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A Statewide Floor for Childcare: the Closure We Truly Need!

Providers, teachers, and families of young children in North Carolina know all too well- our child care system needs a major fix. A lack of investment into early childhood education creates real challenges to center and family child care home owners to provide continuous quality care, and forces many talented educators to shut down operations altogether or leave the field. We need a solution that brings true stability. 

The consensus is in: a critical step towards stabilizing childcare programs rests in creating a statewide child care reimbursement floor. Reports like the NC Child Care Task Force echo the need for a statewide floor that would reimburse providers closer to the true cost of care and establish a level of adequate funding to meet the growing care needs in our state.

Current child care subsidy rates paid to providers are outdated and use a methodology that creates rates that vary greatly across the state and result in major disparities. In 2023, the North Carolina Division of Child Development and Early Education (DCDEE) in partnership with the American Institutes for Research® (AIR®) conducted an alternative market rate study that showed new models to set child care subsidy rates based on the actual cost of care. In comparison, North Carolina’s current child care subsidy rates lag far behind what providers need to deliver the care system families and children deserve, and it will take a strong commitment and investment from the NC General Assembly to move us in the right direction. 

Why does North Carolina need a statewide childcare subsidy floor?

• Over half of NC counties (53), five-star rated centers serving infants are reimbursed at $1000 or less. Infant care is the hardest for parents to find and the most expensive to operate for providers. This floor makes big gains towards covering the cost of care across all age groups, star levels, and in both licensed centers and family child care homes  
• Local child care businesses are better able to support the workforce behind the workforce with more guaranteed funding 
• More providers are likely to continue participating in the program if they are reimbursed closer to the cost of services, keeping more options open for working families
• Rural programs face long standing gaps and disparities in the reimbursements they receive. Many rural counties receive reimbursements that are hundreds of dollars less per child than in urban counties and the floor would create a minimum that significantly lifts up rural counties, and benefits all counties across ages, star-levels, and provider setting (center-based or family child care homes)
• Reduces administrative complexity for county-level administrators by creating uniform rates. County-level subsidy administrators can make better budget projections and child care programs can better plan for their individual programs   

How do we put the North Carolina subsidy rate floor into action?

While the 2025 long legislative session continues on, we still need lawmakers in Raleigh to pass a comprehensive budget. Lawmakers should pass funding needed to increase reimbursement rates to providers, including providing a pathway to set a statewide child care subsidy floor across all age groups. So far, there has been language introduced in the Senate to bring current 2021 subsidy rates up to the most recent 2023 market rate levels. This is a start, but without a statewide floor based on the true cost of care, North Carolina providers will still face similar challenges and struggle to keep their doors open.

We must make meaningful progress this session,pass adequate funding to keep providers in business, and ensure families have uninterrupted care. Not only are we working to gain support for the concept of a statewide floor, but to eventually dedicate significant state dollars to the idea to raise the tide for all providers. Below, we offer a  model for the NC General Assembly to consider that would give our subsidy financing and industry the overhaul it needs: $145 million to set a statewide floor for all age groups (0-12 years).  With this level of funding, providers would be reimbursed uniform rates according to their star level, regardless of where they are located. It is an ambitious vision and one we must build towards to make our NC early education system the standard for licensed child care.

Source: created by WNC Early Childhood Coalition, revised 9/26/25*The proposed floor uses the “Statewide Rate” from the 2021 Market Rate Study as the floor (minimum) and the modeled county rate from the 2023 Market Rate Study as the maximum rate. Counties receive the higher of these two as a “hold harmless” policy. In the rare case that a county’s current rate is higher than either the floor or the 2023 rate, the hold harmless policy would keep the existing rate – meaning no counties receive less than their current rates.

What is at stake for North Carolina child care providers and families?

A statewide floor for childcare subsidy would be a critical intervention for NC’s early education system and make a decided shift towards long term stability for providers and families. An overwhelming number of counties have been experiencing a net loss of centers and center closures will be exacerbated If legislators do not take immediate action. Check out this interactive map that captures child care center closure trends from February of this year through June.