Governor Josh Stein created the bipartisan task force in March to address some of the stark facts about the availability of child care.
For a few examples: child care for one family costs a family close to $12,000 a year, there is only one licensed child care slot available for every five families who need one, and 42% of early child care workers rely on public assistance to meet their needs. (*Note: you can view this report at the end of this article.)
Sheila Hoyle is the interim director of the North Carolina Early Education Coalition.
“Basically, the business model is broken. We do not have enough revenue coming in to support the cost of running a good childcare center,” she said.
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.
“It's a hard problem to fix, because it's not like a restaurant where you can take the portions a little smaller, or charge a little bit more. You can't suddenly have a teacher taking care of 15 babies,” she said.
But there is an economic case to be made for investment in early child care, according to Morrow. A 2023 study from the North Carolina Department of Commerce and NC Child found that if around 31,000 workers had access to child care, they could have produced up to $13 billion in additional economic output.
“If businesses don't have the staff, because those staff can't find a place for their children to be, or the staff are less productive or taking time off because their child care is unstable, that's not good for our economy,” Morrow said.
Creation of a statewide subsidy reimbursement rate floor
The report details more about the industry’s deficits — but it also offers potential solutions, including the establishment of a standard subsidy floor for child care centers. Right now, these rates are set for each county according to the age of the child, star rating of the program, and the 75th percentile of the market rate for care.
“We do know that in certain places, it costs more, so that this wouldn't be making one price across the board, but it would establish a floor that we would still be able to give some communities where the cost of living is higher, for example, additional dollars, but we wouldn't penalize smaller and rural counties where or the cost of care is higher than what this current subsidy minimums are,” Morrow said.
Currently, parents are required to pay 10% of their income towards child care, then the subsidy typically covers the rest to set that market rate. In May, for example, New Hanover County families on average spent $726, but Morrow reiterated that some families pay more, some pay less, again depending on their income and this unique formula.
The report draws out these differences. For example, a five-star rated facility in Gaston County can receive $446 less per infant when compared to a Mecklenburg County facility with the same rating. The task force is hoping the state could eventually fix these types of discrepancies.
Ideas to attract childcare workers
Task force members are looking into other ideas, like making child care workers eligible for the State Health Plan and providing other non-salary benefits like paid sick leave, retirement savings, loan forgiveness, mental health support, and substitute teacher pools. They’re also considering subsidizing child care for those who work in the sector themselves – and funding professional preparation and education programs.
Norris said after the initial years of getting her business off the ground, she decided to offer a medical policy and access to a 401K.
“So when the state would call and want to know how long our staff had been there, I blew the statistics out of the water because I had long-term staff,” she said, but added that she understands that other centers just don’t have the revenues to offer those benefits.
Norris cited other things that helped keep her head above water, like having her husband do the yard maintenance and working with NC State on a gardening program that supported feeding the children.
But for her and other providers like her, “We’ve just dealt with low reimbursement rates for so long in North Carolina, child care can really be improved, and if we improve that, we improve the future of our world.”
Funding already crunched
Most of these ideas rely on increased government funding, but the current climate is sending up warning signs.
The One Big Beautiful Bill Act has made significant reductions in those who qualify for Medicaid and SNAP benefits, which will ultimately affect those families applying for child care. So far, the federal government hasn’t moved to cut all the funding for Preschool Development Grant Birth through Five Program (PDG) or Head Start, but those ideas have been floated.
This uncertainty isn’t the most stable environment to be in, according to those who work in the early childhood sector.
“And I don't think anybody knows exactly at this time, but I think there's lots of uncertainty. And again, one of the problems with uncertainty is, it's harder to plan, right? And so, you're making short-term decisions instead of long-term planning,” Morrow said.
Hoyle agrees, “I think we're all a little bit nervous right now, because we're not sure exactly what might happen.”
Morrow added that while federal and state funding sources are important, so is local support. Earlier in the budget cycle, the New Hanover County Commission signaled they would be covering six preschool classrooms, mainly for three-year-olds, that were originally funded with federal Covid relief money. Ultimately, though, in a 3-2 vote along partisan lines, that financial support was cut.
“From Smart Start’s point of view, that was unfortunate," Morrow said. "We're glad that the school system said we can keep those classrooms open for at least another year, but how long in the future can they continue to support that?”
She added that there is still a waitlist for child care.
“We have people who are reporting that they have not taken promotions, they have left jobs; they have not moved for a new job; any number of things, because of childcare,” she said. “When all is said and done, we need sustainable funding that can support high-quality care; it's not something that the private market can completely absorb and do what we want it to do all by itself, without some additional support.”
It was mostly agreed upon among the state task force members — and among these experts in child care, the largest financial pool to shore up the sector comes from tax revenues. However, in the interim report, it did mention the creation of private child care endowments. There are also state pilots like Tri-Share, where childcare costs are split equally between the employee, the employer, and the state.
Official recommendations are due out by the end of the year. Norris said she’s hopeful that the state will implement them. She said she looks at this group of political and non-profit leaders the way she did former North Carolina Governor Jim Hunt when he created Smart Start, a groundbreaking public-private partnership providing early childhood care and education founded in the early 1990s.
“Now we have somebody with power and the possibility of money to get these things done, and that's how I'm looking at this task force and what we've got going on now, making people more aware that we need quality child care and we need financial help with that,” she said.
2025 Childcare Report by Ben Schachtman on Scribd
