Amends GS 115C-12(39) by requiring a State Board of Education evaluation upon request (was, request of a local board of education specifically) and adding nonpublic schools receiving funds from scholarship grants pursuant to Part 2A of Article 39 of Chapter 115 to those who can be evaluated (was, only schools in local school administrative units). Adds a minimum requirement of accreditation for nonpublic schools that requires the State Board to verify compliance with GS 115C-562.5(a) subdivisions (3a), (10), and (11). Requires the local school administrative unit or nonpublic school (was, local school administrative unit only) to compensate the State Board for actual costs of accreditation process.

Amends GS 115C-562.2 in the following ways:

(1)   Adds stipulation that scholarship grants will be awarded in monthly installments to eligible students (was, grants would be awarded to eligible students without mentioning installments);

(2)   Provides that in addition to the scholarship grant, for any student receiving the grant in grades three through twelve (was three, eight, or eleven) the State Education Assistance Authority (Authority) must provide an amount equal to the cost of the test (was, nationally standardized tests) required to be administered as provided in GS 115C-562.5 to the nonpublic school;

Amends requirements for nonpublic schools that accept eligible students receiving scholarship grants compliance under GS 115C-562.5 in the following ways:  

a.    Requires annual provision (was, only provide without annual stipulation) of documentation for required tuition and fees charged to the student by the nonpublic school to the Authority and the Division of Nonpublic Education (Division) (was, the Authority only). Adds mandate that the Division collect this information and publish it on its website.

b.    Adds requirement to limit increases to cost of tuition and fees by no more than 5% each school year.

c.    Adds requirements to the subdivision pertaining to provision of a criminal background check to the Authority for nonpublic schools located in a local school administrative unit that have a policy requiring criminal history checks to adopt a policy mirroring the local board policy for all employees aside from the employee with the highest decision-making authority. Requires uniform application of policy before applicant is given an unconditional job offer and permits conditional employment while the board is checking the applicant’s criminal history. Requires those schools to also adopt a policy mirroring the local board policy if the local school administrative unit adopts a policy providing for periodic checks of criminal history of employees. Requires a nonpublic school to indicate, upon public school unit inquiry or another nonpublic school in the state’s inquiry, the reason for an employee’s resignation or dismissal, if an employee’s criminal history was relevant to resignation or dismissal. Clarifies that information provided to the Authority in accordance with this subdivision is otherwise privileged information, not public record, and is for the exclusive use of the Authority;

d.    Adds requirement to comply with the standard course of study in accordance with Part 1 of Article 9 of this Chapter and related rules adopted by the State Board of Education;

e.    Requires administration of all tests required by the State Board of Education pursuant to GS 115C-174.11(c) for students in grades three and higher in a local school administrative unit (was, administered to eligible students in grades three and higher whose tuition and fees are paid in whole or in part with a scholarship grant and a list of tests specified directly in the subdivision). Adds clarification that nothing in this subdivision prohibits a nonpublic school from administering additional tests to students;

f.    Requires contracting with a certified public accountant to perform an audit (was, a financial review), requires the audit to be reported to the specified NCGA committee, and removes stipulation that this only applied to schools enrolling 70 students or more that received scholarship grants or funds awarded by the Authority;

g.    Adds requirement to provide all attendance records of students receiving scholarship grants from the previous school year annually to the Division to ensure compliance with compulsory attendance;

h.    Adds requirement to maintain accreditation from the State Board of Education in accordance with GS 115C-12(39);

i.    Adds requirement that at least 50% of teachers in the nonpublic school hold teacher licenses;

j.    Adds requirement to provide instruction each school year for at least 185 days or 1,025 instructional hours during 9 calendar months;

k.    Adds requirement to maintain an operating reserve of 4 months’ worth of expenses;

l.    Adds requirement to maintain a student population reasonably reflecting the racial and ethnic composition of the general population residing in the local school administrative unit where it is located or composition of the special population it seeks to serve residing there. Holds nonpublic schools subject to any court-ordered desegregation plan in effect for the local school administrative unit. Permits the State Board of Education to notify the Authority of a nonpublic school in violation of this subdivision;

m.   Adds new annual report requirement to the Division of Nonpublic Education by September 1 to identify highest paid employee at the school;

n.   Adds requirement that the school enroll an eligible student who timely applies, unless the number of applications exceeds capacity in specified ways and if capacity is reached, students must be accepted by lot. Mandates that students are not required to reapply in subsequent enrollment periods once enrolled;

o.    Adds requirement to comply with all applicable state laws related to expulsion in local school administrative units;

p.    Adds reporting requirement to Authority of any expulsions including the reason for it and identity of student expelled. Clarifies that this information is not a public record under GS 132.

q.    Adds requirement that a school receiving more than $250,000 in grant funds to publish its expenditures in the Uniform Education Reporting System.

Amends reporting requirement for nonpublic schools enrolling more than 25 students whose tuition and fees are paid in whole or in part with a scholarship grant by requiring reports to the Authority on aggregate standardized test performance of eligible students in grades three and higher (was, three, eight, and eleven). Adds requirement that Authority post any aggregate test performance data that is a public record on its website;

Amends prohibition against discrimination from those categories listed in 42 USC § 2000d, as it read on January 1, 2014, to the following categories: race, color, national origin, sex, sexual orientation, disability, or religion of any student or their family members;

Mandates that if the Authority or the State Board of Education (was, Authority only) determines a nonpublic school is not in compliance as required by the section, then it is ineligible to receive future scholarship funds.

Amends GS 115C-562.7 by adding additional parameters to the information the Authority must report annually under both subsections (b) and (c). Adds a new annual reporting requirement for the Division of Nonpublic Education to the Joint Legislative Education Oversight Committee on all political donations from the highest paid official and the official’s spouse, if applicable.

Amends GS 115C-562.8, pertaining to the Opportunity Scholarship Grant Fund Reserve (Reserve) by removing all appropriations from the General Fund to the Reserve as outlined in the list in subsection (b). Amends the remainder of subsection (b) in the following ways: for the 2027-2028 fiscal year (was, 2032-2033) and each fiscal year thereafter, there is appropriated from the General Fund to the Reserve $541.54 million (was, $825 million). Amends subsection (d) by removing the permission that any unexpended funds at the end of a fiscal year to be used for scholarship awards in the following fiscal year could be used, up to $1 million, by the Authority to contract with nonprofits representing parents and families for outreach and scholarship education and application assistance.

Reduces funds appropriated for opportunity scholarship grants as follows: (1) recurring funds appropriated to the Board of Governors of UNC for the opportunity scholarship program by $30 million for the 2025-2026 fiscal year; (2) funds appropriated to the Reserve for the 2024-2025 fiscal year and allocated from the Reserve for awards of scholarship grants in the 2025-2026 fiscal year by $28.46 million in nonrecurring funds for the 2025-2026 fiscal year; and (3) funds appropriated to the Reserve by $83.46 million in recurring funds for the 2025-2026 fiscal year and an additional $50 million in recurring funds for the 2026-2027 fiscal year.

Act is effective July 1, 2025, and applies beginning with the 2025-2026 school year.