Child Care Initiative Funds/Reform/Study.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 2
HOUSE BILL 1086
Committee Substitute Favorable 5/12/26

Short Title: Child Care Initiative Funds/Reform/Study. (Public)
Sponsors:
Referred to:
April 30, 2026
*H1086-v-2*
A BILL TO BE ENTITLED 1
AN ACT TO ESTABLISH CAREER-READY LEAD TEACHER ACADEMIES TO PROVIDE 2
ALTERNATIVE PATHWAYS TO CAREERS IN CHILD CARE; TO APPROPRIAT E 3
FUNDS TO THE NORTH C AROLINA PARTNERSHIP FOR CHILDREN, INC., TO 4
EXPAND MENTAL AND BE HAVIORAL HEALTH SERVICES FOR CHILDRE N, 5
FAMILIES, AND STAFF IN CHILD CARE FACILI TY SETTINGS AND ESTA BLISH 6
THE NORTH CAROLINA PARTNERSHIP FOR CHILDREN, INC., SPECIAL FUND; TO 7
IMPLEMENT REFORMS RE GARDING CHILD CARE C ENTER ADMINISTRATORS 8
UNDER THE LAWS PERTAINING TO CHILD CARE; TO STUDY THE FEASIBILITY 9
OF PROVIDING LIABILI TY INSURANCE COVERAG E FOR CHILD CARE 10
PROVIDERS; AND TO UP DATE THE BIDDING REQ UIREMENTS FOR SMART 11
START. 12
The General Assembly of North Carolina enacts: 13
14
PART I. CAREER-READY LEAD TEACHER ACADEMY PILOT PROGRAM 15
SECTION 1.1. The purpose of this Part is to provide alternative pathways to career 16
advancement in licensed child care. To that end, the North Carolina Partnership for Children, 17
Inc., in collaboration with the North Carolina Community Colleges System Office, shall develop 18
and implement a two -year pilot program that expands the child care workforce academies 19
currently operating in Johnston and Wayne Counties. The pilot program shall establish 20
career-ready lead teacher academies across the State designed to p rovide free, comprehensive 21
training and support to individuals, with no experience or education in child care, who are 22
interested in pursuing a career in child care. 23
SECTION 1.2. Local partnerships in the following counties shall participate in the 24
pilot program described under this Part: Johnston and Wayne. The North Carolina Partnership 25
for Children, Inc. (NCPC), in collaboration with the Community Colleges System Office, shall 26
select 10 additional local partnerships to participate in the pilot program w ith at least one local 27
partnership selected from each of the four local partnership regions of the statewide Smart Start 28
network, which regions are the West, Mid-West, Mid-East, and East. 29
SECTION 1.3. The Community Colleges System Office and local communi ty 30
colleges shall coordinate to ensure that graduates of the career-ready lead teacher academies meet 31
all requirements to be credentialed with the North Carolina Early Childhood Credential as lead 32
teachers in child care in this State. 33
SECTION 1.4.(a) Each child care career -ready lead teacher academy (academy) 34
shall seek to enroll no less than 10 students, with a goal of enrolling 15 students in each course. 35
The academy shall operate up to eight hours per day over a two - to three -week period. A 36
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1086-Second Edition
participating community college shall strive to offer an academy up to three times per year, with 1
at least one of the three academies occurring at the end of the traditional public school calendar 2
year to allow participation by interested high school and college students. The academy shall be 3
offered free -of-charge to applicants. Students participating in the academy shall receive the 4
knowledge, skills, and training, including the necessary health screenings, background checks, 5
and fingerprinting, required for employment as a lead teacher in a licensed child care program in 6
this State. Upon successful completion of the academy, each student shall receive either a North 7
Carolina Early Childhood Credential or a Provisional NC Early Childhood Credential that will 8
enable the student to begin working as either a lead teacher or group leader in a licensed child 9
care program immediately upon graduation. 10
SECTION 1.4.(b) A local partnership may provide each graduate with a one -time 11
stipend. If a one -time stipend for completing t he course is provided, the amount shall be at the 12
discretion of the local partnership but shall not be less than one hundred fifty dollars ($150.00). 13
SECTION 1.4.(c) Students shall be eligible to receive an additional one-time stipend 14
in the amount of fiv e hundred dollars ($500.00) in State funds after completing one year of 15
employment as a lead teacher in a licensed child care program in this State. To receive the 16
additional stipend under this subsection, the graduate shall do each of the following: 17
(1) Begin full-time employment as a lead teacher in a licensed child care center 18
or licensed family child care home within three months from the date of 19
graduation from an academy. 20
(2) Complete the one -year of employment required by this subsection within a 21
consecutive 12-month period at the same child care program. 22
SECTION 1.4.(d) The stipends provided under this section shall be available to a 23
graduate of an academy who is employed by a licensed child care facility in this State, including 24
a graduate who establishes a licensed family child care home. 25
SECTION 1.5. The North Carolina Partnership for Children, Inc., and local 26
partnerships shall (i) collaborate with the community college in the county or counties in which 27
the local partnership is located, as prac ticable, to implement the career -ready lead teacher 28
academy and (ii) ensure information about the career -ready lead teacher academy in the 29
respective county is made available to the public. 30
SECTION 1.6. The North Carolina Partnership for Children, Inc. (N CPC), in 31
collaboration with the local partnerships and community colleges participating in the pilot 32
program, shall submit a progress report on the pilot program to the Joint Legislative Oversight 33
Committee on Health and Human Services and the Fiscal Research Division by March 31, 2027, 34
with any concerns or recommendations for program expansion. A final report shall be submitted 35
by December 31, 2027, and shall include, at a minimum, the following: 36
(1) The local partnerships and community colleges participat ing in the pilot 37
program. 38
(2) The number of students enrolled in each academy, by county. 39
(3) The number of students who successfully completed the academy, by county. 40
(4) The number of newly credentialed graduates employed as lead teachers in 41
licensed child care programs, by county. 42
(5) The outcomes achieved from the pilot program, including any 43
recommendations for expanding the program statewide. 44
(6) The number of new child care slots available as a result of adding the new 45
lead teachers. 46
(7) Total program costs, including any administrative costs borne by the county. 47
(8) The amount of funds needed to expand the program statewide. 48
SECTION 1.7. There is appropriated from the General Fund to the Department of 49
Health and Human Services, Division of Child Dev elopment and Early Education, the sum of 50
one million four hundred seventy-six thousand dollars ($1,476,000) in nonrecurring funds for the 51
General Assembly Of North Carolina Session 2025
House Bill 1086-Second Edition Page 3
2026-2027 fiscal year to be allocated to the North Carolina Partnership for Children, Inc., to 1
provide the State match for implementing the pilot program described in this Part as follows: 2
(1) The sum of nine hundred seventy -two thousand dollars ($972,000) for the 3
2026-2027 fiscal year for the State portion of tuition costs. 4
(2) The sum of five hundred four thousand dollars ($504,000) for the 2026-2027 5
fiscal year for the stipends provided with State funds in accordance with 6
Section 1.4 of this Part. 7
SECTION 1.8. Funds described in Section 1.7 of this Part shall be used in 8
accordance with the following: 9
(1) The funds shall be allocated equally among the local partnerships selected to 10
participate in the pilot program. 11
(2) Local partnerships shall provide documentation of a twenty -five percent 12
(25%) local match as a condition of receiving State funds. 13
(3) Any unexpended and unencumbered funds at the end of the fiscal year from 14
the funds provided under this Part shall not revert to the General Fund but 15
shall remain available for use in accordance with this Part. 16
(4) The funds shall not be used for administrative costs. 17
(5) The funds are not subject to the administrative cost requirements under 18
Section 9D.5(b) of S.L. 2023 -134, child care services funding requirements 19
under G.S. 143B-168.15(b), child care subsidy expansion requirements under 20
G.S. 143B-168.15(g), or match re quirements under Section 9D.5(d) of S.L. 21
2023-134. 22
SECTION 1.9.(a) As a means to assist younger individuals with a career pathway 23
to provide child care services, the Department of Health and Human Services, Division of Child 24
Development and Early Educatio n (DCDEE), shall establish a Provisional Early Childhood 25
Credential for individuals who are 16 or 17 years of age and preparing to work in licensed child 26
care programs in this State. To qualify for the provisional credential, an individual shall complete 27
an approved early childhood education course offered through a North Carolina public high 28
school (FE11), a Career and College Promise course (EDU 119), an Intro to School -Age Care 29
course (EDU 120 or EDU 2120), a Career and College Promise Workforce Continuing Education 30
pathway (EDU 3119), or Career-Ready Lead Teacher Academy. 31
SECTION 1.9.(b) By March 31, 2027, the North Carolina Community Colleges 32
System, the North Carolina Department of Public Instruction (DPI), the North Carolina Center 33
for Afterschool Programs (NC CAP), and DCDEE shall collaborate to ensure the required child 34
care health and safety trainings are embedded in each of the courses in subsection (a) of this 35
section so that individuals who are working to obtain the Provisional Early Childhood Credential 36
can access the required trainings through structured micro credentials, and, through this 37
collaboration, DCDEE shall ensure its trainings are available in the Moodle platform. The 38
Community Colleges System, DPI, NC CAP, and DCDEE shall also colla borate to create 39
pre-apprenticeship and apprenticeship pathways aligned with the Provisional Early Childhood 40
Credential. DCDEE shall issue the Provisional Early Childhood Credential to individuals who 41
meet the requirements established under subsection (a) of this section. The Provisional Early 42
Childhood Credential shall enable those individuals to work in any out -of-school and summer 43
programs, including those located at licensed child care facilities, as group leaders as defined in 44
the child care licensing rules according to the following staff-child ratios and group sizes: 45
46
Age Ratio Staff/Children 47
For a group that includes a child 5 years of age 1/10 48
For a group of children 6 years of age and older 1/14 to 1/16 49
50
General Assembly Of North Carolina Session 2025
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No out-of-school or summer program providing child care pursuant to this section shall care for 1
more than 25 children in one group. The out-of-school or summer program providing care for 26 2
or more children shall provide for two or more groups according to the ages of children and shall 3
provide separate supervisory personnel. 4
SECTION 1.9.(c) When an individual who has received a provisional credential 5
pursuant to this section reaches 18 years of age and has obtained a high school diploma or its 6
equivalent, the individual shall notify the Division of Child Development and Early Education 7
(Division) of such, if they wish to receive the full Early Childhood Credential, and the Division 8
shall issue the individual the full North Carolina Early Childhood Credential which shall enable 9
that individual to be employed as a lead teacher in any licensed child care program in this State. 10
11
PART II. CHILD CARE MENTAL AND BEHAVIORA L HEALTH SERVICES 12
FUNDING 13
SECTION 2.1.(a) There is appropriated from the ARPA Temporary Savings Fund, 14
established in Section 1.3(a) of S. L. 2023-7, to the Department of Health and Human Services, 15
Division of Child Development and Early Education, the sum of fifteen million dollars 16
($15,000,000) in nonrecurring funds for the 2026 -2027 fiscal year to be allocated to the North 17
Carolina Partnership for Children, Inc. (NCPC), to expand mental and behavioral health services 18
for children, families, and staff in child care facility settings and out -of-school programs, 19
including on -site services and behavioral health supports. The NCPC shall spend th e funds 20
appropriated in this Part in the following budget codes: PSC 5415 Health Care Access and 21
Support, PSC 5505 Parent Education, PSC 3125 Quality Child Care, and PSC 5509 Parents as 22
Teachers. The NCPC shall distribute the funds appropriated in this Part to local partnerships, as 23
determined by the NCPC. These funds shall supplement and not supplant existing Smart Start 24
partnership behavioral health spending. Funds appropriated in this Part shall not revert at the end 25
of the 2026 -2027 fiscal year but shal l remain available for costs associated with mental and 26
behavioral health initiatives described in this subsection until expended. 27
SECTION 2.1.(b) The NCPC shall submit a progress report on the mental and 28
behavioral health initiatives described in subsect ion (a) of this section to the Joint Legislative 29
Oversight Committee on Health and Human Services, the Secretary of the Department of Health 30
and Human Services, and the Fiscal Research Division by March 15, 2027, and a final report by 31
November 15, 2028. The progress report and final report shall include all of the following: 32
(1) The name of each local partnership that received funds. 33
(2) The number of children served by each local partnership. 34
(3) The types of mental and behavioral health services provided by each local 35
partnership. 36
(4) Recommendations for continuing and/or expanding mental and behavioral 37
health initiatives for children, families, and staff in child care facility settings. 38
SECTION 2.1.(c) Additional funds allocated in this Part to the North Carolina 39
Partnership for Children, Inc., from the Department of Health and Human Services, Division of 40
Child Development and Early Education, for the 2026 -2027 fiscal year are not subject to the 41
administrative cost requirements under Section 9D.5(b) of S.L. 2023 -134, child care services 42
funding requirements under G.S. 143B-168.15(b), child care subsidy expansion requirements 43
under G.S. 143B-168.15(g), or match requirements under Section 9D.5(d) of S.L. 2023-134. 44
SECTION 2.2.(a) G.S. 143B-168.15(h) reads as rewritten: 45
"(h) The North Carolina Partnership for Children, Inc., Special Fund is hereby established 46
as an interest -bearing, nonreverting special fund in the Department of Health and Human 47
Services. Funds appropriated from the General Fund to the Department for Smart Start and the 48
North Carolina Partnership for Children, Inc. (NCPC), shall be deposited in the Fund and shall 49
be used by the NCPC and local partnership s exclusively for the purposes authorized in this 50
section, unless otherwise expressly provided by law . State funds allocated to local partnerships 51
General Assembly Of North Carolina Session 2025
House Bill 1086-Second Edition Page 5
that are unexpended at the end of a fiscal year shall not revert but shall remain available to the 1
North Carolina Partnership for Children, Inc., to reallocate to local partnerships. Notwithstanding 2
G.S. 147-86.11 or any other provision of law to the contrary, the NCPC shall be allowed to hold 3
cash in excess of incurred expenditures at the end of each fiscal year up to five million dollars 4
($5,000,000). Not later than August 15 of each year, the NCPC shall provide to the Department 5
of Health and Human Services a financial status report for the preceding fiscal year that includes 6
all actual expenditures and remaining cash on hand." 7
SECTION 2.2.(b) This section is effective when it becomes law. 8
9
PART III. CHILD CARE REFORMS/CHILD CARE CENTER ADMINISTRATORS 10
SECTION 3.1. G.S. 110-91(8) is amended by adding the following sub-subdivisions 11
to read: 12
"a1. A licensed child care center may use the combined education and work 13
experience of two staff persons to meet the requirements for Level II 14
and Level III certificate s or designation for the NC Early Childhood 15
Administration Credential certificate established by the Commission 16
and shall receive the same quality rating improvement system (QRIS) 17
credit toward a star -rated license as the center would rec eive if the 18
requirements were met by one staff person. To meet the requirements 19
of this sub-subdivision, the following requirements must be met: 20
1. One individual must complete EDU 261 and EDU 262 as set 21
out in the Child Care Rules in the Administrative Code, or the 22
equivalent, or hold an associate degree or higher in business 23
administration or a related field, o r have at least two years of 24
verifiable business or administrative work experience. 25
2. One individual must (i) hold an associate degree or bachelor's 26
of science degree in early childhood education or child 27
development as designated by the Commission , (ii) be 28
responsible for the center's curriculum, program delivery, and 29
compliance practices, and (iii) be physically on-site for at least 30
the minimum number of hours required by the child care 31
staffing requirements set out under the Child Care Rules in the 32
Administrative Code. 33
a2. The Department shall allow an individua l to earn the minimum 34
mandatory North Carolina Early Childhood Administration Credential 35
without completing coursework in EDU 261 and EDU 262, or the 36
equivalent of both, when the individual has (i) an associate degree or 37
higher in business administration or a related field or (ii) two years of 38
verifiable business or administrative work experience." 39
SECTION 3.2. This Part is effective when it becomes law. 40
41
PART IV. STUDY INSURANCE PROGRAM FOR CHILD CARE PROVIDERS 42
SECTION 4.1.(a) The Department of Insurance shall utilize a consulting firm, an 43
actuarial firm, a brokerage firm, or any combination thereof to study the feasibility of establishing 44
liability insurance coverage, including State-supported captive insurance, risk -pooling, joint 45
underwriting association, joint reinsurance, or other organizations, for North Carolina child care 46
providers in order to provide liability insurance coverage to participating child care providers, 47
which has the potential to support risk distribution while promoting strong governance and shared 48
accountability. All of the following shall be part of the study undertaken in accordance with this 49
subsection: 50
General Assembly Of North Carolina Session 2025
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(1) The collection of loss data and operational inf ormation from child care 1
providers statewide in order to estimate program feasibility, premium 2
requirements, and necessary surplus levels. 3
(2) An evaluation of the viability of a program that is designed primarily to 4
provide general liability coverage, inc luding a focus on sexual abuse and 5
molestation (SAM) coverage, whether offered separately or bundled. 6
(3) A determination of the amount of public funding needed to initially capitalize 7
the insurer and an exploration of potential alternative solutions to th at public 8
funding. 9
(4) An analysis of conditions in the traditional, excess and surplus (E&S), and 10
unauthorized foreign reinsurance markets, including costs, affordability, 11
availability of liabilities coverages, and the barriers that child care providers 12
experience in accessing adequate liability coverage. 13
(5) A determination of whether commercial insurance carriers would be willing 14
to participate in this program, including discussion of developing an assigned 15
risk pool. 16
(6) The recommended design for the m ost viable program for North Carolina 17
child care providers. 18
(7) Identification of any legislative changes necessary to implement any 19
recommendations contained within the report, including any funding 20
recommendations. 21
SECTION 4.1.(b) The Department of Heal th and Human Services shall cooperate 22
with the Department of Insurance, and any entity with which the Department of Insurance has 23
contracted, for the purposes of supplying any information necessary to conduct the study required 24
by this section. 25
SECTION 4.1.(c) No later than June 1, 2027, the Department of Insurance shall 26
submit a report to the Joint Legislative Oversight Committee on General Government with the 27
findings of the study required by this section. 28
SECTION 4.1.(d) Effective July 1, 2026, there i s appropriated from the General 29
Fund to the Department of Insurance the sum of three hundred fifty thousand dollars ($350,000) 30
in nonrecurring funds for the 2026 -2027 fiscal year for the purposes of conducting the study 31
required by this section. 32
33
PART V. UPDATE BIDDING REQUIREMENTS FOR SMART START 34
SECTION 5.1. Section 9D.5(e) of S.L. 2023-134 reads as rewritten: 35
"SECTION 9D.5.(e) Bidding. – The North Carolina Partnership for Children, Inc., and all 36
local partnerships shall use competitive bidding practices in contracting for goods and services 37
on contract amounts as follows: 38
(1) For amounts of five fifteen thousand dollars ($5,000) ($15,000) or less, the 39
procedures specified by a written policy as developed by the Board of 40
Directors of the North Carolina Partnership for Children, Inc. 41
(2) For amounts greater than five fifteen thousand dollars ($5,000) ($15,000) but 42
less than fifteen twenty-five thousand dollars ($15,000), ($25,000), three 43
written quotes. 44
(3) For amounts of fifteen twenty-five thousand dollars ($15,000) ($25,000) or 45
more but less than forty thousand dollars ($40,000), a request for proposal 46
process.process with solicitation in appropriate venues , including, but not 47
limited to, websites, major newspaper portals, or other options to ensure a 48
strong competitive process. 49
(4) For amounts of forty thousand dollars ($40,000) or more, a request for 50
proposal process and advertising in a major newspaper." 51
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House Bill 1086-Second Edition Page 7
1
PART VI. EFFECTIVE DATE 2
SECTION 6.1. Except as otherwise provided, this act becomes effective July 1, 3
2026. 4