Contains whereas clauses.
Part I.
Section 1.1.
Amends the qualifications required for a student to meet the definition of eligible student in GS 115C-562.1 so that the student must reside in a household with an income level between the amount required for the student to qualify for the federal free or reduced-price lunch program and not in excess of 200% of that amount. Makes conforming changes to GS 115C-562.2 (scholarship grants) to account for new definition of eligible student. Starting with the 2027-28 year, reduces the funds appropriated for the Opportunity Scholarship Grant Fund Reserve (Reserve) each fiscal year in GS 115C-562.8 so that they are reduced from a high of $800 million for the 2031-32 school year to $560 million for that year. From the 2032-2033 school year onward, reduces the appropriation from $825 million to $585 million. Reduces funds appropriated for Opportunity Scholarship grants as follows: (1) $150 million from the 2025-26 appropriations for scholarship grants in 2026-27 and (2) $240 million from the 2026-27 appropriations for scholarship grants in 2027-28. Effective July 1, 2026, and applies to applications for the award of scholarship funds beginning in the 2027-28 school year.
Section 1.2.
Appropriates $150 million from the General Fund to the Department of Health and Human Services (DHHS), Division of Child Development and Early Education (Division) for 2026-27 and $240 million in recurring funds beginning in 2026-27 as a result of the reductions made above to be used to assist in reducing the waitlist for subsidized child care in this State.
Part II.
Section 2.1.
Enacts GS 143B-168.17, the tri-share child care program (Program), that creates a public/private partnership to share the cost of child care equally between employers, eligible employees, and the State. Directs the NC Partnership in collaboration with the Department of Commerce (DOC) to facilitate the Program. Provides for regional facilitator hubs as described. Tasks the NC Partnership with implementing standardized procedures to ensure the Program is operated consistently among all regional facilitator hubs, including (1) design of the Program; (2) establishment of Program infrastructure; and (3) recruitment of participating child care providers and employers. Provides for a third-party administrator to assist with the enrollment and financial tasks described. Requires the NC Partnership to conduct financial and compliance monitoring of the hubs and third-party administrator. Directs that an employee is eligible to participate in the Program if the employee: (1) is employed by a participating employer, (2) has a household income between 185% and 300% of the federal poverty level, and (3) is not otherwise eligible for subsidized child care in this State. Lists six additional criteria that the NC Partnership and regional hubs must implement for the Program. Clarifies that child-care includes part-time and full-time care, before and after school care, and summer day camps. Prioritizes business in sectors with persistent labor shortages. Provides for even distribution of Program funds between the regional hubs. Specifies that those funds do not revert and that the hubs can use up to 9% of its allocation for administrative costs. Provides for an annual report. Makes conforming change to GS 143B-168.12.
Specifies that employees deemed eligible to participate in the Tri-Share Child Care pilot program pursuant to Section 9D.9 of SL 2023-134, as amended, remain eligible to participate in the Tri-Share Child Care Program under GS 143B-168.17, as enacted by the act.
Appropriates $9 million from the General Fund to the Division to be allocated to the NC Partnership in recurring funds for 2026-27 to provide the State portion of funding for continuation of the Tri-Share Child Care Program, as described.
Part III.
Section 3.1.
Reenacts GS 105-153.10 (Credit for children), providing an income tax credit for qualifying children, as defined in Section 152(c) of the Internal Revenue Code, of taxpayers. Lays out the applicable credit based upon adjusted gross income (AGI) for each classification of taxpayer filing status. Increases the amount of credit available for each classification; for example, Married Filing Jointly with an AGI of up to $40,000 is eligible for $250, increased from $125, and for an AGI from $40,000 up to $100,000 the credit is $125, increased from $100. Provides a limitation for nonresidents or part-year residents based on the fraction in GS 105-153.4. Caps married filing separately benefits to no more than the maximum credit under a joint return. Makes the credit refundable, allowing excess to be refunded to the taxpayer.
Effective and applicable for taxable years beginning on or after January 1, 2026.
Part IV.
Section 4.1.
Adds new GS 115C-10.52, establishing the Early Childhood Apprenticeship Grant Program (Grant Program) to provide additional funds to community colleges to establish or expand registered apprenticeships in early childhood education recognized by ApprenticeshipNC. Directs the State Board of Community Colleges to administer the Grant Program and to adopt rules for grant disbursement. Limits use of grant funds to four purposes, including tuition assistance, wage supplements, and employer support payments for employers participating in registered apprenticeships, establishing or expanding registered apprenticeships, aligning apprenticeship coursework with the described credential requirements, and prioritizing apprenticeship placements in licensed child-care facilities serving subsidy-eligible children. Requires the Community Colleges System Office (Office) to provide the specified NCGA committee with an annual report by July 15 each year on the three specified matters. Appropriates $5 million from the General Fund to the Office to be allocated to the NC Partnership in recurring funds to implement the above.
Part V.
Section 5.1.
Requires the Department of Health and Human Services, Division of Child Development and Early Education (DCDEE) to develop and implement a unified online portal for child care providers, as described. Requires DCDEE to submit an implementation report to the described NCGA committees within 18 months of the act’s effective date.
Part VI.
Section 6.1.
Requires the Department of Public Instruction (DPI) in collaboration with the Office to develop a plan, as described, to use underutilized classrooms or campus spaces for licensed child care facilities. Requires DPI to submit a report detailing the plan to the specified NCGA committees and divisions by December 15, 2027. Appropriates $100,000 from the General Fund to DPI for 2026-27 to develop the plan.
Section 6.2.
Requires the Department of Administration (DOA) to inventory underutilized State-owned buildings suitable for conversion into child care facilities that will serve State employees. Requires DOA to develop recommendations for the three specified matters. Requires DOA to submit a report of its findings, including any recommendation, to the specified NCGA committee within 18 months of the act’s effective date. Appropriates $100,000 from the General Fund to DOA for 2026-27 to develop the recommendations.
Part VII.
Section 7.1.
Requires the Division to develop and publish a clear, regulatory guidance document to assist religious-sponsored organizations seeking to provide child care that outlines each of the following: (1) licensing pathways; (2) religious exemption eligibility; (3) health and safety requirements; (4) application procedures, including, but not limited to, steps in applying for licensure and ways to participate in existing exemptions. Requires the Division to conduct outreach to faith-based organizations regarding these guidelines.
Part VIII.
Section 8.1.
Requires, beginning July 1, 2026, that the Department of Health and Human Services, Division of Child Development and Early Education, increase the child care subsidy market rates to the seventy-fifth percentile for children in three-, four-, and five-star-rated child care centers and homes.
Sets the payment rates for child care providers in counties with a county rate below the state rate as follows, beginning July 1, 2026: (1) except as applicable in (2) of this subsection, payment rates are set at the seventy-fifth percentile statewide market rate as recommended by the most recent Child Care Market Rate Study for children birth through 5 years of age for licensed three-, four-, and five-star-rated child care centers and homes; (2) if it can be demonstrated that the application of the statewide rate to a county with fewer than 50 children in each age group is lower than the county market rate and would inhibit the ability of the county to purchase child care for low-income children, then the county market rate may be applied.
Appropriates $205 million in recurring funds for 2026-27 from the General Fund to the Department of Health and Human Services, Division of Child Development and Early Education, to implement the market rate increases and to establish a floor for child care subsidy rates.
Section 8.2.
Enacts new GS 143B-168.28, requiring the Department of Health and Human Services, effective July 1, 2027, adjust annually the child care subsidy reimbursement rates based on the greater of: (1) the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U), South Region, or any subsequent similar publication, as published by the US Bureau of Labor Statistics, for the preceding 12-month period, or (2) the percentage change reflected in the most recent North Carolina Child Care Market Rate Study. Requires using the higher rates when the Child Care Market Rate Study results in higher reimbursement rates than those calculated under (1). Requires publishing updated reimbursement rate schedules by August 1 of each year and a report on the adjustments to the specified NCGA committee and division.
Part IX.
Section 9.1.
Appropriates $22.7 million from the General Fund to the Department of Health and Human Services, Division of Child Development and Early Education (Division), for 2026-27 and $36 million for 2027-28 in recurring funds to expand the Child Care WAGE$ program, which provides salary supplements for early childhood educators. Requires inclusion of this appropriation in the development of the base budget for 2027-28.
Section 9.2.
Enacts new GS 110-90.3 requiring the Department of State Treasurer, in consultation with the Department of Health and Human Services (DHHS) and the Department of Insurance, to establish and administer a State-run group health coverage pool to make health benefit coverage available for purchase by eligible child care employers for their employees. Operates pool separately from the State Health Plan for Teachers and State Employees; but allows use of the Plan’s resources to the extent practical. Requires the following to be eligible for an employer to be eligible to participate: (1) holds a valid license to operate a child care facility or child care program in this State; (2) elects to participate in the pool in accordance with rules, policies, or procedures adopted by the State Treasurer; and (3) agrees to satisfy the employer premium contribution requirements and any other participation requirements established by the State Treasurer. Requires a participating child care employer to pay no less than 50% of the premium for employee-only coverage elected through the pool; an enrolled employee pays the remaining percentage of the premium for employee-only coverage through payroll withholding or other approved method. Requires DHHS to provide, subject to funding, premium withholdings rebates to each participating child care employer participating in an amount equal to the actual employee premium withholdings remitted by the employer for employee-only coverage, capped at 25% of the applicable premium; limits use of the rebate to offsetting the employee share of the premium. Allows the State Treasurer to adopt rules, policies, procedures, and participation standards necessary. Requires by March 1, 2027, and annually thereafter for two years, that the State Treasurer, in consultation with DHHS, report to the specified NCGA committee and division on implementation of the pool.
Requires the Department of State Treasurer to ensure that coverage is available under the child care employer health coverage pool no later than January 1, 2027.
Appropriates $35 million in recurring funds for 2026-27 from the General Fund to DHHS for the premium withholdings rebate.
Appropriates $2 million for 2026-27 from the General Fund to the Department of State Treasurer for administrative and start-up costs associated with establishing the pool.
Part X.
Unless otherwise indicated, effective July 1, 2026.

Statutes affected:
Filed: 115C-562.1, 115C-562.2, 115C-562.8, 143B-168.12, 105-153.10