When the NC Chamber Foundation released its report, Addressing North Carolina’s Childcare Crisis: Eleven Strategies to Expand Supply & Support for Working Families, in early 2025, it wasn’t a wish list, it was a roadmap. This year, state leaders followed it. 

Driven by the NC Chamber Foundation’s research-backed recommendations and the NC Chamber’s sustained advocacy , North Carolina’s newly enacted state budget includes landmark investments in childcare that directly address the cost, workforce, and liability challenges that have been quietly destabilizing the childcare sector for years.  

Let’s break down what changed. 

The Big One: A Statewide Subsidy Rate Floor 

The single most consequential childcare provision in this budget is also one of the least self-explanatory. But it matters enormously to employers, and it’s worth understanding why. 

North Carolina provides childcare subsidies to help low-income working families pay for care, reimbursing providers for serving those families. The problem is that those reimbursement rates were based on outdated market data. Until now, rates were still tied to a 2021 market rate study, even as the cost of operating a childcare program rose significantly. Providers serving subsidized families were increasingly operating at a loss. Many closed, while others stopped accepting subsidy families altogether, pushing working parents out of the workforce. 

The new budget addresses this with $97 million in recurring annual funding to update reimbursement rates to the 2023 Childcare Market Rate Study and, critically, establishes a new statewide rate floor. 

That floor is the real breakthrough. It sets a minimum reimbursement level below which no licensed provider can be paid. Rural providers and those in lower-income communities, who have historically been the most underpaid and most vulnerable to closure, are specifically protected. Establishing the floor is a market correction so that providers get paid what it costs to deliver quality care. 

The subsidy floor was also the first recommendation to come out of the Governor’s Task Force on Childcare and Early Education, a task force whose creation was also one of the NC Chamber Foundation’s top recommendations. One recommendation built on another, and both became law. 

For employers, the math is simple: more financially viable providers means more childcare slots, which in turn means more of your employees have access to quality, reliable childcare. 

Building the Workforce Pipeline 

Childcare has a workforce problem of its own, and programs cannot stay open if they are not staffed. Several provisions in this budget address that challenge. 

The Career-Ready Lead Teacher Academy is a new pilot program backed by $1.5 million in nonrecurring funding. It covers training, credentialing, and retention stipends for childcare workers, with a 25% local match requirement to ensure community buy-in.  

The Academy also creates a new provisional credential pathway for 16- and 17-year-olds, a practical step that helps before-school, after-school, and summer programs recruit the high-school-age staff they need to sustain and expand. This maps directly to the NC Chamber Foundation’s recommendation to scale Childcare Academies across the state. 

The budget also implements regulatory workforce reforms to make it easier for high-quality licensed programs to secure qualified staff. That includes the experience equivalency pathway for the NC Early Childhood Credential, something the Foundation recommended specifically to ensure skilled childcare workers aren’t locked out of credentialing because their experience came on the job rather than in a classroom. 

Finally, $7.3 million in nonrecurring funding to the NC Partnership for Children (Smart Start) will expand mental and behavioral health services for children, families, and staff in childcare and out-of-school programs. An accountability report is due back to the legislature to track effectiveness. 

Tackling Liability: A Quiet Threat to the Whole System 

One factor accelerating childcare closures that rarely gets attention is liability insurance. Premiums have risen sharply, and for small operators (and most childcare businesses are small businesses), the cost has become untenable. 

The NC Chamber Foundation recommended regulatory and tort reforms to help preserve liability and other necessary insurance for childcare programs. This budget takes a first step with $350,000 to the NC Department of Insurance to study the feasibility of dedicated liability insurance coverage for childcare providers, including state-supported captive insurance, risk-pooling, and joint underwriting associations. 

The workgroup model may feel incremental, but it’s the same approach that produced the liability reform work in House Bill 412 last year. The legislature recognizes the importance of what has quietly become one of the more significant drivers of closures. 

From the Page to the Law 

The NC Chamber Foundation set out in 2025 to document what was working in other states and in local communities and make the case for scaling those solutions in North Carolina. The research  grounded the conversation in data, and the NC Chamber translated that insight into effective advocacy on behalf of the business community. This year, multiple recommendations from that original report are embedded in state law and the state budget. 

When the business community speaks with one consistent voice on an issue that touches every employer in the state, this is what it looks like. 

The childcare system has more work ahead, but what passed in this budget is real, it’s funded, and it starts July 1. North Carolina’s working families will feel it.