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Take Action! – Sign On to Letter Urging Funding for Subsidy “Rate Floor” by Aug. 15!
As a child care business owner/operator (centers and family child care homes), or a nonprofit child care director, you know that quality care costs not only more than what many families can afford, but also far more than the reimbursement rates for serving subsidy-eligible, working families in most NC counties.
Because subsidy rates are artificially low, most providers who serve subsidy-eligible families struggle to recruit and retain the teachers and staff required to sustain their programs and meet the needs of low-income working families in their communities. Even worse, without higher subsidy rates, too many programs face impossible choices, such as cutting staff, freezing wages, closing classrooms or shutting down altogether.
This is why NCLCCA is encouraging you to join a growing group of child care business owners and nonprofit child care directors from across the state calling for higher subsidy rates and a new statewide subsidy “rate floor” – by signing on to a letter to key state legislators responsible for a state budget. You can read the letter HERE.
What’s a Statewide Reimbursement Rate Floor? – Subsidy reimbursement rates vary too widely by county and are based on outdated market data, especially in rural areas, where rates are typically much lower. Even in higher-rate counties, the payments still fall short of what it costs to deliver quality care. A statewide “rate floor” would set a minimum subsidy reimbursement rate (by age group and star rating) for every county in North Carolina. Counties with rates lower than the “rate floor” would see their rates increase to that amount. This would ensure fairer, more predictable funding for providers regardless of zip code.
In their state budget proposals this year, our state lawmakers included funding to raise rates in all counties from the 2021 market rates to 2023 market rates (based on the most recent market survey), which will only happen if they pass a state budget. They did not, however, include any funding for a new statewide subsidy “rate floor,” which is one of NCLCCA’s top priorities.
By adding your name to this letter, you’ll be joining a powerful collective voice of child care leaders calling on state legislators to include funding for a subsidy market rate increase and a subsidy rate floor in the state budget. Help us reach our goal of at least 500 child care businesses/organizations signing on to this letter by Aug. 15! Click HERE to read the letter now or complete the form below.
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State Legislators Override Governor’s Vetoes, Pass Stop-gap ‘Mini Budget’
State legislators returned to Raleigh this week (July 29-31) to hold override votes on potentially 14 bills they passed earlier in the session that Governor Josh Stein vetoed. Both chambers quickly overrode eight gubernatorial vetoes, enacting those bills into law. (Details are included below.) Next, they turned their attention to House Bill 125 – Continuing Budget Operations, which constituted a “mini budget” that appropriated limited government funding where the House and Senate have agreement.
The “mini budget” bill allocates $2.3 billion over the next two years, as compared to a $60 billion total state budget amount from two years ago. Unfortunately, the mini budget bill did not include any additional funding for child care programs. The only child care provision in the mini budget replaced $8 million in state General-Fund money for child care subsidies with $8 million in federal TANF funding, meaning actual subsidy funding DID NOT change.
The mini budget bill moved quickly through the Senate and House in two days. It is now up to Governor Stein to decide whether to sign it, let it become law without his signature, or veto it. (He has 10 days to decide.) The mini budget passed both chambers by a sizable margin with bipartisan support.
What Will State Legislators Do Next? – Will There Be a Comprehensive State Budget?
A modified “adjournment resolution” (SJR 772) has state legislators scheduled to return to Raleigh every month between August and April 21, 2026. They will return for two days in August (26-28), three days in September (22-25) and one day each from November through April (Oct. 21; Nov. 18; Dec. 16; Jan. 13, 2026; Feb. 10; March 10; April 7). Then, they will return again on April 21, presumably for the legislature’s 2026 “Short Session.”
There is still hope that a comprehensive budget will pass when state legislators return to Raleigh in August or September – or at least additional mini budgets. NCLCCA is continuing our strong push for lawmakers to include funding for the following child care programs, initiatives and bills in a comprehensive state budget or additional mini-budget bill:
- Subsidy market rate increase(s) and subsidy rate floor
- Expansion of behavioral/mental health services for children in licensed care
- Free Child Care Academies across the state to develop and train new Lead Teachers in a matter of weeks without enrollment in community colleges
While these are not all of NCLCCA’s legislative priorities for 2025, these provisions and accompanying funding were all included either in state budget proposals from the House and Senate or bills that have advanced during the ongoing legislative session.
Veto Overrides Lead to New Laws
This week the General Assembly successfully overrode gubernatorial vetoes of several bills, which will enact them immediately into law unless the bills specify different. The veto override, to date, that stands to have the most impact on licensed child care, is the following:
House Bill 402 – Limit Rules with Substantial Financial Costs – This new law puts new restrictions on administrative rulemaking through requirements tied to financial thresholds. Here how it works: If proposed new rules will have a projected aggregate financial cost to all persons affected of $1 million or more during any five-year period, then the vote to implement the rules must include two-thirds of the rulemaking body. If the cost is $10 million or more during a five-year period, the vote by the rulemaking body to implement the new rules must be unanimous. If the cost is $20 million or greater over five years, then the rules will not take effect unless the General Assembly ratifies them.
This means that if new rules proposed by the Child Care Commission or Building Code Council or other rulemaking bodies for licensed child care would cost licensed child care programs $800 per year each, then state legislators would have to approve the new rules before they would be effective. ($20 million in costs divided by roughly 5,000 licensed child care programs, divided by 5 years equals about $800 per year each.) And if the proposed rules would cost licensed child care programs $400 per year each, then the vote to approve them would need to be unanimous. At the low end, if the proposed new rules would cost licensed providers even $40/year each, two-thirds of the rulemaking body would have to approve them
It is important to note that the new rulemaking requirements do not apply to rules required by federal law to maintain compliance with a federal program or receive funding, such as federal subsidy program rules and funding.
Other veto overrides, leading to new laws, include:
House Bill 193 – Firearm Law Revisions: Permits certain employees, parents and volunteers at private schools to carry a concealed firearm if allowed by school leadership.
House Bill 805 – Prevent Sexual Exploitation/Women and Minors: Defines two genders/sexes in state law and sets regulations to ensure that adult content posted online without an individual's consent is removed.
House Bill 549 – Clarify Powers of State Auditor: Clarifies the powers of the state auditor and grants the auditor access to databases, datasets and digital records necessary for any purpose within the authority of the position.
House Bill 318 – The Criminal Illegal Alien Enforcement Act: Requires local sheriff’s offices to cooperate more closely with Immigrations and Customs Enforcement.
Senate Bill 266 – The Power Bill Reduction Act: Eliminates the interim date for carbon reduction by certain electric public utilities (Duke Energy) and modifies construction work in progress for baseload electric generating facilities.
Senate Bill 416 – Personal Privacy Protection Act: Prohibits state agencies from accessing or disclosing the member, supporter, and volunteer lists of nonprofits unless provided otherwise in law.
Senate Bill 254 – Charter School Changes: Amends charter school laws and grants the NC Charter Schools Review Board the ability to propose, recommend and approve rules and policies.
Experts and advocates say the child care industry needs more public support to survive
WHQR (Audio & Print), July 25, 2025
“Sarah Norris ran Wilmington’s Total Child Care for over two decades. She said the sector can’t get by without increased government subsidies. ‘Without state and federal funds, childcare programs will not be able to continue. That's just the bottom line,’ she said. And while some say free market and competition can fix most industries, Jane Morrow, who is the executive director of New Hanover Smart Start, said public education and child care don’t typically work that way.” Read more HERE.