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GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1158
Short Title: Increase Market Rate/Rate Floor/Child Subsidy. (Public)
Sponsors: Representatives Lofton, Prather, von Haefen, and Crawford (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Appropriations, if favorable, Rules, Calendar, and Operations of the House
May 4, 2026
*H1158-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO INCREASE C HILD CARE SUBSIDY RA TES TO THE SEVENTY -FIFTH 2
PERCENTILE OF THE 20 23 MARKET RATE STUDY , WITH AUTOMATIC 3
INCREASES UPON COMPL ETION OF SUBSEQUENT NEW STUDIES, TO SET A 4
STATEWIDE RATE FLOOR , AND TO APPROPRIATE FUNDS FOR THOSE 5
PURPOSES. 6
The General Assembly of North Carolina enacts: 7
SECTION 1.(a) Beginning July 1, 2026, the Department of Health and Human 8
Services, Division of Child Development and Early Education, shall increase the child care 9
subsidy market rates to the seventy -fifth percentile as recommended by the 2023 Child Care 10
Market Rate Study for children in three-, four-, and five-star-rated child care centers and homes. 11
Whenever new rates are recommended in subsequent market rate studies, the Division shall 12
automatically increase the child care subsidy rates to the seventy -fifth percenti le of those 13
recommended rates beginning July 1 of the next fiscal year. 14
SECTION 1.(b) There is appropriated to the Department of Health and Human 15
Services, Division of Child Development and Early Education (Division), from the General Fund 16
the sum of sixt y million dollars ($60,000,000) in recurring funds beginning in the 2026 -2027 17
fiscal year and from the Child Care and Development Fund Block Grant the sum of twenty 18
million dollars ($20,000,000) in recurring funds beginning in the 2026 -2027 fiscal year. Th ese 19
funds shall be used to implement the market rate increases set forth in subsection (a) of this 20
section. 21
SECTION 2.(a) Beginning July 1, 2026, provisions of payment rates for child care 22
providers in counties that have a county rate below the State rate for center -based and 23
home-based care are as follows: 24
(1) Except as applicable in subdivision (2) of this subsection, payment rates shall 25
be set at the seventy -fifth percentile statewide market rate as recommended 26
by the 2023 Child Care Market Rate Study for children birth through 5 years 27
of age for licensed child care centers and homes. 28
(2) If it can be demonstrated that the application of the statewide rate to a county 29
with fewer than 50 children in each age group is lower than the county market 30
rate and would inhibit the ability of the county to purchase child care for 31
low-income children, then the county market rate may be applied. 32
SECTION 2.(b) There is appropriated from the General Fund to the Department of 33
Health and Human Services, Division of Child Development and Early Education, the sum of 34
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1158-First Edition
one hundred sixty million dollars ($160,000,000) in recurring funds beginning in the 2026-2027 1
fiscal year to implement the statewide rate floor set forth in subsection (a) of this section. 2
SECTION 3. This act becomes effective July 1, 2026. 3