Part I

Currently, Personal Education Student Accounts (PESA) for Children with Disabilities are funds provided by the State to children with disabilities to use for a variety of educational expenses, including tuition at a private school, speech therapy, and tutoring services.  The act would expand PESA eligibility to include any student eligible to attend school in North Carolina who has not been enrolled in a post-secondary school as a full-time student (i.e., taking at least 12 hours of credit), and who has not been placed in a nonpublic school by a public agency at public expense. As discussed in detail below, it would provide for two types of scholarships: one that is available to all students and another for students with disabilities.

The following changes are applicable to applications for the award of scholarship funds for the 2024-2025 school year, effective July 1, 2023.

Amends title of GS 115C-590 to refer to PESA, instead of PESA for Children with Disabilities.  Enacts the following definitions: child with a disability and eligible institution of higher education. Makes conforming changes to definitions of educational technology and eligible student to remove limitation that these terms only apply to a child with a disability. Makes organizational changes.  Amends GS 115C-592 (pertaining to awards of scholarship funds for PESA’s not limited to children with disabilities) to require that the funds be used for qualifying educational expenses (1) to attend a nonpublic school and (2) to enroll in courses at an eligible institution of higher education prior to obtaining a high school diploma. (Currently, funds are used to attend a nonpublic school.) Sets award amounts as follows: (1) for eligible students who attend home schools, up to 28% of the average State per pupil funding allocation for average daily membership set in the prior fiscal year and (2) for eligible students who attend all other nonpublic schools, up to 33% of the average State per pupil funding allocation for average daily membership set in the prior fiscal year for students who attend full-time and 17% for students who attend part-time. Deletes provision requiring reversion of certain unused funds to the State Education Assistance Authority (Authority).

Amends GS 115C-592(b1) to create separate funding structure for students with disabilities. Moves the flat rate awards per school year ($9,000 for full-time students and $4,500 for part-time students) to that section.  Makes conforming changes to GS 115C-592(b1)(2) (pertaining to higher award of PESA funds for students with certain disabilities). Amends the carry forward provisions to require unused PESA funds that are not awarded to students with disabilities to be returned to the Authority at the end of the school year. Makes conforming changes. Clarifies that scholarship grants for students to attend nonpublic schools for low income students set forth in Article 39, Part 2A of GS Chapter 115C are available to PESA recipients who are children with disabilities, in addition to a PESA award.

Amends GS 115C-593 to set forth initial and continuing eligibility for a child with a disability. Moves the eligibility determination set forth in GS 115C-592(e) to GS 115C-593 so that the determination of initial eligibility is as follows. Continues to require assessment through a local education agency who determines that the child is a child with a disability and verifies that information on eligibility form provided by the Authority. Makes technical and conforming changes.

Expands the terms of the parental agreement pertaining to use of PESA funds (GS 115C-595) as follows. Adds the following permitted uses of the funds to the agreement:

· Tuition and fees at an eligible institution of higher education for courses taken prior to obtaining a high school diploma.

· Textbooks required by an eligible institution of higher education for  courses taken prior to obtaining a high school diploma.

·Consumable educational supplies, including paper, pens, and markers.

· Uniforms purchased from or through a GS 115C-562.5 compliant school (schools who have not agreed to comply with the statutory requirements pertaining to nonpublic schools accepting eligible students receiving scholarship grants).

Provides that educational therapies may only be used for children with disabilities.  Removes requirements that funds used for student transportation only be used to transport to and from educational services or activities. And, allows for transportation funds to be used for public transportation, transportation network company services, and taxicab services.

Provides that only parents of children with disabilities may use PESA funds to pay tuition to certain nonpublic schools that are not GS 115C-562.5 schools. Makes conforming changes to the agreement provisions pertaining to limitations on use of funds.

Deletes reference to the method the Authority uses to disburse PESA funds based on whether the nonpublic school is a GS 115C-562.5 compliant school. Makes conforming changes to provide for distributions to institutions of higher education. Clarifies that certain reimbursement of tuition for certain types of schools where the tuition is paid directly by the child’s parents is only available for children with disabilities. 

Amends the administrative provisions pertaining to PESA’s (GS 115C-597) as follows. Changes the amount of administration costs that the Authority is permitted to retain from the lesser of 4% of the funds appropriated or $2 million to the lesser of 2.5% of the funds appropriated or $10 million. Establishes that the Authority must use the lesser of 1% of the funds appropriated or $5 million each fiscal year to contract with a third party for outreach, including promotions through scholarship application processes, guidance on scholarship grant applications, one-on-one parent and family engagement, and scholarship education and awareness. Requires that the Authority contract with the Parents for Educational Freedom in North Carolina, Inc. to provide these services. 

Amends the funding provisions for PESA’s (GS 115C-600) as follows. Changes the NCGA’s finding from the need to provide opportunities for school choice to children with disabilities to all children. Makes conforming changes. Increases appropriation amounts for the following fiscal years as follows:

· Fiscal Year 2024-2025: from $49,943,166 million to $326,239,959 million.

· Fiscal Year 2025-2026: from $50,943,166 million to $708,659,393 million.

· Fiscal Year 2026-2027: from $51,943,166 million to $1,307,881,817 billion.

· Fiscal Year 2027-2028: from $52,943,166 million to $1,536,178,159 billion.

· Fiscal Year 2028-2029: from $53,943,166 million to $1,537,178,159 billion.

· Fiscal Year 2029-2030: from $54,943,166 million to $1,538,178,159 billion.

· Fiscal Year 2030-2031: from $55,943,166 million to $1,539,178,159 billion.

·  Fiscal Year 2031-2032: from $56,943,166 million to $1,540,178,159 billion.

·  Fiscal Year 2032-2033 and each subsequent fiscal year thereafter:  from $57,943,166 million to $1,541,178,159 billion.

Effective July 1, 2025, amends GS 115C-592(b) by increasing the amount of PESA awards available to any student from up to 33% of the average State per pupil funding allocation set in the prior fiscal year to 66% for full-time students or up 33% percent for part-time students (from 17%). 

Part II

Effective July 1, 2025, repeals GS 115C-562.1(5e) and GS 115C-562.8, concerning the Opportunity Scholarship Grant Fund Reserve. Prohibits including the amount appropriated in GS 115C-562.8(b) in the base budget for the 2026-2027 fiscal year. No later than November 1, 2026, all funds in the Opportunity Scholarship Grant Fund Reserve revert to the General Fund.

Effective July 1, 2026, repeals the Opportunity Scholarship Program as set forth in Article 39, Part 2A, of GS 115C (scholarship funds for low-income students to put toward attendance at certain nonpublic schools).

Effective July 1, 2025, amends Article 41 of GS Chapter 115C (pertaining to PESA’s), as amended by the act, as follows. Enacts definition compliant school. Removes reference to the Opportunity Scholarship Program in definition of eligible student. Deletes definition of GS 115C-562.5 compliant school.

Amends GS 115C-592 as follows. Increases the amount of PESA scholarship awards available to any student under GS 115C-592(b) from up to 66% of the average State per pupil funding allocation set in the prior fiscal year for full-time students to up to 100%. And for part-time students, from up to 33% of the average State per pupil funding allocation set in the prior fiscal year to up to 50%. Removes references to the Opportunity Scholarship Program. Clarifies that a student with a disability may also receive an award under GS 115C-592(b) in addition to the award set forth in GS 115C-592(b1). 

Amends GS 115C-595 (parental agreement for use of funds) to remove references to the Opportunity Scholarship Program. Enacts the provisions of GS 115C-562.5 (requirements of nonpublic schools accepting student recipients of the Opportunity Scholarship Program) in new GS 115C-596.5 with clarifying changes.

Amends GS 115C-597 (PESA administration) to require the Authority to adopt a rule regarding the early admission of four-year-old children that establishes the same factors for eligibility as the rule adopted by the State Board of Education (Board) under GS 115C-364(d) (admission to kindergarten for children who are four years old).

Applies to applications for the award of scholarship funds for the 2026-2027 school year

Effective July 1, 2025, for timely applications for the award of scholarship funds for the 2026-2027 school year, requires the Authority to give second priority to eligible students awarded Opportunity Scholarship Program grants.

Part III

Repeals Section 7.15(b) of SL 2007-323 (requiring the Board to reduce the allotments for a public school unit if the higher of the first or second month average daily membership in a local school administrative unit is at least 2% or 100 students lower than the anticipated average daily membership used for allotments for the unit, subject to certain requirements.)