New NC budget keeps Khanmigo contract, but slashes funding from $10 million to $500,000

Republican lawmakers have sharply reduced a proposal to fund an artificial intelligence platform for North Carolina schools, scaling back an earlier plan that would have directed $10 million to Khan Academy for an AI-powered tutoring and teaching assistant platform called Khanmigo.  

The conference budget proposal released Monday appropriates $500,000 in nonrecurring funding to the Department of Public Instruction to contract with Khan Academy for Khanmigo licenses and to develop an AI course over the next two years. The proposal still must be approved by the House and Senate before heading to Gov. Josh Stein.  

The funding marks a significant reduction from legislation introduced earlier this year that would have appropriated $10 million to Khan Academy to pilot Khanmigo in North Carolina classrooms.

NC bill would steer $10 million to Khan Academy for AI tool of debatable value

NC Newsline previously reported that the original proposal raised concerns because it directed the state to contract with a specific vendor without a competitive bidding process. Educators and artificial intelligence experts also questioned whether Khanmigo had been sufficiently evaluated before lawmakers proposed the funding, and whether it had demonstrated enough educational value to justify the investment. 

The latest budget proposal continues to identify Khan Academy by name, but reduces the appropriation to 5% of the amount originally proposed. The bill states the money would be used to contract with Khan for licenses to the Khanmigo application.  

Sen. Mike Lee (R-New Hanover), who spearheaded the original proposal, did not immediately respond to NC Newsline’s request for comment

The reduced appropriation comes as lawmakers move forward with a broader package of AI initiatives for public schools. 

Elsewhere in the budget, lawmakers propose requiring the Department of Public Instruction to develop a model artificial intelligence policy for schools, requiring school districts, charter schools and laboratory schools to adopt AI policies, and directing N.C. State University’s Friday Institute for Educational Innovation to develop professional development for educators. Public school teachers would be required to complete AI training by June 30, 2028.  

The proposed budget is expected to receive votes in the House and Senate this week.