May 15 Policy Updates

North Carolina General Assembly leaders announced that budget negotiations are finally moving forward, but they have not yet released a finalized budget or detailed funding allocations for public schools.

Teacher Pay Agreement

Speaker Destin Hall and Senate President Pro Tempore Phil Berger announced a compromise on teacher compensation. The proposed agreement includes:

• An average 8% raise for teachers (non-retroactive)
• A one-time $1,000 bonus for teachers with more than 16 years of experience
• A $500 bonus for teachers with fewer than 16 years of experience

The proposed pay increase is heavily weighted toward beginning teachers. Starting salaries are projected to rise by 17%, bringing the base to $48,000, or roughly $53,000 with local supplements included. This would place North Carolina among the highest starting teacher pay rates in the region. Veteran teachers with more than 16 years of experience would receive a one-time bonus, but the proposal does little to address long-term retention concerns. Questions surrounding mid-career pay plateaus, master’s pay, and sustained salary growth remain unresolved until the full budget is released.

Tax Policy and Long-Term Revenue Implications

The agreement also includes several major tax policy provisions:

• If approved by voters, a constitutional amendment limiting local governments’ ability to increase property taxes (H1089)
• If approved by voters, a constitutional amendment capping the personal income tax rate at 3.5%
• Replacement of current revenue-triggered tax cuts with a delayed schedule that would gradually reduce the personal income tax rate from 3.99% to 2.49% over time
• Continued phaseout of the corporate income tax, which is scheduled to reach zero in 2030

These broader tax policy changes carry significant long-term implications. Reduced state revenue–estimated to cost the state billions annually–and new limits on local taxing authority could make it harder for state and local governments to fund public schools and other public services in the future. In many communities, local governments have already taken on increased financial responsibility as the state has fallen short of fully funding public education and continues to pass along additional costs through unfunded mandates. Limiting local revenue flexibility could further constrain counties’ ability to provide the services residents rely on each day, including school funding, public safety, and infrastructure. 

While the proposed teacher raises may generate positive headlines, the budget’s full impact will remain unclear until lawmakers release the complete proposal, which is expected to receive a vote mid-June.

As the filing deadline for appropriations bills came to a close at the General Assembly, more than 60 education-related bills have already been filed, offering an early look at competing visions for North Carolina’s public schools. These proposals reflect two realities shaping education policy in the state: growing interest in innovation and transformation, alongside persistent challenges around staffing, funding, and school stability. 

Short Session Education Bills
Approximately fourteen bills focused on school funding and finance, addressing topics ranging from funding formulas to tax policy and resource allocation. Bills such as the Kids Over Corporations Act also motivated teachers to march in Raleigh and across the state, calling for a shift in what many advocates view as misguided legislative priorities.

Lawmakers also introduced eleven bills related to teacher compensation, benefits, workforce pipeline development, and professional support, including the bipartisan teacher licensure bill highlighted in last week’s Policy Corner. The Pay Teachers What They’re Worth Act proposes salary increases alongside a paid student teaching grant program designed to strengthen recruitment into the profession.

Another thirteen bills focused on student supports, health, and well-being, including proposals related to mental health services, universal school meals, and afterschool programming. Notably, afterschool legislation was filed in both chambers, signaling potential bicameral interest. Legislators also filed ten bills centered on school safety, student protections, school climate, and issues such as student screen time.

Nine additional bills addressed accountability, governance, and school choice. These included a joint resolution urging Congress to support dismantling the U.S. Department of Education, as well as legislation aimed at increasing accountability and reporting requirements for private schools receiving Opportunity Scholarship funds.

Finally, lawmakers introduced twelve bills related to instructional policy, graduation requirements, and emerging issues such as artificial intelligence. One omnibus proposal stands out as a broad systems redesign bill, combining funding, workforce, accountability, AI integration, and high school redesign initiatives into a single package. The proposal emphasizes competency-based education, personalized learning pathways, work-based learning, AI-enabled instruction, and a reimagining of the traditional high school structure. Also included is increased funding for Advanced Teaching Roles, awarding the program over $54 million in recurring funds.

Education Innovation without Stability
While innovation and systems redesign may help schools adapt to evolving workforce and student needs, meaningful transformation is difficult without first stabilizing the foundation of the education system itself. North Carolina continues to face significant workforce challenges, including teacher shortages, high attrition rates, and declining morale. Teachers have not received a raise since 2023, and the state is projected to fall to 46th in the nation for teacher pay.

Although some proposed legislation attempts to address workforce development and educator support, many proposals stop short of fully addressing the state’s most pressing challenge: competitive teacher compensation. Long-term innovation depends not only on new models and initiatives, but also on sustained investment in highly-qualified educators and school systems responsible for implementing them.