Human Resources (OSHR) and state agencies on establishing apprenticeships throughout state government,” the proposal says.
Finally, there is $10 million nonrecurring in 2025-26 for the North Carolina Independent Colleges and Universities (NCICU) to “help educate more health care professionals to address critical health care workforce shortages across the state.”
You can read all of the workforce investments starting on page 17 of the budget.
Early childhood
Stein’s budget proposal would put new money into early care and education through the state’s child care subsidy program and NC Pre-K. It would also create three new refundable tax credits for families.
The bill includes an additional $88 million per year to increase the amount child care programs receive to serve children through the Division of Child Development and Early Education’s subsidy program.
The proposal says the increased reimbursement rates would “narrow the gap between families’ ability to pay tuition and the true cost to provide high-quality child care and early education.” The current rates cover about half of the true cost of care, according to DCDEE.
Child care advocates are asking for $220 million to do two things: raise the rates and decrease the disparities in those rates by county. They say creating a “floor rate,” or giving the state average rate to programs with low rates, would help providers in rural and low-wealth areas recruit teachers and sustain their businesses.
The EdNC coverage you need to understand early care and learning, all in one place
Stein’s budget would also give an additional $26.8 million in the first year of the biennium and $53.5 million in the second year to strengthen and expand NC Pre-K, the state’s preschool program for eligible 4-year-olds. Eligibility is based on factors like income and special needs, and about half of the state’s 4-year-olds are eligible. A little over half of eligible children were enrolled in 2024.
The funding would be used to increase the amount child care centers and public elementary schools receive to host NC Pre-K, increase the amount agencies receive to administer the program, and add new seats.
The plan also includes $10 million each year for programming the summer before kindergarten to prepare children for school.
It also allocates $1 million to the Department of Administration to renovate under-utilized state buildings in order to host child care programs serving children of state employees.
Stein’s budget proposal recommends adopting two new refundable tax credits and tweaking the child tax deduction to a refundable credit to put money spent on raising children, including child care costs, back into families’ pockets.
The plan would spend an additional $530 million per year on three tax credits: the Working Families Tax Credit, the Child and Dependent Tax Credit, and the Child Tax Credit.
The new Working Families Tax Credit would be set at 20% of the federal Earned Income Tax Credit. The average benefit would be $419 per family, and the proposal says it would benefit an estimated 680,000 working families. The credit varies based on martial status, income, and number of children.
The new Child and Dependent Tax Credit would be set at 50% of the federal credit of the same name. It partially refunds costs of care for children or other dependents. It would reach about 214,000 families and would send an average of $303 to families, according to the plan.
The proposal recommends converting the existing child tax deduction to a refundable Child Tax Credit so that lower-income families could receive the benefit. The credit would be set at 5% of the current deduction, and the amount families receive would depend on their income and number of children. Low-income families would receive $150 per child, with the amount decreasing based on income to $25 per child for upper-middle-income families. Making the deduction refundable would reach 193,000 new families, according to the proposal.
Hurricane Helene
“Hurricane Helene struck western North Carolina on September 27, 2024, causing an estimated $59.6 billion in total damage and needs ($44.B direct, $15.2B indirect and mitigation,” the budget says.
The proposal says that “Hurricane Helene will continue to impact North Carolina’s economy over the biennium and beyond.”
The legislature this week passed its fourth Helene relief bill, which includes $524 million of aid. The House passed its version of the bill last month, with the Senate passing a modified version on March 5.
In February, Stein presented a “Helene Immediate Needs” budget request calling for $1.07 billion in state funding. On Wednesday, he said he will be submitting additional recommendations for long-term recovery in a separate request later this spring.
“We also cannot and will not forget about the needs facing our fellow North Carolinians in eastern and western North Carolina,” Stein said in the proposal. “… Our state will do everything we can to support these hurricane-ravaged regions that need our support.”
Stein’s budget proposal includes some items that would indirectly impact people and businesses in North Carolina, but his office said that most recommendations will come later.
“In part, we’re waiting to see what the General Assembly does, but we also don’t want to conflate the needs of Helene survivors with the ongoing two year budget process,” Walker said. “Helene survivors deserve separate attention.”
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