GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 412
Short Title: Child Care Regulatory Reforms. (Public)
Sponsors: Representatives Arp, Lambeth, Paré, and Rhyne (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Health, if favorable, Judiciary 2, if favorable, Rules, Calendar, and Operations of
the House
March 18, 2025
*H412 -v-1*
A BILL TO BE ENTITLED 1
AN ACT TO DECOUPLE T HE CHILD CARE RATED LICENSE SYSTEM AND 2
SUBSIDIZED CHILD CARE SUBSIDY REIMBURSEM ENT RATES AND TO MAK E 3
OTHER CHILD CARE REGULATORY REFORMS. 4
The General Assembly of North Carolina enacts: 5
6
PART I. DECOUPLE RATED LICENSE AND SUBSIDIZED CHILD CARE 7
SECTION 1.(a) The General Assembly recognizes the need to balance maintaining 8
critical health, safety, and welfare standards for child care, as well as a well-established rating 9
system used for informational purposes, with the need to move toward maximizing State funds 10
for child care and increasing the supply of child care from State-funded sources. The General 11
Assembly further recognizes the importance of continuing the child care stabilization grants 12
funding while weighing the need to decrease the cost of child care through deregulatory actions 13
and at the same time maintain child care subsidy reimbursement rates. The purpose of this 14
provision, in part, is to encourage the business community to partner with the State in achieving 15
this goal. 16
SECTION 1.(b) To that end, by May 1, 2026, the Department of Health and Human 17
Services, Division of Child Development and Early Education (Division), shall develop a plan 18
to separate the quality rating improvement system (QRIS) from the requirements and payments 19
for participation in the State subsidized child care program using the market rate study submitted 20
in 2026. The next market rate study shall be completed and made available to the public by May 21
1, 2026. Under the plan, licensed child care centers and homes may continue to receive 22
star-ratings on a voluntary basis. However, the star-rating shall not impact the rate at which 23
licensed child care centers or homes are reimbursed for subsidized child care. 24
SECTION 1.(c) The Division of Child Development and Early Education shall 25
ensure that the next market rate study also includes recommended rates that are not segmented 26
by star-rating. The Division shall not implement new reimbursement rates unless authorized to 27
do so by the General Assembly. 28
SECTION 1.(d) Section 9D.3 of S.L. 2023-134 reads as rewritten: 29
"CHILD CARE SUBSIDY RATES 30
… 31
"SECTION 9D.3.(c) Payments for the purchase of child care services for low-income 32
children shall be in accordance with the following requirements: 33 General Assembly Of North Carolina Session 2025
Page 2 House Bill 412-First Edition
(1) Religious sponsored child care facilities operating pursuant to G.S. 110-106 1
and licensed child care centers and homes that meet the minimum licensing 2
standards that are participating in the subsidized child care program shall be 3
paid the one-star county market rate or the rate they charge privately paying 4
parents unless prohibited by subsection (f) of this section.Licensed child care 5
centers and homes, including religious sponsored child care facilities 6
operating pursuant to G.S. 110-106, that meet the minimum licensing 7
standards as set forth in G.S. 110-91, that are participating in the subsidized 8
child care program shall be paid the applicable market rate or the rate they 9
charge privately paying parents. 10
(2) Licensed child care centers and homes with two or more stars shall receive the 11
market rate for that rated license level for that age group unless prohibited by 12
subsection (g) of this section. 13
(3) No payments shall be made for transportation services charged by child care 14
facilities. 15
(4) Payments for subsidized child care services for postsecondary education shall 16
be limited to a maximum of 20 months of enrollment. This shall not be 17
determined before a family's annual recertification period. 18
(5) The Department of Health and Human Services shall implement necessary 19
rule changes to restructure services, including, but not limited to, targeting 20
benefits to employment. 21
… 22
"SECTION 9D.3.(e) A market rate shall be calculated for child care centers and homes at 23
each rated license level for each county and for each age group or age category of enrollees and 24
shall be representative of fees charged to parents for each age group of enrollees within the 25
county. The Division of Child Development and Early Education shall also calculate a statewide 26
rate and regional market rate for each rated license level for each age category. 27
"SECTION 9D.3.(f) The Division of Child Development and Early Education shall continue 28
implementing policies that improve the quality of child care for subsidized children, including a 29
policy in which child care subsidies are paid, to the extent possible, for child care in the higher 30
quality centers and homes only. The Division shall define higher quality, and subsidy funds shall 31
not be paid for one- or two-star-rated facilities. For those counties with an inadequate number of 32
four- and five-star-rated facilities, the Division shall continue a transition period that allows the 33
facilities to continue to receive subsidy funds while the facilities work on the increased star 34
ratings. The Division may allow exemptions in counties where there is an inadequate number of 35
four- and five-star-rated facilities for non-star-rated programs, such as religious programs. 36
"SECTION 9D.3.(g) Facilities licensed pursuant to Article 7 of Chapter 110 of the General 37
Statutes and facilities operated pursuant to G.S. 110-106 may participate in the program that 38
provides for the purchase of care in child care facilities for minor children of needy families. 39
Except as authorized by subsection (f) of this section, no No separate licensing requirements shall 40
be used to select facilities to participate. In addition, child care facilities shall be required to meet 41
any additional applicable requirements of federal law or regulations. Child care arrangements 42
exempt from State regulation pursuant to Article 7 of Chapter 110 of the General Statutes shall 43
meet the requirements established by other State law and by the Social Services Commission. 44
County departments of social services or other local contracting agencies shall not use a 45
provider's failure to comply with requirements in addition to those specified in this subsection as 46
a condition for reducing the provider's subsidized child care rate. 47
…." 48
SECTION 1.(e) G.S. 110-90(4) is amended by adding a new sub-subdivision to read: 49
"f. A rated license shall have no impact on the rate at which a child care 50
facility is reimbursed for subsidized child care." 51 General Assembly Of North Carolina Session 2025
House Bill 412-First Edition Page 3
SECTION 1.(f) Nothing in this section shall be construed as impacting the 1
star-rating requirements for the NC Prekindergarten (NC Pre-K) program. 2
SECTION 1.(g) The North Carolina Child Care Commission shall adopt, amend, or 3
repeal any rules regarding separating the star-rating system from requirements and payments for 4
reimbursement for subsidized child care. 5
SECTION 1.(h) The Division of Child Development and Early Education (Division) 6
shall submit a progress report on developing the plan required by this section by April 1, 2026, 7
to the chairs of the House and Senate Appropriations Committees, the chairs of the House and 8
Senate Appropriations Committees on Health and Human Services, the Joint Legislative 9
Oversight Committee on Health and Human Services, and the Fiscal Research Division. The 10
Division shall submit a final report within two months from the date the new rates are 11
implemented pursuant to this section. 12
13
PART II. REGULATORY CHANGES 14
SECTION 2. G.S. 110-86(5a) reads as rewritten: 15
"(5a) Lead teacher. – An individual who is responsible for planning and 16
implementing the daily program of activities for a group no more than two 17
groups of children in a child care facility." 18
SECTION 3. G.S. 110-90(4) reads as rewritten: 19
"(4) To issue a rated license to any child care facility which meets the standards 20
established by this Article as follows: 21
a. For any child care facility currently holding a license of two to five 22
stars or any new license issued to a child care facility with a rating of 23
two to five stars, the rating shall be based on (i) program standards and 24
(ii) education levels of staff. When evaluating program standards, the 25
Department shall consider the facility's staff/child ratios, space 26
requirements, continuous quality improvement standards, family and 27
community engagement practices, environmental rating scale 28
evaluations, curriculum, child observation and assessment, staff 29
coaching or mentoring, or accreditation by a national or regional 30
accrediting agency with early childhood standards. When evaluating 31
education levels of staff, the Department shall consider any early 32
childhood and child development coursework, early childhood 33
education certificates, Child Development Associate credentials, 34
associate or bachelor's degrees, continuous quality improvement 35
standards for staff, continuing education units, early childhood 36
education competency evaluations, work experience in child care, 37
including staff granted the North Carolina Early Childhood Credential 38
based on experience pursuant to G.S. 110-91, coaching or mentoring 39
completed, and education standards within an accreditation award. 40
…." 41
SECTION 4. G.S. 110-91(6) reads as rewritten: 42
"(6) Space and Equipment Requirements. – There shall be no less than 25 square 43
feet of indoor space for each child for which a child care center is licensed, 44
exclusive of closets, passageways, kitchens, and bathrooms, and this floor 45
space shall provide during rest periods 200 cubic feet of airspace per child for 46
which the center is licensed. There shall be adequate outdoor play area for 47
each child under rules adopted by the Commission which shall be related to 48
the size of center and the availability and location of outside land area. In no 49
event shall the minimum required exceed 75 square feet per child. The outdoor 50
area shall be protected to assure the safety of the children receiving child care 51 General Assembly Of North Carolina Session 2025
Page 4 House Bill 412-First Edition
by an adequate fence or other protection. A center operated in a public school 1
shall be deemed to have adequate fencing protection. A center operating 2
exclusively during the evening and early morning hours, between 6:00 P.M. 3
and 6:00 A.M., need not meet the outdoor play area requirements mandated 4
by this subdivision. 5
Each child care facility shall provide indoor area equipment and 6
furnishings that are child size, sturdy, safe, and in good repair. Each child care 7
facility that provides outdoor area equipment and furnishings shall provide 8
outdoor area equipment and furnishings that are child size, sturdy, free of 9
hazards that pose a threat of serious injury to children while engaged in normal 10
play activities, and in good repair. The Commission shall adopt standards to 11
establish minimum requirements for equipment appropriate for the size of 12
child care facility. Space shall be available for proper storage of beds, cribs, 13
mats, cots, sleeping garments, and linens as well as designated space for each 14
child's personal belongings. 15
The Division of Child Development of the Department of Health and 16
Human Services shall establish and implement a policy that defines any 17
building which is currently approved for school occupancy and which houses 18
a public or private elementary or middle school to include the playgrounds 19
and athletic fields as part of the school building when that building is used to 20
serve school-age children in after-school out-of-school child care programs. 21
Playgrounds Except as provided in subdivision (6a) of this section, 22
playgrounds and athletic fields referenced in this section that do not meet 23
licensure standards promulgated by the North Carolina Child Care 24
Commission shall be noted on the program's licensure and rating 25
information." 26
SECTION 5.(a) G.S. 110-91 is amended by adding a new subdivision to read: 27
"(6a) Certain Exemptions for School-Age Children in Out-of-School Child Care. – 28
Notwithstanding any provision of law or rule to the contrary, any building and 29
grounds which are currently approved for school occupancy and which house 30
a public or private elementary or middle school shall be deemed to have met 31
the sanitation, fire, and building code requirements for a licensed child care 32
facility when the building and grounds are serving the same, or a subset of the 33
same, school-age children in an out-of-school child care program." 34
SECTION 5.(b) The Child Care Commission shall adopt or amend any rules to 35
ensure uniformity and consistency in application of the exemptions for school-age children in 36
out-of-school child care programs as provided in this section. 37
SECTION 6. G.S. 110-91(7)a. reads as rewritten: 38
"a. The Commission shall adopt rules for child care centers regarding 39
staff-child ratios, group sizes and multi-age groupings other than for 40
infants and toddlers, provided that these rules shall be no less stringent 41
than those currently required for staff-child ratios as enacted in Section 42
156(e) of Chapter 757 of the 1985 Session Laws. Only one lead teacher 43
shall be required for every two groups. 44
1. Except as otherwise provided in this subdivision, the minimum 45
staff-child ratios and group sizes for infants and toddlers in 46
child care centers shall be no less stringent than as follows: 47
Age Ratio Staff/Children Group Size 48
0 to 12 months 1/5 1015 49
12 to 24 months 1/6 1218 50
2 to 3 years 1/10 20. 51 General Assembly Of North Carolina Session 2025
House Bill 412-First Edition Page 5
No child care center shall care for more than 25 children in one 1
group. Child care centers providing care for 26 or more 2
children shall provide for two or more groups according to the 3
ages of children and shall provide separate supervisory 4
personnel and separate identifiable space for each group. 5
1a. If a child care center is operating under voluntary enhanced 6
requirements, the maximum group size for toddlers aged 2 to 7
3 years may be increased from 18 to 20 children when the child 8
care center maintains a 1/9 staff-child ratio. 9
1b. If a child care center is operating under the highest voluntary 10
enhanced requirements, the child care center may use the 11
following maximum group sizes for infants and toddlers when 12
the child care center maintains staff-child ratios as provided 13
herein: 14
Age Ratio Staff/Children Group Size 15
0 to 12 months 1/4 12 16
12 to 24 months 1/5 15 17
2 to 3 years 1/8 20. 18
1c. For groups of children 1 year of age or older, the staff/child 19
ratio during nap time shall comply with the requirements of 20
rules adopted by the Commission if (i) at least one person 21
remains in the room, (ii) all children are visible to that person, 22
and (iii) the total number of required staff are on the premises 23
and within calling distance of the rooms occupied by children. 24
…." 25
SECTION 7. G.S. 110-91(8) reads as rewritten: 26
"(8) Qualifications for Staff. – Qualifications for child care staff are as follows: 27
a. All child care center administrators shall be at least 21 years of age. 28
All child care center administrators shall have the North Carolina 29
Early Childhood Administration Credential or its equivalent as 30
determined by the Department. All child care administrators 31
performing administrative duties as of the date this act becomes law 32
and child care administrators who assume administrative duties at any 33
time after this act becomes law and until September 1, 1998, shall 34
obtain the required credential by September 1, 2000. Child care 35
administrators who assume administrative duties after September 1, 36
1998, shall begin working toward the completion of the North Carolina 37
Early Childhood Administration Credential or its equivalent within six 38
months after assuming administrative duties and shall complete the 39
credential or its equivalent within two years after beginning work to 40
complete the credential. Each child care center shall be under the 41
direction or supervision of a person meeting these requirements. All 42
staff counted toward meeting the required staff-child ratio shall be at 43
least 16 years of age, provided that persons younger than 18 years of 44
age work under the direct supervision of a credentialed staff person 45
who is at least 21 years of age. 46
b. All lead teachers in a child care center shall have at least a North 47
Carolina Early Childhood Credential or its equivalent as determined 48
by the Department. Lead teachers shall either (i) be enrolled in the 49
North Carolina Early Childhood Credential coursework or its 50
equivalent as determined by the Department within six months after 51 General Assembly Of North Carolina Session 2025
Page 6 House Bill 412-First Edition
becoming employed as a lead teacher or within six months after this 1
act becomes law, whichever is later, and shall complete the credential 2
or its equivalent within 18 months after enrollment.enrollment or (ii) 3
have a minimum of five years of documented experience teaching in a 4
licensed child care facility in this State which shall be deemed 5
equivalent to the North Carolina Early Childhood Credential. 6
c. Only administrators and lead teachers in licensed child care centers are 7
required to have a North Carolina Early Childhood Credential or its 8
equivalent as determined by the Department. All other staff shall meet 9
the standards established by the Commission for their positions that do 10
not include a North Carolina Early Childhood Credential or its 11
equivalent as determined by the Department. 12
d. For child care centers licensed to care for 200 or more children, the 13
Department, in collaboration with the North Carolina Institute for 14
Early Childhood Professional Development, shall establish categories 15
to recognize the levels of education achieved by child care center 16
administrators and teachers who perform administrative functions. 17
The Department shall use these categories to establish appropriate 18
staffing based on the size of the center and the individual staff 19
responsibilities. 20
e. Effective January 1, 1998, an operator of a licensed family child care 21
home shall be at least 21 years old and have a high school diploma or 22
its equivalent. Operators of a family child care home licensed prior to 23
January 1, 1998, shall be at least 18 years of age and literate. Literate 24
is defined as understanding licensing requirements and having the 25
ability to communicate with the family and relevant emergency 26
personnel. Any operator of a licensed family child care home shall be 27
the person on-site providing child care. 28
f. The Commission shall adopt standards to establish appropriate 29
qualifications for all staff in child care centers. These standards shall 30
reflect training, experience, education and credentialing and shall be 31
appropriate for the size center and the level of individual staff 32
responsibilities. It is the intent of this provision to guarantee that all 33
children in child care are cared for by qualified people. Pursuant to 34
G.S. 110-106, no requirements may interfere with the teachings or 35
doctrine of any established religious organization. The staff 36
qualification requirements of this subdivision do not apply to 37
religious-sponsored child care facilities pursuant to G.S. 110-106." 38
SECTION 8. Section 8 of S.L. 2024-34 is amended by adding a new subsection to 39
read: 40
"SECTION 8.(a1) In modifying the quality rating improvement system (QRIS), the Division 41
of Child Development and Early Education shall ensure a North Carolina Early Childhood 42
Credential based on five years of work experience in a licensed child care facility in this State is 43
treated as equivalent to when that credential is earned through other pathways for purposes of 44
awarding a star-rating." 45
SECTION 9. The Weikart Youth Program Quality Assessment ("Weikart Program") 46
shall be added as an assessment tool for evaluating out-of-school child care programs and 47
awarding of a star-rating. The Department of Health and Human Services, Division of Child 48
Development and Early Education, shall complete the necessary crosswalk evaluation of the 49
Weikart Program and have it available for applicants to use not later than six months after the 50
date this act becomes law. 51 General Assembly Of North Carolina Session 2025
House Bill 412-First Edition Page 7
SECTION 10. Notwithstanding any other provision of law, rule, or regulation, the 1
Department of Health and Human Services, Division of Child Development and Early Education 2
(Division), shall, for courses offered by a community college in the North Carolina Community 3
Colleges System (NCCCS), assign credit for continuing education courses on the same basis as 4
curriculum courses designated by NCCCS as equivalent to the continuing education courses for 5
the purpose of providing any credential offered by the Division. 6
SECTION 11. The Department of Health and Human Services, Division of Child 7
Development and Early Education, shall: 8
(1) Not later than December 1, 2025, and in consultation with the North Carolina 9
Community Colleges System, create a North Car olina School 10
Age/Out-of-School Care Credential that aligns with a new curriculum course 11
and continuing education course entitled "Introduction to School Age Care 12
and Education." 13
(2) Award the North Carolina Early Childhood Administration Credential or the 14
North Carolina Family Child Care Credential to individuals who have 15
successfully completed continuing education courses that are equivalent to 16
child care curriculum courses, as determined by the Community Colleges 17
System. The Community Colleges System shall ensure that the continuing 18
education courses are comparable to the corresponding curriculum courses in 19
course descriptions, competencies, and hour requirements and shall state the 20
credential that is to be awarded for each continuing education course. 21
SECTION 12.(a) The Commissioner of the Department of Insurance shall establish 22
a workgroup to examine the potential for developing group liability insurance plan opportunities 23
for all child care providers. The workgroup shall consist of representatives from all of the 24
following: 25
(1) The Department of Insurance. 26
(2) The insurance industry. 27
(3) The child care industry, including foster family homes and out-of-school 28
providers. 29
(4) The Department of Health and Human Services, Division of Child 30
Development and Early Education. 31
(5) The American Tort Reform Association. 32
SECTION 12.(b) The workgroup shall develop findings and recommendations 33
related to at least the following: 34
(1) Potential methods for creating group liability insurance plan opportunities for 35
all child care providers. 36
(2) Reforms that could reduce group liability insurance plan premiums. 37
(3) Tort reforms that could reduce the liability damages of child care providers. 38
SECTION 12.(c) By January 1, 2026, the Department of Insurance shall report the 39
findings and recommendations of the workgroup to the Joint Legislative Oversight Committee 40
on Health and Human Services, the Joint Legislative Oversight Committee on General 41
Government, and the Fiscal Research Division. 42
43
PART III. EFFECTIVE DATE 44
SECTION 13. This act is effective when it becomes law. 45