Senate Bill 594, the Care Center Cost Support Act, would raise North Carolina child care subsidy reimbursement rates to the 75th percentile of the 2023 Child Care Market Rate Study. The increase would apply beginning October 1, 2025, for children in three-, four-, and five-star-rated child care centers and homes, and it would also set statewide payment rates at the 75th percentile for licensed child care centers and homes serving children from birth through age 5.
The bill includes a county-level safeguard for smaller counties: if applying the statewide rate to a county with fewer than 50 children in each age group would result in a rate below the county market rate and would make it harder to purchase child care for low-income children, the county market rate could be used instead. To fund these changes, the bill appropriates $110 million in recurring General Fund dollars each year of the 2025-2027 fiscal biennium to the Department of Health and Human Services, Division of Child Development and Early Education. The act would become effective July 1, 2025.
Impact
If enacted, the bill would amend the state’s child care subsidy payment structure by directing DHHS to pay higher reimbursement rates tied to the 2023 market study and by creating a minimum floor for subsidy rates. It would affect child care centers and homes that serve subsidized children, especially providers in counties where current rates are below the new statewide benchmark, and would increase recurring state spending by $110 million annually for the biennium.
Sentiment
The available record shows no committee transcript or recorded votes, so there is no direct evidence of debate or formal support/opposition in the materials provided. Based on the bill’s purpose and funding approach, the measure appears designed to address child care affordability and provider reimbursement concerns, suggesting a policy focus on stabilizing the child care market and improving access for low-income families.
Contention
The main potential points of contention are fiscal and implementation-related. The bill requires a substantial recurring appropriation from the General Fund, which may raise budget concerns. Another possible issue is the balance between a uniform statewide reimbursement floor and county-specific market conditions, particularly in smaller counties where the bill allows an exception if the statewide rate would undercut local market realities and reduce access to care for low-income children.