Over the last year, the Carolina Journal reported on the use of “reserve funds” in the state budget: billions of taxpayer dollars that are appropriated yet not accounted for in the general fund’s headline numbers. This has allowed sizable expansion in the state budget while keeping the headline budget number at a more acceptable level.
So, where is the money going, and how do reserve funds work?
Carolina Journal is examining some of these “reserve funds” to explain how the process operates. This time, the spotlight is on the “Information Technology Reserve.”
According to the latest monthly financial report from the Office of the State Controller, the IT Reserve, established in the 2021 budget, currently stands at $343.8 million.
“The State Controller shall transfer funds available in the Information Technology Reserve to state agencies and departments for information technology projects,” reads the budget. “…and the funds transferred are appropriated for the fiscal year in which they are transferred.”
A total of $280.3 million in appropriations has been outlined in the NC House of Representatives Appropriations Committee Report on the Current Appropriations Act. A total of $264.4 million was appropriated in the NC Senate Appropriations/Base Budget Committee Report on the Current Operations Appropriations Act. All appropriations are for the 2025-27 biennial budget.
In comments to Carolina Journal, Joseph Harris, fiscal policy analyst for the John Locke Foundation, said in addition to the $264,422,622 allocated by the Senate, they recommended transferring $15,361,021 to the Economic Development Project Reserve and $61,300,394 to the Helene Fund, resulting in a total of $341,084,037.
The House appropriates $15 million in fiscal year 2026 (FY26) and $12.7 million in FY27 from the IT Reserve for the Uniform Education Reporting System (UERS).
The House and Senate have both made appropriations to the School Business Modernization System; the House appropriates $15.2 million in FY26, and the Senate appropriates $45 million in FY26.
Both the House and Senate appropriate $18.6 million for Electronic Health Records (EHR) for State Facilities Implementation in FY26 — $41.6 million in FY26 and $67 million in FY27 for the Medicaid Enterprise System, and $20 million for the Integration Budget Information System (IBIS) Replacement for FY26.
Both legislative houses appropriate $850,000 for IBIS Stabilization for FY26, and the Senate appropriates an additional $850,000 in FY27. Finally, the House appropriated $15 million for software modernization, and the Senate appropriated $13 million in FY26.
These are just a few of the noteworthy expenditures outlined in the committee reports from the NC House and Senate reports.
“Both chambers have proposed substantial allocations from the state’s Information Technology Reserve to fund technology upgrades, indicating that policymakers recognize the need to modernize the state’s technology infrastructure,” said Harris. The House recommended $280.3 million in technology upgrades over the biennium, while the Senate recommended $264.4 million. In addition, the Senate also proposed transferring $15.4 million and $61.3 million from the Information Technology Reserve to the Economic Development Project Reserve and the Helene Fund, respectively. The House’s proposal would leave $63.5 million in the Information Technology Reserve, while the Senate’s recommendation would drive the balance down to just $2.7 million.”
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