New NC budget protects Opportunity Scholarships after Dems sought cuts

North Carolina’s Opportunity Scholarship Program will continue to grow under a state budget released by lawmakers and expected to be voted on this week. The development turns back a months-long campaign by Gov. Josh Stein and Democratic lawmakers to freeze or defund the voucher program.

The spending plan, released June 30, has other good news for school-choice supporters: It would commit up to $1 million to help the state launch a new federal school-choice tax credit that North Carolina opted into earlier in June. The move positions the NC State Education Assistance Authority (NCSEAA), which already runs the Opportunity Scholarship Program, to administer the federal scholarships alongside the state’s own program.

The Republican-led General Assembly finalized the budget over the over the weekend, declining to adopt either of the two routes Democrats pushed this spring to shrink the program: Stein’s proposed moratorium and income cap, and a House bill that would have cut nearly $400 million over two years.

Instead, the budget leaves in place the statutory schedule that lifts the program’s annual appropriation toward $825 million by the early 2030s.

Roughly 107,000 students now receive Opportunity Scholarships at a cost of about $587 million a year. Since lawmakers removed the income cap in 2023 — making the scholarships available to all families on a sliding scale based on household income — the program has more than doubled in size.

In announcing the finalized budget, Senate Leader Phil Berger, R-Rockingham, said the plan keeps the GOP’s promise to cut taxes “while expanding access to incredible educational opportunities, keeping our communities safe, and solidifying North Carolina’s status as the best state in the nation.”

Savings sent back to public schools

A notable provision makes good on a promise lawmakers first wrote into the 2023 state budget — the same law that removed the income cap and opened Opportunity Scholarships to all families.

Under the spending plan, the state would reinvest nearly $36 million into public schools. That amount is equal to the savings the state realized over the past two years when students left public schools for private ones, using vouchers that cost less than the state would have spent to educate those same students in public school.

The money would fund $1,750 bonuses for school nutrition and custodial workers, middle-school literacy training, and a new K-8 math curriculum.

The mechanism underscores a point school-choice advocates have long made: Because most vouchers are worth less than the state spends per public-school student, transfers can save the state money.

“The legislation calls on the state to reinvest future savings from the program when the scholarship is less than the average state per-pupil allocation,” said Robert Luebke, director of the Center for Effective Education at the John Locke Foundation. “The provision underscores how the Opportunity Scholarship Program doesn’t drain funding from the public schools, but can help to strengthen them.”

A Department of Public Instruction report last year found the state spent about $34.3 million on scholarships for students who left public schools in 2024-25 — roughly $10.1 million less than the $44.4 million it would have spent educating them in public schools. That was the first year’s savings — a second year of transfers brought the two-year total to nearly $36 million.

The reinvestment is nonrecurring, and the budget resets the program’s forward-looking reinvestment intent to the 2027-28 school year.

New verification and testing audit

While the proposed budget continues to grow the voucher program, it also includes new accountability mechanisms.

For the first time, the state would work harder to confirm that families getting vouchers actually live in North Carolina. The budget would direct the NCSEAA to build a residency-verification system to check applicants’ information — including Social Security numbers — against records kept by other state agencies, from the Division of Motor Vehicles to the Department of Revenue. Military families moved into the state on orders get an exception.

The budget also asks more of the private schools that accept the vouchers. Every year, NCSEAA would have to audit at least 4% of participating schools to confirm they gave students the standardized tests the program requires. Schools would have to keep those test records for four years, but the results would be kept confidential.

“The guardrails to tighten residency, reserves and improve the timing around application guidelines are improvements,” Luebke said. “The requirements for testing will not be popular. But in all honesty, they could have been far worse.”

State Auditor Dave Boliek, a Republican, has separately said his office plans to review the program, with findings expected this fall.

Democrats press to scale back

Democrats have argued the money would be better spent in traditional public schools. Stein’s recommended budget would have frozen new awards and capped eligibility near $90,000 for a family of four — a change Carolina Journal reported would remove an estimated 60,000 of the program’s current recipients. A separate bill from four House Democrats would cut nearly $400 million from the program and redirect it to child-care subsidies.

State Rep. Brandon Lofton, D-Mecklenburg, has framed the program as a trade-off against teacher pay: “We came to Raleigh and we passed a budget that put more money into private school vouchers than it did into teacher raises,” he said in April.

The program continues to poll well. A Carolina Journal survey in January put support for the Opportunity Scholarship Program at 61% of likely voters.

“Compared to the calls from the Democrats to end the Opportunity Scholarship Program, the proposed state budget preserves and seeks to strengthen the popular voucher program,” Luebke said. “Overall, should the proposed budget pass, I’d consider it a win.”

Funding the federal credit

The budget also sets aside up to $1 million for NCSEAA to administer the new federal school-choice tax credit, which the General Assembly joined this month by overriding Stein’s veto of House Bill 87.

The federal program, created under the tax-and-spending law President Donald Trump signed in July 2025, lets donors claim a dollar-for-dollar federal tax credit of up to $1,700 for gifts to scholarship-granting organizations beginning in 2027. North Carolina is among roughly 29 states that have moved to participate.

NCSEAA — which already runs the Opportunity Scholarship Program — will maintain the list of approved organizations and must establish rules by July 1, 2026, or within 120 days of federal guidance.

The budget also clears the waitlist for a related school-choice program — Personal Education Student Accounts for children with disabilities — bringing its total appropriation to $94 million.

“New NC budget protects Opportunity Scholarships after Dems sought cuts” was originally published on www.carolinajournal.com.