Child Care Omnibus.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 1015

Short Title: Child Care Omnibus. (Public)
Sponsors: Senators Chitlik and Chaudhuri (Primary Sponsors).
Referred to: Rules and Operations of the Senate
May 4, 2026
*S1015-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE VARIOUS CHANGES UNDER THE LAWS PERTAINING TO CHILD 2
CARE AND TO APPROPRIATE FUNDS FOR THOSE PURPOSES. 3
The General Assembly of North Carolina enacts: 4
5
PART I. INCREASE CHILD CARE SUBSIDY RATES/ESTABLISH RATE FLOOR 6
SECTION 1.1. Beginning October 1, 2026, the Department of Health and Human 7
Services, Division of Child Development and Early Education, shall increase the child care 8
subsidy market rates to the seventy -fifth percentile as recommended by the 2023 Child Car e 9
Market Rate Study for children in three-, four-, and five-star-rated child care centers and homes. 10
SECTION 1.2. Beginning October 1, 2026, provisions of payment rates for child 11
care providers in counties that have a county rate below the State rate for center-based and 12
home-based care are as follows: 13
(1) Except as applicable in subdivision (2) of this section, payment rates shall be 14
set at the seventy -fifth percentile statewide market rate as recommended by 15
the 2023 Child Care Market Rate Study for child ren birth through 5 years of 16
age for licensed child care centers and homes. 17
(2) If it can be demonstrated that the application of the statewide rate to a county 18
with fewer than 50 children in each age group is lower than the county market 19
rate and would in hibit the ability of the county to purchase child care for 20
low-income children, then the county market rate may be applied. 21
SECTION 1.3. There is appropriated from the General Fund to the Department of 22
Health and Human Services, Division of Child Developm ent and Early Education, the sum of 23
one hundred ten million dollars ($110,000,000) in recurring funds beginning in the 2026 -2027 24
fiscal year to implement the market rate increases and to establish a floor for child care subsidy 25
rates as set forth in Sections 1.1 and 1.2 of this Part. 26
27
PART II. REINSTITUTE FUNDING FOR CHILD CARE STABILIZATION GRANTS 28
SECTION 2.1. There is appropriated from the General Fund to the Department of 29
Health and Human Services, Division of Child Development and Early Education (Division), the 30
sum of fifty million dollars ($50,000,000) in nonrecurring funds for the 2026-2027 fiscal year to 31
reinstitute the compensation grants portion of the child care stabilization grants. 32
SECTION 2.2. This Part is effective when it becomes law. 33
34
PART III. MATCHING GRANT FUNDS FOR COUNTIES AND PRIVATE 35
EMPLOYERS TO ASSIST WITH CAPACITY BUILDING IN CHILD CARE 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 1015-First Edition
SECTION 3.1. There is appropriated from the General Fund to the Department of 1
Health and Human Services, Division of Child Development and Early Education (Division), the 2
sum of fifty million dollars ($50,000,000) in nonrecurring funds for the 2026-2027 fiscal year to 3
be used for grants to counties and private employers that provide assistance with capacity 4
building in child care in this State, incl uding, but not limited to, (i) building construction, 5
renovation, upfitting, or improvements, (ii) expansion costs, (iii) furniture and equipment, or (iv) 6
playground installation. The Division shall award grants under this section pursuant to criteria 7
established by the Division in accordance with federal law and guidance. These grants shall be 8
one-time awards to assist with child care initiatives as established by the Division. Counties or 9
private employers seeking to receive funds under this section shall provide documentation of a 10
twenty-five percent (25%) match as a condition of receiving these State funds. A county or 11
private employer receiving grant funds under this Part may use up to nine percent (9%) of the 12
State funds awarded for administrative costs. 13
14
PART IV. CHILD CARE FOR CHILD CARE PROVIDERS PILOT PROGRAM 15
SECTION 4.1. There is appropriated from the General Fund to the Department of 16
Health and Human Services, Division of Child Development and Early Education (Division), the 17
sum of sixty million dollars ($60,000,000) in nonrecurring funds for the 2026 -2027 fiscal year. 18
These funds shall be used to establish a two -year, statewide pilot program that provides child 19
care expansion assistance grants for child care providers providing direct care and employed full 20
time by any licensed child care program in this State to assist in recruiting and retaining 21
employees necessary to expand the supply of licensed child care to additional children from birth 22
through 5 years of age by ensuring that unaffordable child care is not a barrier to work for these 23
employees. For purposes of this Part, "child care provider" includes lead teachers, teachers, 24
teacher assistants, and administrators. 25
SECTION 4.2. A child care provider providing direct care who is eligible for a child 26
care expansion assistance grant pursuant to this section shall earn at or below eighty-five percent 27
(85%) of the State median income and be employed full time at a licensed child care center or 28
family child care home. For purposes of this Part, "f ull time" means at least 32 hours per week. 29
If a licensed family child care home provider applies for a child care assistance grant for the 30
provider's own children, that provider must provide care for additional children in the provider's 31
program equal to the number of the provider's own children for which a child care expansion 32
assistance grant is provided. 33
SECTION 4.3. Any licensed child care program may apply to the Division of Child 34
Development and Early Education (Division) for a child care expansion assistance grant for 35
eligible employees only when there is capacity at the program to serve an eligible employee's 36
child without displacing other children already in care in the program. When a child care 37
program's application for a child care expansion assistance grant is approved, the Division shall 38
pay seventy-five percent (75%) of the published child care tuition rates to the licensed program 39
for each eligible staff member for up to two children. Child care program employers shall cover 40
a minimum of twenty-five percent (25%) of the published tuition rate for each child. Child care 41
expansion assistance grants may be distributed monthly or quarterly, at the Division's discretion, 42
so long as the eligible employee remains employed full time at the licensed c hild care program. 43
The program operator or administrator is responsible for informing the Division when an eligible 44
employee is no longer employed at the program. Failure to inform the Division of such departure 45
within 30 days of separation may result in the program being required to return distributed grant 46
funds for the eligible employee postseparation from employment. 47
SECTION 4.4. The Division of Child Development and Early Education (Division) 48
shall make the child care expansion assistance grants provi ded in accordance with the pilot 49
program available statewide in all counties. However, the Division shall prioritize counties with 50
the highest unmet demand or longest wait lists for subsidized child care funded by the federal 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 3
Child Care Assistance Program and shall work to ensure that child care expansion assistance 1
grants are distributed to geographically diverse areas across the State. A child care program 2
licensed in this State does not have to participate in the federal Child Care Assistance Program 3
to apply for a child care expansion assistance grant for eligible employees. 4
SECTION 4.5. The Division of Child Development and Early Education (Division) 5
shall submit a progress report to the Joint Legislative Oversight Committee on Health and Human 6
Services and the Fiscal Research Division of the General Assembly by March 31, 2027, with a 7
final report by December 31, 2028, on the pilot program that includes the following: 8
(1) The number of licensed child care programs participating in the pilot program, 9
by setting (center or family child care home) and county. 10
(2) The number of child care providers participating in the pilot program, by 11
position or title, hire date (newly employed versus already employed), and 12
county. 13
(3) The number of new licensed child care slots created as a result of the pilot, by 14
age group and county. 15
(4) The number of additional children aged birth to 5 years served as a result of 16
the pilot, by age group and county. 17
18
PART V. USE OF STATE -OWNED PROPERTY FOR CHILD CARE CENTERS F OR 19
STATE EMPLOYEES 20
SECTION 5.1. The Department of Administration shall report to the Joint 21
Legislative Oversight Committee on Health and Human Services and the Joint Legislative 22
Commission on Governmental Operations, no later than March 31, 2027, on the feasibil ity and 23
advisability of using obsolete or underutilized State -owned buildings (available buildings) to 24
house child care facilities giving child care priority to State employees. The report shall include 25
the following: 26
(1) Location of each available building. 27
(2) Estimated costs for upfitting each property to meet daycare licensing 28
standards. 29
(3) Estimated costs for asbestos and lead remediation. 30
(4) Barriers to the available buildings' use as a child care facility. 31
SECTION 5.2. Any project undertaken by th e State to build or renovate property 32
having a budget greater than five million dollars ($5,000,000) shall include a child care center or 33
adult day care center if more than 250 people would work in the building. This requirement 34
includes current projects w hich have not broken ground by July 1, 2026, unless one or both of 35
the following exceptions apply: 36
(1) Inclusion of either type of center would delay the project by six months or 37
more. 38
(2) Inclusion of either type of center would increase the project cost by ten percent 39
(10%) or more. 40
41
PART VI. CHILD CARE FOR STATE EMPLOYEES 42
SECTION 6.1. The Division of Child Development and Early Education shall 43
establish a pilot program for on-site child care for State employees as follows: 44
(1) The Division of Child Deve lopment and Early Education shall contract with 45
a private commercial child care provider to establish three child care centers 46
for State employees' use to be established on State -owned property that is 47
unused or underutilized. 48
(2) Priority in contracting shall be given to commercial child care providers who 49
currently operate five or fewer facilities and provide high quality child care. 50
General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 1015-First Edition
(3) The Division of Child Development and Early Education must include the 1
following terms in the contract with the commercial child care providers: 2
a. The child care facility must operate an apprenticeship program in 3
conjunction with a public or private university or community college 4
who operates an early child care education program. 5
b. The child care center must comply wit h the requirements established 6
by the Division of Child Development and Early Education for the 7
apprenticeship program. 8
c. The child care center must maintain the operation of the apprenticeship 9
program for so long as the child care center is housed in Sta te-owned 10
property and the university or community college is willing to 11
continue the partnership. 12
d. The State will provide the upfit cost of the space to meet the licensure 13
requirements at reasonable levels that are customary at the operators' 14
other facilities and those similarly situated and provide use of the space 15
rent free, notwithstanding the provisions of G.S. 146-29.1. 16
e. The lease terms for State -owned property must be approved as 17
required by G.S. 146-27. 18
SECTION 6.2. The Division of Child Development and Early Education shall create 19
the requirements for the apprenticeship program and pair the child care centers with a university 20
or community college early education program utilizing parameters similar to the Durham 21
Childcare Apprenticeship Program. 22
SECTION 6.3. There is appropriated from the General Fund to the Department of 23
Health and Human Services the sum of five million dollars ($5,000,000) in recurring funds 24
beginning in the 2026-2027 fiscal year for the Division of Child Development and Earl y 25
Education's use in establishing the child care centers as required by Section 6.1 of this Part. 26
SECTION 6.4. If any expenses are incurred by the State for asbestos or lead 27
remediation in establishing the child care centers required by Section 6.1 of this Part, the State 28
shall be eligible for reimbursement from the Asbestos and Lead Remediation Fund subject to the 29
rules of the fund for up to five hundred thousand dollars ($500,000). 30
SECTION 6.5. By April 1, 2028, the Division of Child Development and Early 31
Education shall report on and make recommendations to the Joint Legislative Oversight 32
Committee on Health a nd Human Services, the Joint Legislative Oversight Committee on 33
General Government, and the Fiscal Research Division the status of the implementation of the 34
pilot program, including successes, concerns, problems encountered, enrollment, and 35
expenditures. 36
SECTION 6.6. Sections 6.3 and 6.4 of this Part are effective July 1, 2026. The 37
remainder of this Part is effective when it becomes law. 38
39
PART VII. ON-SITE CHILD CARE FOR THIRD-SHIFT FIRST RESPONDERS 40
SECTION 7.1. There is appropriated from the General Fund to the Department of 41
Health and Human Services the sum of six million dollars ($6,000,000) in nonrecurring funds 42
for the 2026-2027 fiscal year for a pilot program to provide counties grants to establish third-shift 43
child care for first responders, with priority to be given to third-shift facilities operated in unused 44
or underutilized county-owned buildings. By April 1, 2028, the Department of Health and Human 45
Services shall report on and make recommendations to the Joint Legislative Oversight 46
Committee on Health and Human Services, the Joint Legislative Oversight Committee on 47
General Government, and the Fiscal Research Division regarding the implementation of the pilot 48
program, including successes, concerns, problems encountered, enrollment, and expenditures. 49
50
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 5
PART VIII. ON -SITE CHILD CARE AT EACH NO RTH CAROLINA COMMUNI TY 1
COLLEGE AND COLLEGE IN THE UNIVERSITY OF NORTH CAROLINA SYSTEM 2
3
ON-SITE CHILD CARE AT COMMUNITY COLLEGES 4
SECTION 8.1.(a) Report. – The State Board of Community Colleges shall study 5
and rep ort to the Joint Legislative Education Oversight Committee, the Joint Legislative 6
Oversight Committee on Health and Human Services, and the Fiscal Research Division of the 7
General Assembly, no later than March 31, 2027, on the feasibility and advisability of 8
implementing a publicly available child care program on every community college campus that 9
offers priority enrollment to the children of community college employees and students. The 10
report shall include the following: 11
(1) Recommendations for implementing the child care program. 12
(2) Estimated costs for implementation and maintenance of the child care 13
program. 14
(3) Return on investment of the child care program. 15
(4) Issues related to historical and ongoing utilization of grants or other funding. 16
(5) Barriers to implementation of the child care program. 17
SECTION 8.1.(b) There is appropriated from the General Fund to the Community 18
Colleges System Office the sum of one hundred thousand dollars ($100,000) in nonrecurring 19
funds for the 2026-2027 fiscal year for the study required by subsection (a) of this section. 20
21
CHILD CARE COMPETITIVE GRANTS FOR COMMUNITY COLLEGES 22
SECTION 8.2.(a) There is appropriated from the General Fund to the Community 23
Colleges System Office the sum of thirty million dollars ($30,000,000) in nonrecurring funds for 24
the 2026-2027 fiscal year to develop and implement a competitive request for proposal (RFP) 25
process for child care funding for community colleges with early childhood education (ECE) 26
degrees on their campuses. Funding shall be a warded based on (i) ECE program quality, (ii) 27
demonstrated student and faculty need, and (iii) regional child care availability. The funds shall 28
be used to establish a new child care program on a community college campus with 50 or more 29
slots or expand an existing child care program on a community college campus to 50 slots. Each 30
community college eligible for funding under this section may receive a maximum grant of three 31
million dollars ($3,000,000). The funds may be used for subsidies for students, faculty and staff, 32
or one-time capital expenditures to launch programs. 33
SECTION 8.2.(b) There is appropriated from the General Fund to the Community 34
Colleges System Office the sum of fifty thousand dollars ($50,000) in nonrecurring funds for the 35
2026-2027 fiscal year to provide awareness about existing child care benefits and programs to 36
faculty, staff, and students. 37
38
ON-SITE CHILD CARE AT UNIVERSITIES/COLLEGES 39
SECTION 8.3.(a) The Board of Governors of The University of North Carolina shall 40
study and report to the Joint Legislative Education Oversight Committee, the Joint Legislative 41
Oversight Committee on Health and Human Services, and the Fiscal Research Division of the 42
General Assembly, no later than March 31, 2027, on the feasibility and advisability of 43
implementing a publicly available child care program at each constituent institution campus that 44
offers priority enrollment to the children of university employees and students. The report shall 45
include: 46
(1) Recommendations for implementing the child care program. 47
(2) Estimated costs for implementation and maintenance of the child care 48
program. 49
(3) Return on investment of the child care program. 50
(4) Issues related to historical and ongoing utilization of grants or other funding. 51
General Assembly Of North Carolina Session 2025
Page 6 Senate Bill 1015-First Edition
(5) Barriers to implementation of the child care program. 1
SECTION 8.3.(b) There is appropriated from the General Fund to the Board of 2
Governors of The University of North Carolina the sum of one hundred thousand dollars 3
($100,000) in nonrecurring funds for the 2026 -2027 fiscal year for the study required by 4
subsection (a) of this section. 5
6
PART IX. NORTH CAROLINA CHILD CARE FINANCE AGENCY 7
SECTION 9.1.(a) The General Statutes are amended by adding a new Chapter to 8
read: 9
"Chapter 122F. 10
"North Carolina Child Care Finance Agency. 11
"§ 122F-1. Short title. 12
This Chapter shall be known and may be cited as the "North Carolina Child Care Finance 13
Agency Act." 14
"§ 122F-2. Legislative findings and purposes. 15
(a) The General Assembly hereby finds and declares the following: 16
(1) That there exists in the State of North Carolina a serious shortage of accessible 17
and affordable child care. This statewide shortage severely impacts the State's 18
workforce and economy and is inimical to the health, safety, welfare , and 19
prosperity of all residents of the State and to the sound growth of North 20
Carolina's economy. 21
(2) That private enterprise and investment have not been able to produce, without 22
assistance, the needed supply or rehabilitation of child care facilities to 23
provide sufficient child care for the State's workforce, including low-income 24
families. It is imperative that the supply of child care for families be increased; 25
and that private enterprise and investment be encouraged to sponsor, build , 26
rehabilitate, and operate child care for families to remove barriers to 27
employment and to foster healthy development for children. 28
(3) That the purposes of this Chapter are to provide financing for child care 29
construction, new or rehabilitated, for individuals providing high-quality child 30
care to families and facilitate the matching and development of child care 31
providers with organizations seeking child care for their workforce. 32
(4) That faith -based organization s are eligible for financing for child care 33
construction that provides high-quality child care. 34
(5) That businesses that make child care accessible to their employees are eligible 35
for financing for child care construction that provides high-quality child care. 36
(b) In accomplishing these public purposes, the North Carolina Child Care Finance 37
Agency, a public agency and an instrumentality of the State, is acting in all respects for the benefit 38
of the people of the State in the performance of essential public functions and serves a public 39
purpose in improving and otherwise promoting their health, welfare , and prosperity. The North 40
Carolina Child Care Finance Agency is empowered to act on behalf of the State of North Carolina 41
and its people in serving this public purpose for the benefit of the general public. 42
(c) Whenever feasible, the North Carolina Child Care Finance Agency shall prioritize the 43
following policy goals in its actions: 44
(1) Give first priority in its programs to assisting child care providers with fewer 45
than 10 facilities. 46
(2) Undertake its programs in the areas where the greatest child care needs exists. 47
(3) Give priority to projects for child care facilities with licenses that indicate 48
high-quality child care , as determined by the North Carolina Child Care 49
Commission. 50
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 7
(4) Incentivize child care providers, including faith -based organizations, to 1
provide full-day child care. 2
(5) Encourage private employers to provide on-site child care to employee s 3
through advising on information for research-based solutions , including 4
methods and guides to financing facilities and child care providers as partners 5
and providing information to employers on high -quality child care providers 6
to partner with in providing on-site child care. 7
(6) Partner with the State Board of Community Colleges to facilitate 8
apprenticeships with high-quality child care providers for students at 9
community colleges and other institutions of higher education. 10
(7) Establish grants to support these policy goals from available funds, including 11
funds appropriated for this purpose by the State and funds from any federal or 12
private agency, corporation, association, or person. 13
"§ 122F-3. Definitions. 14
The following definitions apply in this Chapter: 15
(1) Agency. – The North Carolina Child Care Finance Agency created by this 16
Chapter. 17
(2) Bonds or notes. – The bonds or the bond anticipation notes or construction 18
loan notes authorized to be issued by the Agency under this Chapter. 19
(3) Child care facility. – As defined in G.S. 110-86. For the purposes of this 20
Chapter, a child care facility does not include a residential dwelling where 21
child care is provided. 22
(4) Construction loan. – A loan made by a lending institution or by the Agency to 23
any person for the purpose of financing construction of a child care facility. 24
(5) Federally insured securities. – An evidence of indebtedness secured by a first 25
mortgage lien on child care centers and insured or guaranteed as to repayment 26
of principal and interest by the United States or any agency or instrumentality 27
thereof. 28
(6) Governmental agency. – Any department, division, public agency, political 29
subdivision, or other public instrumentality of the State, the federal 30
government, any other State or public agency, or any two or more thereof. 31
(7) Mortgage lenders. – Any bank or trust c ompany, savings bank, national 32
banking association, savings and loan association, or building and loan 33
association, life insurance company, mortgage banking company, the federal 34
government, and any other financial institution authorized to transact business 35
in the State. 36
(8) Mortgage or mortgage loan. – A mortgage loan for child care facilities, 37
including, without limitation, a mortgage loan to finance, either temporarily 38
or permanently, the construction, rehabilitation, improvement, or acquisition 39
and rehabilitation or improvement of a child care facility and a mortgage loan 40
insured or guaranteed by the United States or an instrumentality thereof or for 41
which there is a commitment by the United States or an instrumentality thereof 42
to insure such a mortgage. A mortgage obligation may be evidenced by a 43
security document and secured by a lien upon real property, including a deed 44
of trust and land sale agreement. 45
(9) Mortgagee. – The owner of a beneficial interest in a mortgage loan, the 46
servicer for the owner of a beneficial interest in a mortgage loan, or the trustee 47
for a securitized trust that holds title to a beneficial interest in a mortgage loan. 48
(10) Obligations. – Any bonds or bond anticipation notes authorized to be issued 49
by the Agency under the provisions of this Chapter. 50
General Assembly Of North Carolina Session 2025
Page 8 Senate Bill 1015-First Edition
(11) Rehabilitation. – The renovation or improvement of a child care facility by the 1
owner or operator of that facility. 2
(12) Rehabilitation loan. – A loan made by a lending institution or by the Agency 3
to any person for the purpose of financing renovation of a child care facility. 4
(13) State. – The State of North Carolina. 5
"§ 122F-4. North Carolina Child Care Finance Agency. 6
(a) There is hereby created a body politic and corporate to be known as the "North 7
Carolina Child Care Finance Agency " which shall be constituted a public agency and an 8
instrumentality of the State for the performance of essential public functions. 9
(b) The Agency shall be governed by a board of directors composed of 1 2 members for 10
a term of four years beginning July 1. The directors of the Agency shall be residents of the State 11
and shall not hold other public office. 12
(c) The Agency shall be appointed as follows: 13
(1) Six members appointed by the Governor as follows: 14
a. One member with experience in workforce needs. 15
b. One member with experience as a licensed child care provider. 16
c. One member with experience as a specialist in child care licensure. 17
d. One member with experience in construction of child care facilities. 18
e. One member with experience in commercial small business lending. 19
f. One member with experience in real estate development. 20
(2) Three members appointed by the General Assembly upon the 21
recommendation of the President Pro Tempore of the Senate as follows: 22
a. One member with experience with a savings and loan institution. 23
b. One member with experience as a licensed child care provider. 24
c. One member with experience in construction lending. 25
(3) Three members appointed by the General Assembly upon the 26
recommendation of the Speaker of the House of Representatives as follows: 27
a. One member with experience with a mortgage-servicing institution. 28
b. One member with experience as a licensed child care provider. 29
c. One member with experience in a business that makes on -site child 30
care available to employees. 31
(d) Any vacancy for a person appointed under sub division (1) of subsection (c) of this 32
section shall be filled by appointment of the Governor for the remainder of the unexpired term. 33
Any appointment by the General Assembly shall be made in accordance with G.S. 120-121 and 34
vacancies in those appointments shall be filled in accordance with G.S. 120-122. 35
(e) Any member of the Board of Directors shall be eligible for reappointment. Each 36
member of the Board of Directors may be removed by the Governor for misfeasance, 37
malfeasance, or neglect of duty after reasonable notice and a public hearing, unless the same are 38
in writing expressly waived. Each member of the Board of Directors before entering upon the 39
duties shall take an oath of office to administer the duties of the office faithfully and impartially, 40
and a record of such oath shall be filed in the office of the Secretary of State. 41
(f) The Governor shall designate from among the members of the Board a chair and a 42
vice-chair. The terms of the chair and vice-chair shall extend to the earlier of either two years or 43
the date of expiration of their then current terms as members of the Board of Directors of the 44
Agency. The Agency shall exercise all of its prescribed statutory powers independently of any 45
principal State Department except as described in this Chapter. 46
(g) The Executive Director of the Agency shall be appointed by the Board of Directors, 47
subject to approval by the Governor. All staff and employees of the Agency shall be appointed 48
by the Executive Director, subject to approval by the Board of Directors; shall be eligible for 49
participation in the State Employees' Retirement System; and shall be exempt from the provisions 50
of the North Carolina Human Resources Act. All emplo yees other than the Executive Director 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 9
shall be compensated in accordance with the salary schedules adopted pursuant to the North 1
Carolina Human Resources Act. The salary of the Executive Director shall be fixed by the Board 2
of Directors. The salary of the Executive Director and all staff and employees of the Agency shall 3
not be subject to any limitations imposed pursuant to any salary schedule adopted pursuant to the 4
terms of the North Carolina Human Resources Act. The Board of Directors shall, subject to the 5
approval of the Governor, elect and prescribe the duties of any other officers it finds necessary 6
or advisable, and the Board of Directors shall fix the compensation of these officers. 7
(h) The books and records of the Agency shall be maintained by the Agency and shall be 8
subject to periodic review and audit by the State. 9
(i) No part of the revenues or assets of the Agency shall inure to the benefit of or be 10
distributable to its members or officers or other private persons. The members of the Agency 11
shall receive no compensation for their services but shall be entitled to receive, from funds of the 12
Agency, for attendance at meetings of the Agency or any committee thereof and for other services 13
for the Agency reimbursement for such actual expenses as may b e incurred for travel and 14
subsistence in the performance of official duties and such per diem as is allowed by law for 15
members of other State boards, commissions, and committees. 16
(j) The Executive Director shall administer, manage, and direct the affairs and business 17
of the Agency, subject to the policies, control, and direction of the members of the Agency Board 18
of Directors. The Secretary of the Agency shall keep a record of the proceedings of the Agency 19
and shall be custodian of all books, documents , and papers filed with the Agency, the minute 20
book or journal of the Agency , and its official seal. The Secretary may have copies made of all 21
minutes and other records and documents of the Agency and may give certificates under the 22
official seal of the Agency to the effect that such copies are true copies, and all persons dealing 23
with the Agency may rely upon such certificates. 24
(k) Seven members of the Board of Directors of the Agency shall constitute a quorum 25
and the affirmative vote o f a majority of the members present at a meeting of the Board of 26
Directors duly called and held shall be necessary for any action taken by the Board of Directors 27
of the Agency, except adjournment; provided, however, that the Board of Directors may appoint 28
an executive committee to act on behalf of said Board during the period between regular meetings 29
of said Board, and said committee shall have full power to act upon the vote of a majority of its 30
members. No vacancy in the membership of the Agency shall imp air the rights of a quorum to 31
exercise all the rights and to perform all the duties of the Agency. 32
"§ 122F-5. General powers. 33
The Agency shall have all of the powers necessary or convenient to carry out the provisions 34
of this Chapter, including the power: 35
(1) To make or participate in the making of mortgage loans , construction loans, 36
and rehabilitation loans to licensed child care providers for rehabilitation and 37
construction; provided, however, that such loans shall be made only upon the 38
determination by the Agency that mortgage loans , construction loans, and 39
rehabilitation loans are not otherwise available wholly or in part from private 40
lenders upon reasonably equivalent terms and conditions. 41
(2) To collect and pay reasonable fees and charges in connectio n with making, 42
purchasing, and servicing its loans, notes, bonds, commitments , and other 43
evidences of indebtedness. 44
(3) To acquire on a temporary basis real property, or an interest therein, in its own 45
name, by purchase, transfer , or foreclosure, where suc h acquisition is 46
necessary or appropriate to protect any loan in which the Agency has an 47
interest and to sell, transfer, and convey any such property to a buyer and, in 48
the event such sale, transfer, or conveyance cannot be effected with reasonable 49
promptness or at a reasonable price, to rent or lease such property to a tenant 50
pending such sale, transfer, or conveyance. 51
General Assembly Of North Carolina Session 2025
Page 10 Senate Bill 1015-First Edition
(4) To sell, at public or private sale, all or any part of any mortgage or other 1
instrument or document securing a loan of any type permitted by this Chapter. 2
(5) To procure insurance against any loss in connection with its operations in such 3
amounts, and from such insurers, as it may deem necessary or desirable. 4
(6) To consent, whenever it deems it necessary or desirable in the fulfillment of 5
its corporate purposes, to the modification of the rate of interest, time of 6
payment of any installment of principal or interest, or any other terms, of any 7
mortgage loan, mortgage loan commitment, construction loan, rehabilitation 8
loan, contract, or agreement of any kind to which the Agency is a party. 9
(7) To borrow money as herein provided to carry out and effectuate its corporate 10
purposes and to issue its obligation as evidence of any such borrowing. 11
(8) To include in any borrowing such amounts as may be deemed necessary by 12
the Agency to pay financing charges, interest on the obligations for a period 13
not exceeding two years from their date, consultant, advisory , and legal fees 14
and such other expenses as are necessary or incident to such borrowing. 15
(9) To make and publish rules and regulations respecting its lending programs 16
and such other rules and regulations as are necessary to effectuate its corporate 17
purposes. 18
(10) To provide technical and advisory services to sponsors, builders , and 19
developers of child care facilities. 20
(11) To promote research and development in scientific methods of constructing 21
low-cost child care facilities of high durability and improved safety and utility. 22
(12) To service or contract for the servicing of mortgage loans, construction loans, 23
and rehabilitation loans, and to make and execute agreements, contracts , and 24
other instruments necessary or convenient in the exercise of the powers and 25
functions of the Agency under this Chapter, including contracts with any 26
person, firm, corporation, governmental agency, or other entity, and each and 27
any North Carolina governmental agency is hereby authorized to enter into 28
contracts and otherwise cooperate with the Agency to facilitate the purposes 29
of this Chapter. 30
(13) To receive, accept, administer, and comply with the conditions and 31
requirements respecting any appropriation or any gift, grant , or donation of 32
any property or money, including the proceeds of general obligation bonds of 33
the State. 34
(14) To develop a financing application for providers with less than 10 child care 35
centers to seek financing through a common application from multiple 36
financing providers, in order to reduce administrative burdens and facilitate 37
access to funds for facilities and growth financing. 38
(15) To establish a program of grants that support the policy goals established by 39
this Chapter to increase the supply of child care for families from funds made 40
available for that purpose. 41
(16) To establish a clearinghouse to connect high-quality child care providers with 42
potential workforce partners seeking on-site child care for employees. 43
(17) To partner with the State Board of Community Colleges to facilitate 44
apprenticeships with high -quality child care providers for students at 45
community colleges and other institutions of higher education. 46
(18) To sue and be sued in its own name, plead and be impleaded. 47
(19) To establish and maintain an office for the transaction of its business in the 48
City of Raleigh and at such place or places as the Board of Directors deems 49
advisable or necessary in carrying out the purposes of this Chapter. 50
(20) To adopt an official seal and alter the same at pleasure. 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 11
(21) To adopt bylaws for the regulation of its affairs and the conduct of its business 1
and to prescribe rules, regulations , and policies in connection with the 2
performance of its functions and duties. 3
(22) To employ fiscal consultants, engineers, attorneys, real estate counselors, 4
appraisers, and such other consultants and employees as may be required in 5
the judgment of the Agency and to fix and pay their compensation from funds 6
available to the Agency therefor. 7
(23) To purchase or to participate in the purchase a nd enter into commitments by 8
itself or together with others for the purchase of federally insured securities; 9
provided, however, that the Agency shall first determine that the proceeds of 10
such securities will be utilized for the purpose of making new mortgage loans 11
to licensed child care providers , all as specified in regulations to be adopted 12
by the Agency. 13
(24) To advise the Governor regarding the coordination of child care facilities. 14
(25) To acquire, hold, rent, encumber, transfer, convey, and otherwise deal with 15
real property and utilities in the same manner as a private person or 16
corporation, subject only to the approval of the Governor and Council of State. 17
The Board of Directors may pledge or encumber income and assets of the 18
Agency to secure financing for real property. 19
(26) To select and retain, subject to the approval of the Local Government 20
Commission, the financial consultants, underwriters, and bond attorneys to be 21
associated with the issuance of any bonds and to pay for services rendered by 22
underwriters, financial consultants, or bond attorneys out of the proceeds of 23
any such issue with regard to which the services were performed. 24
"§ 122F-6. Rules and regulations governing Agency activity. 25
(a) The Agency shall from time to time adopt, modify , or repeal rules and regulations 26
governing the purchase of federally insured securities by the Agency and the purchase and sale 27
of mortgage loans, construction loans, and rehabilitation loans and the application of the proceeds 28
thereof, including rules and regulations as to any or all of the following: 29
(1) Procedures for the submission of requests or the invitation of proposals for the 30
purchase and sale of mortgage loans, construction loans, rehabilitation loans, 31
or for the purchase of federally insured securities. 32
(2) Limitations or restrictions as to the number, location , or other qualifications 33
or characteristics of child care facilities to be financed by mortgage loans, 34
construction loans, and rehabilitation loans. 35
(3) Restrictions as to the interest rates on mortgage loans, construction loans, and 36
rehabilitation loans or the return which may be realized by lenders on any 37
mortgage loans, construction loans, and rehabilitation loans, or on the sale of 38
federally insured securities to the Agency. 39
(4) Requirements as to commitments by lenders with respect to the use of the 40
proceeds of sale of any federally insured securities. 41
(5) Schedules of any fees and charges necessary to provide for expenses and 42
reserves of the Agency. 43
(6) Any other matters related to the duties and the exercise of the powers of the 44
Agency to purchase and sell mortgage loans, construction loans, and 45
rehabilitation loans or to purchase federally insured securities. 46
Such rules and regulations shall be designed to effectuate the general purposes of this Chapter 47
and the following specific objectives: (i) the construction of decent, safe , and sanitary full-day 48
child care facilities; (ii) the rehabilitation of present child care facilities; (iii) increasing the supply 49
and access to affordable child care for all families, regardless of income level ; (iv) the 50
encouraging of private enterprise and investment to sponsor, build , and rehabilitate child care 51
General Assembly Of North Carolina Session 2025
Page 12 Senate Bill 1015-First Edition
facilities; and (v) the restriction of the financial return and benefit to that necessary to protect 1
against the realization by lenders of an excessive financial return or benefit as determined by 2
prevailing market conditions. 3
(b) The interest rate or rates and other terms of federally insured securities or mortgage 4
loans, construction loans, and rehabilitation loans purchased from the proceeds of any issue of 5
bonds of the Agency shall be at least sufficient to assure the payment of said bonds and the 6
interest thereon as the same become due from the amounts received by the Agency in repayment 7
of such federally insured securities or such loans and interest thereon. 8
(c) The Agency shall provide that mortgage loans, construction loans, and rehabilitation 9
loans are forgivable in full after 15 years if the licensed child care provider (i) serves at least 10
twenty-five percent (25%) more children than when the loan was received and (ii) at least fifty 11
percent (50%) of the children served by the child care facility receive a child care subsidy. 12
(d) The Agency shall require as a condition of the purchase of federally insured securities 13
from a mortgage lender and the purchase or the making of a commitment to purchase mortgage 14
loans from a mortgage lender where the Agency has not given its approval prior to the initial 15
making of the m ortgage loan that such mortgage lender shall on or prior to the 16
one-hundred-eightieth day (or such earlier day as may be prescribed by rules and regulations of 17
the Agency) following the receipt of the sale proceeds have entered into written commitments to 18
make, and shall thereafter proceed as promptly as practicable to make from such sale proceeds, 19
new mortgage loans with respect to child care facilities in the State having a stated maturity of 20
not less than 20 years from the date thereof in an aggregate principal amount equal to the amount 21
of such sale proceeds. The Agency shall not purchase nor make commitment to purchase 22
mortgage loans, federally insur ed securities, or other obligations from a mortgage lender from 23
which it has previously purchased federally insured securities or mortgage loans initially made 24
without such prior approval unless said mortgage lender has either made or entered into written 25
commitments to make such new mortgage loans. 26
"§ 122F-7. Mortgage insurance authority. 27
(a) The Agency may upon application of a proposed mortgagee insure and make advance 28
commitments to insure payments required by a loan for child care facilities upon such terms and 29
conditions as the Agency may prescribe. Mortgage loans insured by the Agency under this 30
Chapter may provide financing for related ancillary facilities to the extent permitted by applicable 31
Agency regulations. Mortgage loans insured by the Agency under this Chapter shall be secured 32
by a first mortgage. 33
The aggregate principal amount of all mortgages so insured by the Agency under this Chapter 34
and outstanding at any one time shall not exceed 10 times the average annual balance for the 35
preceding cal endar year of funds on deposit in the child care mortgage insurance fund, the 36
creation of which is hereby authorized. The aggregate amount of principal obligations of all 37
mortgages so insured shall not be deemed to constitute a debt, liability, or obligation of the State 38
or of any political subdivision thereof or a pledge of the faith and credit of the State or of any 39
such political subdivision, but shall be payable solely from moneys on deposit to the credit of the 40
child care mortgage insurance fund. Any c ontract of insurance executed by the Agency under 41
this section shall be conclusive evidence of eligibility for such mortgage insurance and the 42
validity of any contract of insurance so executed or of an advance commitment to issue such shall 43
be incontestable in the hands of a mortgagee from the date of execution of such contract or 44
commitment, except for fraud or misrepresentation on the part of such mortgagee and, as to 45
commitments to insure, noncompliance with the terms of the advance commitment or Agency 46
regulations in force at the time of issuance of the advance commitment. 47
(b) For mortgage payments to be eligible for insurance under the provisions of this 48
Chapter, the underlying mortgage loan shall: 49
(1) Be one which is made and held by a mortgagee approv ed by the Agency as 50
responsible and able to service the mortgage properly. 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 13
(2) Not exceed ninety percent (90%) of the estimated cost of the proposed child 1
care facility. 2
(3) Have a maturity satisfactory to the Agency but in no case longer than eighty 3
percent (80%) of the Agency's estimate of the remaining useful life of said 4
child care facility or 40 years from the date of the issuance of insurance, 5
whichever is earlier. 6
(4) Contain amortization provisions satisfactory to the Agency requiring periodic 7
payments by the mortgagor not in excess of the ability to pay as determined 8
by the Agency. 9
(5) Be in such form and contain such terms and provisions with respect to 10
maturity, prop erty insurance, repairs, alterations, payment of taxes and 11
assessments, default reserves, delinquency charges, default remedies, 12
anticipation of maturity, additional and secondary liens, equitable and legal 13
redemption rights, prepayment privileges , and other matters as the Agency 14
may prescribe. 15
(c) All applications for mortgage insurance shall be forwarded, together with an 16
application fee prescribed by the Agency, to the executive director of the Agency. The Agency 17
shall cause an investigation of the propo sed project to be made, review the application and the 18
report of the investigation, and approve or deny the application. No application shall be approved 19
unless the Agency finds that it is consistent with the purposes of this Chapter and further finds 20
that the financing plan for the proposed project is sound. The Agency shall notify the applicant 21
and the proposed lender of its decision. Any such approval shall be conditioned upon payment 22
to the Agency, within such reasonable time and after notification of approval as may be specified 23
by the Agency, of the commitment fee prescribed by the Agency. 24
(d) The Agency shall fix mortgage insurance premiums for the insurance of mortgage 25
payments under the provision of this Chapter. Such premiums shall be computed as a percentage 26
of the principal of the mortgage outstanding at the beginning of each mortgage year but shall not 27
be more than one-half of one percent (1/2 of 1%) per year of such principal amount. The amount 28
of premium need not be uniform for all insured loan s. Such premiums shall be payable by 29
mortgagors or mortgagees in such manner as prescribed by the Agency. 30
(e) In the event of default by the mortgagor, the mortgagee shall notify the Agency both 31
of the default and the mortgagee 's proposed course of action. When it appears feasible, the 32
Agency may for a temporary period upon default or threatened default by the mortgagor authorize 33
mortgage payments to be made by the Agency to the mortgagee which payments shall be repaid 34
under such conditions as the Agency may prescribe. The Agency may also agree to revised terms 35
of financing when such appear prudent. The mortgagee shall be entitled to receive the benefits 36
of the insurance provided herein upon: 37
(1) Any sale of the mortgaged property by court order in foreclosure or a sale with 38
the consent of the Agency by the mortgagor or a subsequent owner of the 39
property or by the mortgagee after foreclosure or acquisition by deed in lieu 40
of foreclosure, provided all claims of the mortgagee against the mortgagor or 41
others ari sing from the mortgage, foreclosure, or any deficiency judgment 42
shall be assigned to the Agency without recourse except such claims as may 43
have been released with the consent of the Agency; or 44
(2) The expiration of six months after the mortgagee has taken title to the 45
mortgaged property under judgment of strict foreclosure, foreclosure by sale 46
or other judicial sale, or under a deed in lieu of foreclosure if during such 47
period the mortgagee has made a bona fide attempt to sell the property, and 48
thereafter conveys the property to the Agency with an assignment, without 49
recourse, to the Agency of all claims of the mortgagee against the mortgagor 50
or others arising out of the mortgage foreclosure, or deficiency judgment; or 51
General Assembly Of North Carolina Session 2025
Page 14 Senate Bill 1015-First Edition
(3) The acceptance by the Agency of title to the property or an assignment of the 1
mortgage, without recourse to the Agency, in the event the Agency determines 2
it imprudent to proceed under subdivision (1) or (2) of this subsection. 3
Upon the occurrence of either subdivision (1), (2), or (3) of this subsection, the obligation of 4
the mortgagee to pay premium charges for insurance shall cease, and the Agency shall, within 5
30 days thereafter, pay to the mortgagee ninety -eight percent (98%) of the sum of (i) the then 6
unpaid principal balance of the in sured indebtedness, (ii) the unpaid interest to the date of 7
conveyance or assignment to the Agency, as the case may be, (iii) the amount of all payments 8
made by the mortgagee for which it has not been reimbursed for taxes, insurance, assessments , 9
and mortgage insurance premiums, and (iv) such other necessary fees, costs , or expenses of the 10
mortgagee as may be approved by the Agency. 11
(f) Upon request of the mortgagee, the Agency may at any time, under such terms and 12
conditions as it may prescribe, consent to the release of the mortgagor from the mortgagor's 13
liability or consent to the release of parts of the property from the lien of the mortgage, or approve 14
a substitute mortgagor or sale of the property or part thereof. 15
(g) No claim for the benefit of the in surance provided in this Chapter shall be accepted 16
by the Agency except within one year after any sale or acquisition of title of the mortgaged 17
premises described in subdivision (1) or (2) of subsection (e) of this section. 18
(h) There shall be paid into the child care mortgage insurance fund (i) all premiums 19
received by the Agency for the granting of such mortgage insurance, (ii) any moneys or other 20
assets received by the Agency as a result of default or delinquency on mortgage loans insured by 21
the Agency, including any proceeds from the sale or lease of real property, (iii) any moneys 22
appropriated and made available by the State for the purpose of such fund. 23
"§ 122F-8. Terms and conditions of loans to and by lenders. 24
(a) The Agen cy shall from time to time adopt, modify, amend , or repeal rules and 25
regulations governing the making of loans to lenders and the application of the proceeds thereof. 26
These rules and regulations shall be designed to effectuate the general purposes of this Chapter 27
and the following specific objectives: (i) the construction and renovation of decent, safe , and 28
sanitary child care facilities ; (ii) the encouragement of private enterprise and investment to 29
sponsor, build, and renovate child care facilities ; (iii) the increase in the supply and access to 30
affordable child care for all families, regardless of income level; and (iv) the restriction of the 31
financial return and benefit to the mortgage lenders from such loans to an amount that is 32
necessary to induce their participation and that is not excessive as determined by prevailing 33
market conditions. 34
(b) Notwithstanding any other provision of this section, the interest rate or rates and other 35
terms of the loans to lenders made from the proceeds of any issue of bonds of the Agency shall 36
provide that the amounts received by the Agency in repayment of the loans and interest thereon 37
shall be at least sufficient to assure the payment of the principal of and the interest on the bonds 38
as they become due. 39
(c) The Agency shall enter into a written agreement with each lender that shall require as 40
a condition of each loan to such lender that the lender shall originate new mortgage loans , 41
construction loans, and rehabilitation loans within a reasonable period of time as determined by 42
the Agency's rules and regulations and that such new loans shall have such stated maturities as 43
determined by the Agency's rules and regulations. 44
(d) The loans to lenders shall be general obligations of the respective lenders owing them. 45
The Agency shall require that such loans shall be secured as to payment of both principal and 46
interest by a pledge and lien upon collateral security. The collateral security itself shall be in such 47
amount as the Agency determines will assure the payment of the principal of and the interest on 48
the bonds as they become due. Collateral security shall be deemed to be sufficient if the principal 49
of and the interest on the collateral security, when due, will be sufficient to pay the principal of 50
and the interest on the bonds. The collateral security shall consist of any of the following items: 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 15
(i) direct obligations of, or obligations guaranteed by, the State or the United States of America; 1
(ii) bonds, debentures, notes , or other evidences of indebtedness, satisfactory t o the Agency, 2
issued by any of the following federal agencies: Bank for Cooperatives, Federal Intermediate 3
Credit Bank, Export -Import Bank of Washington, Federal Land Banks, or the Government 4
National Mortgage Association; (iii) direct obligations of or obligations guaranteed by the State; 5
(iv) mortgages insured or guaranteed by the United States of America or an instrumentality of it 6
as to payment of principal and interest; (v) any other mortgages secured by real estate on which 7
there is located a commercial structure, the collateral value of which shall be determined by the 8
regulations issued from time to time by the Agency; (vi) certificates of deposit of banks or trust 9
companies, including the trustee, organized under the laws of the United States or any state, 10
which have a combined capital and surplus of at least fifteen million dollars ($15,000,000); (vii) 11
Bankers Acceptances; and (viii) commercial paper that has been classified for rating purposes by 12
Dun & Bradstreet, Inc., as Prime-1 or by Standard & Poor's Corp. as A-1. 13
(e) The Agency may require as a condition of any loan to a lender such representations 14
and warranties that it determines to be necessary to secure such loans and to carry out the 15
purposes of this section. 16
"§ 122F-9. Credit of State not pledged. 17
Obligations issued under the provisions of this Chapter shall not be deemed to constitute a 18
debt, liability, or obligation of the State or of any political subdivision thereof or a pledge of the 19
faith and credit of the State or of any such political subdivision, but shall be payable solely from 20
the revenues or assets of the Agency. Each obligation issued under this Chapter shall contain on 21
the face thereof a statement to the effect that the Agency shall not be obligated to pay the same 22
nor the interest thereon except from the revenues or assets pledged therefor and that neither the 23
faith and credit nor the taxing power of the State or of any political subdivision thereof is pledged 24
to the payment of the principal of or the interest on such obligation. 25
Expenses incurred by the Agency in carrying out the provisions of this Chapter may be made 26
payable from funds provided pursuant to this Chapter and no liability shall be incurred by the 27
Agency hereunder beyond the extent to which moneys shall have been so provided. 28
"§ 122F-10. Bonds and notes. 29
The Agency is hereby authorized to provide for the issuance, at one time or from time to time, 30
of bonds and notes of the Agency to carry out and effectuate its corporate purposes. The Agency 31
also is hereby authorized to provide for the issuance, at one time or from time to time, of (i) bond 32
anticipation notes in anticipation of the issuance of such bonds and (ii) construction loan notes 33
to finance the making or purchase of mortgage loans, construction loans, and rehabilitation loans, 34
for the construction, rehabilitation, or improvement of child care facilities. The total amount of 35
bonds, bond anticipation notes, and construction loan notes outstanding at any one time shall not 36
exceed twelve billion dollars ($12,000,000,000) excluding therefrom any bond anticipation notes 37
for the payment of which bonds have been issued. The principal of and the interest on such bonds 38
or notes shall be payable solely from the funds herein provided for such payment. Any such notes 39
may be made payable from the proceeds of bonds or renewal notes or, in the event bond or 40
renewal note proceeds are not available, such notes may be paid from any available revenues or 41
assets of the Agency. The bonds or notes of each issue shall be dated and may be made 42
redeemable before maturity at the option of the Agency at such price or prices and under such 43
terms and conditions as may be determined by the Agency. Any such bonds or notes shall bear 44
interest at such rate or rates as may be determined by the Local Government Commission of 45
North Carolina with the approval of the Agency. Notes shall mature a t such time or times not 46
exceeding 10 years from their date or dates and bonds shall mature at such time or times not 47
exceeding 43 years from their date or dates, as may be determined by the Agency. The Agency 48
shall determine the form and manner of executi on of the bonds or notes, including any interest 49
coupons to be attached thereto, and shall fix the denomination or denominations and the place or 50
places of payment of principal and interest, which may be any bank or trust company within or 51
General Assembly Of North Carolina Session 2025
Page 16 Senate Bill 1015-First Edition
without the Stat e. In case any officer whose signature or a facsimile of whose signature shall 1
appear on any bonds or notes or coupons attached thereto shall cease to be such officer before 2
the delivery thereof, such signature or such facsimile shall nevertheless be valid and sufficient 3
for all purposes the same as if that officer had remained in office until such delivery. The Agency 4
may also provide for the authentication of the bonds or notes by a trustee or fiscal agent. The 5
bonds or notes may be issued in coupon or in registered form, or both, as the Agency may 6
determine, and provision may be made for the registration of any coupon bonds or notes as to 7
principal alone and also as to both principal and interest, and for the reconversion into coupon 8
bonds or notes of any bonds or notes registered as to both principal and interest, and for the 9
interchange of registered and coupon bonds or notes. Upon the filing with the Local Government 10
Commission of North Carolina of a resolution of the Agency requesting that its bonds and notes 11
be sold, such bonds or notes may be sold in such manner, either at public or private sale, and for 12
such price as the Commission shall determine to be for the best interest of the Agency and best 13
effectuate the purposes of this Chapter, as long as the sale is approved by the Agency. 14
The proceeds of any bonds or notes shall be used solely for the purposes for which issued 15
and shall be disbursed in such manner and under such restrictions, if any, as the Agency may 16
provide in the resolution authorizing the issuance of such bonds or notes or in the trust agreement 17
hereinafter mentioned securing the same. 18
Prior to the preparation of definitive bonds, the Agency may, under like restrictions, issue 19
interim receipts or temporary bonds, with or without coupons, exchangeable for definitive bonds 20
when such bonds shall have been executed and are available for delivery. The Agency may also 21
provide for the replacement of any bonds or notes which shall become mutilated or shall be 22
destroyed or lost. 23
Bonds or notes may be issued under the provisions of this Chapter without obtaining, except 24
as otherwise expressly provided in this Chapter, the consent of any department, division, 25
commission, board, body, bureau, or agency of the State, and without any other proceedings or 26
the happening of any conditions or things other than those proceedings, conditions , or things 27
which are specifically required by this Chapter and the provisions of the resolution authorizing 28
the issuance of such bonds or notes or the trust agreement securing the same. 29
"§ 122F-11. Trust agreement or resolution. 30
In the discretion of the Agency , any obligations issued under the provisions of this Chapter 31
may be secured by a trust agreement by and between the Agency and a corporate trustee, which 32
may be any trust company or bank having the powers of a trust company within or without the 33
State. Such trust agreement or the resolution providing for the issuance of such obligations may 34
pledge or assign all or any part of the revenues or assets of the Agency, including, without 35
limitation, mortgage loans, construction loans, rehabilitation loans, mortgage loan commitments, 36
contracts, agreements, and other security or investment obligations, the fees or charges made or 37
received by the Agency, the moneys received in payment of loans and interest thereon , and any 38
other moneys received or to be received by the Agency. Such trust agreement or resolution may 39
contain such provisions for protecting and enforcing the rights and remedies of the holders of 40
any such obligations as may be reasonable and proper and not in violation of law, including 41
covenants setting forth the duties of the Agency in relation to the purposes to which obligation 42
proceeds may be applied, the disposition or pledging of the revenues or assets of the Agency, the 43
terms and conditions for the issuance of additional obligations, and the custody , safeguarding, 44
and application of all moneys. It shall be lawful for any bank or trust company incorporated under 45
the laws of the State which may act as depositary of the proceeds of obligations, revenues , or 46
other money hereunder to furnish such indemnif ying bonds or to pledge such securities as may 47
be required by the Agency. Any such trust agreement or resolution may set forth the rights and 48
remedies of the holders of any obligations and of the trustee, and may restrict the individual right 49
of action by any such holders. In addition to the foregoing, any such trust agreement or resolution 50
may contain such other provisions as the Agency may deem reasonable and proper for the 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 17
security of the holders of any obligations. All expenses incurred in carrying out the provisions of 1
such trust agreement or resolution may be paid from the revenues or assets pledged or assigned 2
to the payment of the principal of and the interest on obligations or from any other funds available 3
to the Agency. 4
"§ 122F-12. Validity of any pledge. 5
The pledge of any assets or revenues of the Agency to the payment of the principal of or the 6
interest on any obligations of the Agency shall be valid and binding from the time when the 7
pledge is made and any such assets or revenues shall immediat ely be subject to the lien of such 8
pledge without any physical delivery thereof or further act, and the lien of any such pledge shall 9
be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise 10
against the Agency, irrespective of whether such parties have notice thereof. Nothing herein shall 11
be construed to prohibit the Agency from selling any assets subject to any such pledge except to 12
the extent that any such sale may be restricted by the trust agreement or resolution providing for 13
the issuance of such obligations. 14
"§ 122F-13. Trust funds. 15
Notwithstanding any other provisions of law to the contrary, all moneys received pursuant to 16
the authority of this Chapter shall be deemed to b e trust funds to be held and applied solely as 17
provided in this Chapter. The resolution authorizing any obligations or the trust agreement 18
securing the same may provide that any of such moneys may be temporarily invested pending 19
the disbursement thereof an d shall provide that any officer with whom, or any bank or trust 20
company with which, such moneys shall be deposited shall act as trustee of such moneys and 21
shall hold and apply the same for the purposes hereof, subject to such regulations as this Chapter 22
and such resolution or trust agreement may provide. 23
Any moneys received pursuant to the authority of this Chapter and any other moneys 24
available to the Agency for investment may be invested: 25
(1) As provided in G.S. 159-30, except that for purposes of G.S. 159-30(b), the 26
Agency may deposit moneys at interest in banks or trust companies outside as 27
well as in this State, as long as any moneys at deposit outside this State are 28
collateralized to the same extent and manner as if at deposit in this State. 29
(2) In ev idences of ownership of, or fractional undivided interests in, future 30
interest and principal payments on either direct obligations of the United 31
States government or obligations the principal of and the interest on which are 32
guaranteed by the United States government, which obligations are held by a 33
bank or trust company organized and existing under the laws of the United 34
States of America or any state in the capacity of custodian. 35
(3) In repurchase agreements with respect to (i) direct obligations of the United 36
States government, (ii) obligations the principal of and the interest on which 37
are guaranteed by the United States government, or (iii) obligations described 38
in G.S. 159-30(c)(2), (3), (6), or (7), if all of the following conditions are met: 39
a. The repurchase agreement is entered into with an institution whose 40
ability to pay its unsecured long -term obligations (including, if the 41
institution is an insurance company, its claims paying ability) is rated 42
in one of the two highest ratings categories by a nationally recognized 43
securities rating agency. If the term of the repurchase agreement is for 44
a period of one year or less, however, the repurchase agreement may 45
be entered into with an institution that does not have such a long-term 46
rating if its ability to pay its unsecured short -term obligations is rated 47
in one of the two highest ratings categories by a nationally recognized 48
securities rating agency. If the institution with which the agreement is 49
to be entered does not meet the ratings requirement of this 50
subparagraph, the repurchase agreement may nevertheless be entered 51
General Assembly Of North Carolina Session 2025
Page 18 Senate Bill 1015-First Edition
into with the institution if the obligations of the institution under the 1
repurchase agreement are fully guaranteed by another institution that 2
does meet the ratings requirement of this sub-subdivision. 3
b. The repurchase agreement provides that it shall be terminated, without 4
penalty, if the institution with which the repurchase agreement is 5
entered or by whom the institution's obligations are guaranteed fails to 6
maintain (i) in the event that the repurchase agreement was entered 7
into in reliance upon the rating of the institution 's long -term 8
obligations, a rating of its long -term obligations in one of the three 9
highest ratings categories by at least one nationally recognized 10
securities rating agency, or (ii) in the event that the repurchase 11
agreement was entered into in reliance upon the rating of the 12
institution's short -term obligations, a rating of its short -term 13
obligations in one of the two highest ratings categories by at least one 14
nationally recognized securities rating agency. The repurchase 15
agreement does not have to be terminated, however, if a new guarantor 16
meeting the rating requirement set forth in sub -subdivision a. of this 17
subdivision as the requirement necessary for the Agency to enter the 18
repurchase agreement agrees to fully guarantee the obligations of the 19
institution under the repurchase agreement. 20
c. The obligations that are subject to the repurchase ag reement are 21
delivered (in physical or in book entry form) to the Agency, or any 22
financial institution serving either as trustee for obligations issued by 23
the Agency or as fiscal agent for the Agency or the State Treasurer or 24
are supported by a safekeeping receipt issued by a depository 25
satisfactory to the Agency. The repurchase agreement must provide 26
that the value of the underlying obligations shall be maintained at a 27
current market value, calculated at least daily, of not less than one 28
hundred percent (10 0%) of the repurchase price. The financial 29
institution serving either as trustee or as fiscal agent for the Agency 30
holding the obligations subject to the repurchase agreement hereunder 31
or the depository issuing the safekeeping receipt shall not be the 32
provider of the repurchase agreement. 33
d. A valid and perfected first security interest in the obligations which 34
are the subject of the repurchase agreement has been granted to the 35
Agency or its assignee or book entry procedures, conforming, to the 36
extent pract icable, with federal regulations and satisfactory to the 37
Agency have been established for the benefit of the Agency or its 38
assignee. 39
e. The securities are free and clear of any adverse third-party claims. 40
f. The repurchase agreement is in a form satisfactory to the Agency. 41
"§ 122F-14. Remedies. 42
Any holder of obligations issued under the provisions of this Chapter or any coupons 43
appertaining thereto, and the trustee under any trust agreement or resolution authorizing the 44
issuance of such obligations, except to the extent the rights herein given may be restricted by 45
such trust agreement or resolution, may, either at law or in equity, by suit, action, mandamus or 46
other proceeding, protect and enforce any and all rights under the laws of the State or granted 47
hereunder or under such trust agreement or resolution, or under any other contract executed by 48
the Agency pursuant to this Chapter, and may enforce and compel the performance of all duties 49
required by this Chapter or by such trust agreement or resolution to be performed by the Agency 50
or by any officer thereof. 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 19
"§ 122F-15. Negotiable instruments. 1
Notwithstanding any of the foregoing provisions of this Chapter or any recitals in any 2
obligations issued under the provisions of this Chapter, all such obligations and interest coupons 3
appertaining thereto shall be and are hereby made negotiable instruments under the laws of this 4
State, subject only to any applicable provisions for registration. 5
"§ 122F-16. Obligations eligible for investment. 6
Obligations issued under the provisions of this Chapter are hereby made securities in which 7
all public officers and public bodies of the State and its political subdivisions, all insurance 8
companies, trust companies, banking associations, investment companies , executors, 9
administrators, trustees, and other fiduciaries may properly and legally invest funds, including 10
capital in their control or belonging to them. Such obligations are hereby made securities which 11
may properly and legally be deposited with and received by any State or municipal officer or any 12
agency or political subdivision of the State for any purpose for which the deposit of bonds, notes, 13
or obligations of the State is now or may hereafter be authorized by law. 14
"§ 122F-17. Refunding obligations. 15
The Agency is hereby authorized to provide for the issuance of refunding obligations for the 16
purpose of refunding any obligations then outstanding which shall have been issued under the 17
provisions of this Chapter, including the payment of any redemption premium thereon and any 18
interest accrued or to accrue to the date of redemption of such obligations and, if deemed 19
advisable by the Agency, for any corporate purpose of the Agency. The issuance of such 20
obligations, the maturities and other detai ls thereof, the rights of the holders thereof, and the 21
rights, duties, and obligations of the Agency in respect of the same shall be governed by the 22
provisions of this Chapter which relate to the issuance of obligations, insofar as such provisions 23
may be appropriate therefor. 24
Refunding obligations may be sold or exchanged for outstanding obligations issued under 25
this Chapter and, if sold, the proceeds thereof may be applied, in addition to any other authorized 26
purposes, to the purchase, redemption, or payment of such outstanding obligations. Pending the 27
application of the proceeds of any such refunding obligations, with any other available funds, to 28
the payment of the principal, accrued interest and any redemption premium on the obligations 29
being refunded, and, if so provided or permitted in the resolution authorizing the issuance of such 30
refunding obligations or in the trust agreement securing the same, to the payment of any interest 31
on such refunding obligations and any expenses in connection with such refu nding, such 32
proceeds may be invested in direct obligations of, or obligations the principal of and the interest 33
on which are unconditionally guaranteed by, the United States of America which shall mature or 34
which shall be subject to redemption by the holde rs thereof, at the option of such holders, not 35
later than the respective dates when the proceeds, together with the interest accruing thereon, will 36
be required for the purposes intended. 37
"§ 122 F-18. Oversight by committees of General Assembly; annual repo rt; audit; 38
construction of Chapter. 39
(a) Oversight. – The Finance Committee of the House of Representatives, the Finance 40
Committee of the Senate, and the Joint Legislative Oversight Committee on Health and Human 41
Services shall exercise continuing oversight of the Agency in order to assure that the Agency is 42
effectively fulfilling its statutory purpose. 43
(b) Comprehensive Report. – The Agency shall, on or before February 15 of each year, 44
submit an annual comprehensive report of its activities for the preceding year to the Governor, 45
the Office of State Budget and Management, the State Auditor, the Local Government 46
Commission, the Joint Legislative Oversight Committee on Health and Human Services, and the 47
Fiscal Research Division. The comprehensive report required under this subsection shall include 48
at least all of the following: 49
(1) The goals and objectives of the program administered by the Agency. 50
(2) The number and types of activities funded by the Agency. 51
General Assembly Of North Carolina Session 2025
Page 20 Senate Bill 1015-First Edition
(c) Audit. – The Agency shall cause an audit of its books and accounts to be made at least 1
once in each year by an independent certified public accountant and the cost thereof may be paid 2
from any available moneys of the Agency. 3
(d) Construction. – Nothing in this Chapter shall be construed as requiring the Agency to 4
receive legislative approval for the exercise of any of the powers granted by this Chapter. 5
"§ 122F-19. Officers not liable. 6
No member or other officer of the Agency shall be subject to any personal liability or 7
accountability by reason of his execution of any obligations or the issuance thereof. 8
"§ 122F-20. Authorization to accept appropriated moneys. 9
The Agency is authorized to accept such moneys as may be appropriated from time to time 10
by the General Assembly for effectuating its corpor ate purposes including, without limitation, 11
the payment of the initial expenses of administration and operation and the establishment of a 12
reserve or contingency fund to be available for the payment of the principal of and the interest 13
on any bonds or notes of the Agency. 14
"§ 122F-21. Tax exemption. 15
The exercise of the powers granted by this Chapter will be in all respects for the benefit of 16
the people of the State, for their well-being and prosperity and for the improvement of their social 17
and economic conditions, and the Agency shall not be required to pay any tax or assessment on 18
any property owned by the Agency under the provisions of this Chapter or upon the income 19
therefrom. 20
Any obligations issued by the Agency under the provisions of this Chapter s hall at all times 21
be free from taxation by the State or any local unit or political subdivision or other instrumentality 22
of the State, excepting inheritance or gift taxes, income taxes on the gain from the transfer of the 23
obligations, and franchise taxes. The interest on the obligations is not subject to taxation as 24
income. 25
"§ 122F-22. Conflict of interest. 26
If any member, officer , or employee of the Agency shall be interested either directly or 27
indirectly, or shall be an officer or employee of or have an ownership interest in any firm or 28
corporation interested directly or indirectly in any contract with the Agency, including any lo an 29
to any sponsor, builder, or developer, such interest shall be disclosed to the Agency and shall be 30
set forth in the minutes of the Agency, and the member, officer, or employee having such interest 31
therein shall not participate on behalf of the Agency in the authorization of any such contract. 32
"§ 122F-23. Additional method. 33
The foregoing sections of this Chapter shall be deemed to provide an additional and 34
alternative method for the doing of the things authorized thereby and shall be regarded as 35
supplemental and additional to powers conferred by other laws, and shall not be regarded as in 36
derogation of any powers now existing; provided, however, that the issuance of bonds or notes 37
under the provisions of this Chapter need not comply with the requirements of any other law 38
applicable to the issuance of bonds or notes. 39
"§ 122F-24. Chapter liberally construed. 40
This Chapter, being necessary for the prosperity of the State and its inhabitants, shall be 41
liberally construed to effect the purposes thereof. 42
"§ 122F-25. Inconsistent laws inapplicable. 43
Insofar as the provisions of this Chapter are inconsistent with the provisions of any general 44
or special laws, or parts thereof, the provisions of this Chapter shall be controlling." 45
SECTION 9.1.(b) Notwithstanding the requirements of G.S. 122F-4, as enacted by 46
subsection (a) of this section, the initial appointments to the North Carolina Child Care Finance 47
Agency shall be appointed to a term beginning October 1, 2026, as follows: 48
(1) Six members appointed by the Governor as follows: 49
a. One member with experience in workforce needs to a two -year term 50
expiring June 30, 2028. 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 21
b. One member with experience as a licensed child care provider to a 1
four-year term expiring June 30, 2030. 2
c. One member with experience as a speci alist in child care licensure to 3
a two-year term expiring June 30, 2028. 4
d. One member with experience in construction of child care facilities to 5
a four-year term expiring June 30, 2030. 6
e. One member with experience in commercial small business lending to 7
a two-year term expiring June 30, 2028. 8
f. One member with experience in real estate development to a four-year 9
term expiring June 30, 2030. 10
(2) Three members appointed by the General Assembly upon the 11
recommendation of the President Pro Tempore of the Senate as follows: 12
a. One member with experience with a savings and loan institution to a 13
four-year term expiring June 30, 2030. 14
b. One member with experience as a licensed child care provider to a 15
two-year term expiring June 30, 2028. 16
c. One member with ex perience in construction lending to a four -year 17
term expiring June 30, 2030. 18
(3) Three members appointed by the General Assembly upon the 19
recommendation of the Speaker of the House of Representatives as follows: 20
a. One member with experience with a mortgage-servicing institution to 21
a two-year term expiring June 30, 2028. 22
b. One member with experience as a licensed child care provider to a 23
four-year term expiring June 30, 2030. 24
c. One member with experience in a business that makes on -site child 25
care available to employees to a two-year term expiring June 30, 2028. 26
SECTION 9.2. The State Treasurer shall invest three and one-half percent (3.5%) of 27
the corpus of the North Carolina Innovation Fund with the North Carolina Child Care Finance 28
Agency, as enacted under this Part. 29
SECTION 9.3. There is appropriated from the General Fund to the Department of 30
Administration the sum of twenty million dollars ($20,000,000) in nonrecurring funds for the 31
2026-2027 fiscal year for the North Carolina Child Care Finance Agency, as enacted under this 32
Part. The North Carolina Child Care Finance Agency shall use the funds as provided in 33
G.S. 122F-20, as enacted in Section 9.1 of this Part. 34
35
PART X. CARING FOR OUR CAREGIVERS ACT 36
37
INCOME TAX EXEMPTION 38
SECTION 10.1.(a) G.S. 105-153.7 reads as rewritten: 39
"§ 105-153.7. Individual income tax imposed. 40
(a) Tax. – A tax is imposed for each taxable year on the North Carolina taxable income 41
of every individual. The tax shall be levied, collected, and paid annually. Except as otherwise 42
provided in subsection (a1) of this section, the tax is a percentage of the taxpayer's North Carolina 43
taxable income computed as follows: shall be computed at the following percentages of the 44
taxpayer's income for taxable year 202 6 and computed at the following percentage reduced by 45
twenty-six hundredths percent (0.26%) for taxable years after 2026: 46
Taxable Years Beginning Tax 47
In 2022 4.99% 48
In 2023 4.75% 49
In 2024 4.5% 50
In 2025 4.25% 51
General Assembly Of North Carolina Session 2025
Page 22 Senate Bill 1015-First Edition
After 2025 3.99%. 1
(1) For married individuals who file a joint return under G.S. 105-153.8 and for 2
surviving spouses, as defined in section 2(a) of the Code: 3
Over Up To Rate 4
-0- 1,000,000 4.25% 5
$1,000,000 NA 5.05% 6
(2) For heads of households, as defined in section 2(b) of the Code: 7
Over Up To Rate 8
-0- $800,000 4.25% 9
$800,000 NA 5.05% 10
(3) For unmarried individuals other than surviving spouses and heads of 11
households: 12
Over Up To Rate 13
-0- 600,000 4.25% 14
$600,000 NA 5.05% 15
(4) For married individuals who do not file a joint return under G.S. 105-153.8: 16
Over Up To Rate 17
-0- 500,000 4.25% 18
$500,000 NA 5.05% 19
(a1) Rate Reduction Trigger. – Notwithstanding the tax rates set out in subsection (a) of 20
this section, if total General Fund revenue in a fiscal year set out below exceeds the trigger 21
amount indicated for that fiscal year, then the applicable tax rate for the indicated and subsequent 22
tax years shall be equal to the greater of (i) the prior taxable year's rate decreased by one -half 23
percentage point (0.50%) or (ii) two and forty-nine hundredths percent (2.49%). For purposes of 24
this subsection, total General Fund revenue is the amount stated in the final accounting of total 25
General Fund Reverting Net Tax and Non -Tax Revenues for the fiscal year, as reported by the 26
Office of State Controller in August following the end of the fiscal year. 27
Fiscal Year Trigger Amount Taxable Year Beginning 28
FY 2025-2026 $33,042,000,000 In 2027 29
FY 2026-2027 $34,100,000,000 In 2028 30
FY 2027-2028 $34,760,000,000 In 2029 31
FY 2028-2029 $35,750,000,000 In 2030 32
FY 2029-2030 $36,510,000,000 In 2031 33
FY 2030-2031 $38,000,000,000 In 2032 34
FY 2031-2032 $38,500,000,000 In 2033 35
FY 2032-2033 $39,000,000,000 In 2034 36
(b) Withholding Tables. – The Secretary may provide tables that compute the amount of 37
tax due for a taxable year under this Part. The amounts of the tax determined under the tables 38
shall be computed on the basis of the rates prescribed by subsection (a) of this section. The tables 39
do not apply to an individual who files a return under section 443(a)(1) of the Code for a period 40
of less than 12 months due to a change in the individual's annual accounting period or to an estate 41
or trust." 42
SECTION 10.1.(b) G.S. 105-153.5(b) is amended by adding a new subdivision to 43
read: 44
"(6a) Income earned for work performed as one of the following: 45
a. Firefighter. 46
b. Emergency medical services personnel, including the following: 47
1. Emergency medical responder. 48
2. Paramedic. 49
3. Rescue squad member. 50
c. Emergency management worker. 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 23
d. 911 call center worker. 1
e. Sworn law enforcement officer with the power of arrest. 2
f. Child care worker. 3
g. Public school unit employee. 4
h. Probation or parole officer. 5
i. Corrections officer." 6
SECTION 10.1.(c) This section is effective for taxable years beginning on or after 7
January 1, 2026. 8
9
BENEFITS FOR CAREGIVER WORKERS 10
SECTION 10.2.(a) For the purposes of this section, a qualifying caregiver worker is 11
any individual who meets both of the following requirements: 12
(1) Has an annual household income that does not exceed one hundred 13
twenty-five thousand dollars ($125,000). 14
(2) Is employed in the State at least 30 hours a week as one of the following: 15
a. Firefighter. 16
b. Emergency medical services personnel, including the following: 17
1. Emergency medical responder. 18
2. Paramedic. 19
3. Rescue squad member. 20
c. Emergency management worker. 21
d. 911 call center worker. 22
e. Sworn law enforcement officer with the power of arrest. 23
f. Child care worker. 24
g. Public school unit employee. 25
h. Probation or parole officer. 26
i. Corrections officer. 27
SECTION 10.2.(b) There is appropriated from the General Fund to the Department 28
of Health and Human Services, Division of Child Development and Early Education, the sum of 29
one hu ndred sixty -five million dollars ($165,000,000) in recurring funds beginning in the 30
2026-2027 fiscal year to provide subsidized child care services to a family that includes an 31
individual employed as a qualifying caregiver worker. The Division of Child Dev elopment and 32
Early Education shall give priority to child care workers in awarding these subsidies. 33
34
PART XI. CHILD CARE REFORMS AND FUNDING 35
36
CHILD CARE PROVIDER ACCESS TO THE FEDERAL CHILD AND ADULT CARE 37
FOOD PROGRAM 38
SECTION 11.1.(a) Article 3 of Chapter 143B of the General Statutes is amended by 39
adding a new Part to read: 40
"Part 10D. Child and Adult Care Food Program (CACFP) for Child Care Providers. 41
"§ 143B-168.40. CACFP access for family, friend, and neighbor child care providers. 42
(a) Definitions. – The following definitions apply in this section: 43
(1) CACFP. – The Child and Adult Care Food Program, as authorized under 44
Section 17 of the National School Lunch Act, 42 U.S.C. § 1766, and 45
administered in this State by the Division of Child Development and Early 46
Education (DCDEE) within the Department of Health and Human Services. 47
(2) Family, friend, and neighbor (FFN) child care provider. – An individual who 48
is legally operating under applicable State law and provides child care , 49
including child care in one of the following settings: 50
General Assembly Of North Carolina Session 2025
Page 24 Senate Bill 1015-First Edition
a. An operator-occupied private dwelling in which, at any one time, two 1
or fewer children receive child care. 2
b. The home of any child receiving child care if all of the children in child 3
care are related to one another and no more than two additional 4
children are in child care. 5
The term includes individuals providing (i) child care that falls below the 6
threshold requiri ng licensure under G.S. 110-86(3)b., (ii) arrangements 7
excluded from the definition of child care under G.S. 110-86(2), and (iii) child 8
care holding a license-exempt status recognized by the Department. 9
(b) Requirements. – The Department shall take all feasible administrative action to 10
extend access to CACFP to legally operating FFN child care providers, which action may include, 11
but is not limited to, the following: 12
(1) Identifying and engaging or designating one or more sponsoring organizations 13
capable of administering CACFP reimbursements to FFN providers. 14
(2) Developing or modifying application procedures, training requirements, and 15
record-keeping protocols appropriate to the scale and nature of FFN care 16
settings. 17
(3) Applying for any available federal waivers, pilot programs, or flexibilities that 18
support FFN provider participation in CACFP. 19
(4) Establishing simplified or tiered compliance mechanisms to reduce 20
administrative burden on FFN providers while maintaining program integrity. 21
(5) Coordinating with the USDA Food and Nutrition Service to ensure State plan 22
amendments, as necessary, reflect expanded eligibility for FFN providers. 23
(c) Reporting. – No later than July 1 of each year, the Department shall submit a report 24
to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal 25
Research Division of the General Assembly detailing each of the following: 26
(1) The number of FFN providers enrolled in or newly accessing CACFP. 27
(2) The number of children served through FFN providers participating in 28
CACFP. 29
(3) Any barriers to participation identified and steps taken to address them. 30
(4) Recommendations for additional legislative or administrative action. 31
(d) Nothing in this section shall be construed to require any FFN provider to participate 32
in CACFP, to alter the licensure requirements of Chapter 110 of the General Statutes, or to 33
conflict with applicable federal law or USDA regulations governing CACFP." 34
SECTION 11.1.(b) Implementation Plan. – No later than 180 days after this section 35
becomes effective, the Department of Health and Human Services, Division of Child 36
Development and Early Education, shall develop and publish an implementation plan detailing 37
the administrative approach selected pursuant to G.S. 143B-168.40(b), as enacted in subsection 38
(a) of this section, including time lines, required rule changes, any necessary federal approvals, 39
and resource requirements. 40
SECTION 11.1.(c) Report. – The Division of Child Develop ment and Early 41
Education shall submit its initial report required by G.S. 143B-168.40(c), as enacted by 42
subsection (a) of this section, no later than 12 months from the date this Part becomes effective. 43
SECTION 11.1.(d) Appropriations. – There is appropriated from the General Fund 44
to the Department of Health and Human Services, Division of Child Development and Early 45
Education, the following amounts for the 2025-2026 fiscal year, for the following purposes: 46
(1) The sum of one hundred fifty thousand dollars ($150,000) in nonrecurring 47
funds for the 2025-2026 fiscal year to do each of the following: 48
a. Develop the implementation plan required by subsection (b) of this 49
section, including identification of feasible administrative approaches 50
to extending Child and Adult Care Food Program (CACFP) access to 51
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 25
legally operating family, friend, and neighbor (FFN) child care 1
providers, assessment of required federal approvals or State plan 2
amendments, and determination of resource requirements necessary to 3
carry out the selected approach. 4
b. Conduct outreach to existing and potential CACFP sponsoring 5
organizations to assess capacity and willingness to administer CACFP 6
reimbursements on behalf of FFN providers, and to identify gaps in 7
sponsoring organization coverage acros s the State, with particular 8
attention to rural areas and communities with high concentrations of 9
FFN care arrangements. 10
c. Design and pilot FFN -appropriate application procedures, training 11
curricula, and record -keeping protocols that reduce administrative 12
burden on FFN providers while maintaining compliance with 13
applicable federal program integrity requirements. 14
d. Apply for any available federal waivers, pilot programs, or flexibilities 15
offered by the United States Department of Agriculture, Food and 16
Nutrition Service, that would support or accelerate FFN provider 17
participation in CACFP, including preparation of any required State 18
plan amendments. 19
(2) The sum of five hundred thousand dollars ($500,000) in recurring funds 20
beginning in the 2025-2026 fiscal year to support the ongoing administrative 21
costs of coordinating FFN provider participation in CACFP in accordance 22
with this act, including the hiring of full -time staff to assist with processing 23
and outreach of applications, staff time dedicated to sponsor ing organization 24
oversight, FFN provider support, data collection, and preparation of the annual 25
report required under G.S. 143B-168.40(c), as enacted by this section. 26
Funding shall continue until such time as federal CACFP administrative 27
reimbursements are sufficient to cover those costs, at which point the Division 28
of Child Development and Early Education shall notify the Office of State 29
Budget and Management and the Fiscal Research Division and the recurring 30
appropriation under this subdivision shall be reduced accordingly. 31
SECTION 11.1.(e) Funds appropriated under subsection (d) of this section shall not 32
revert to the General Fund at the end of the fiscal year but shall remain available for the purposes 33
of that subsection until expended or until June 30 of the second fiscal year following 34
appropriation, whichever occurs first. 35
SECTION 11.1.(f) This section is effective when it becomes law. 36
37
PROTECT THE RIGHTS OF HOMEOWNERS AND TENANTS TO OPERATE 38
LICENSED FAMILY CHILD CARE HOMES 39
SECTION 11.2.(a) Chapter 110 of the General Statutes is amended by adding a new 40
Article to read: 41
"Article 7A. 42
"Protection of Family Child Care Home Operations. 43
"§ 110-107.25. Definitions. 44
The following definitions apply in this Article: 45
(1) Family child care home. – The same meaning as set forth in G.S. 110-86(3)b., 46
limited to facilities licensed under G.S. 110-88. 47
(2) HOA governing document . – Any declaration, covenant, condition, 48
restriction, bylaw, rule, or regulation of a homeowners association, 49
condominium association, planned community, or similar entity that governs 50
the use of residential property. 51
General Assembly Of North Carolina Session 2025
Page 26 Senate Bill 1015-First Edition
(3) Landlord. – The same meaning as set forth in G.S. 42-40(3). 1
(4) Licensed operator. – Any person holding a valid license to operate a family 2
child care home issued by the Secretary pursuant to G.S. 110-88, whether the 3
person is a homeowner or a tenant residing at the licensed premises. 4
"§ 110-107.26. HOA restrictions prohibited. 5
(a) Any provision of an HOA governing document that prohibits, restricts, conditions, or 6
penalizes the operation of a licensed family child care home by a member or resident who holds 7
a valid license issued pursuant to G.S. 110-88 is void and unenforceable as contrary to the public 8
policy of this State. 9
(b) A homeowners association or condominium association shall not do any of the 10
following: 11
(1) Deny, suspend, revoke, or condition membership rights or community 12
privileges solely on account of a member's operation of a licensed family child 13
care home. 14
(2) Impose fees, assessments, fines, or penalties on a member solely on account 15
of the member's operation of a licensed family child care home. 16
(3) Require approval or consent of the association as a condition of o perating a 17
licensed family child care home. 18
(c) Nothing in this section prohibits an association from enforcing rules of general 19
applicability relating to parking, noise, exterior modifications, or use of common areas to the 20
extent such rules do not impose requirements more burdensome on licensed family child care 21
homes than on other residential uses. 22
"§ 110-107.27. Landlord restrictions prohibited. 23
(a) A landlord shall not include in any lease, rental agreement, or tenancy arrangement a 24
provision that prohibits, restricts, or penalizes a tenant from operating a licensed family child 25
care home at the leased premises. 26
(b) Any lease provision in violation of subsection (a) of this section is void and 27
unenforceable as against public policy. 28
(c) A landlord shall not terminate a tenancy, refuse to renew a lease, or take any adverse 29
action against a tenant solely because the tenant operates or intends to operate a licensed family 30
child care home. 31
(d) A tenant operating a licensed family child care home remains responsible for 32
compliance with all other applicable lease terms, including obligations regarding maintenance of 33
the premises, liability, and insurance, and shall carry liability insurance in amounts sufficient to 34
cover the operation of the child care home. 35
(e) A landlord may require a tenant to do the following: 36
(1) Provide written notice of the intent to operate a licensed family child care 37
home. 38
(2) Provide a copy of any license issued pursuant to G.S. 110-88. 39
(3) Require the tenant to maintain adequate liability insurance coverage. 40
"§ 110-107.28. Local government zoning; limitations. 41
(a) For purposes of local land use and zoning regulation, a licensed family child care 42
home shall be deemed a residential use of property and shall be permitted as a matter of right in 43
any zoning district in which single-family or multifamily residential uses are permitted, including 44
residential zones, mixed-use zones, or any other district that allows residential dwellings. 45
(b) A local government shall not adopt or enforce any zoning ordinance, development 46
regulation, or land use restriction that does any of the following: 47
(1) Subjects a licensed family child care home to requirements, conditions, or 48
standards more burdensome than those applicable to other single -family or 49
multifamily residential dwellings in the same zoning district. 50
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 27
(2) Imposes special use permit requirements, conditional use permit 1
requirements, or other discretionary approval processes applicable to licensed 2
family child care homes but not to other residential uses. 3
(3) Limits the number of licensed family child care homes permitted within a 4
zoning district based solely on the child care use. 5
(4) Requires a licensed family child care home to comply with commercial or 6
institutional zoning standards, includi ng, but not limited to , commercial 7
parking minimums, commercial signage requirements, or nonresidential 8
setback requirements. 9
(c) A local government may impose on a licensed family child care home only those 10
development standards that would apply to the residential use of the property generally, including 11
applicable building codes, fire codes, and health and sanitation requirements. 12
(d) Nothing in this section shall be construed to preempt or limit the application of 13
standards adopted by the Child Care Co mmission or the Department of Health and Human 14
Services governing the health, safety, and physical environment of licensed child care facilities. 15
"§ 110-107.29. Remedies. 16
(a) Any licensed operator whose rights under this Article are violated may bring a c ivil 17
action in superior court for any of the following: 18
(1) Declaratory and injunctive relief. 19
(2) Actual damages. 20
(3) Reasonable attorneys' fees and costs if the licensed operator is the prevailing 21
party. 22
(b) The Attorney General may bring an action on behalf of the State to enforce the 23
provisions of this Article. 24
"§ 110-107.30. Application. 25
This Article applies to all HOA governing documents, lease agreements, and local zoning 26
ordinances adopted before, on, or after the effective date of this act. Any provision of a governing 27
document, lease, or ordinance that conflicts with this Article is void and unenforceable to the 28
extent of the conflict." 29
SECTION 11.2.(b) Article 3 of Chapter 47F of the General Statutes is amended by 30
adding a new section to read: 31
"§ 47F-3-123. Operation of a licensed family child care home. 32
A homeowners association shall not prohibit, restrict, or penalize the operation of a licensed 33
family child care home, as defined in G.S. 110-86(3)b., by a lot owner or tenant who holds a 34
valid license issued pursuant to G.S. 110-88. Any provision of a declaration, covenant, bylaw, or 35
rule of the association to the contrary is void and unenforceable. This section shall not be 36
construed to prevent the association from enforcing rules of general applicability as provided in 37
G.S. 110-107.26(c)." 38
SECTION 11.2.(c) Nothing in this section is intended to abrogate reasonable health, 39
safety, building code, or fire code requirements applicable to child care facilities. 40
SECTION 11.2.(d) There is appropriated from the General Fund to the Department 41
of Health and Human Services, Division of Child Development and Early Education (Division), 42
the sum of seventy -five thousand dollars ($75,000) in nonrecurring fu nds for the 2025 -2026 43
fiscal year to be used as follows: 44
(1) Develop and disseminate plain language guidance for licensed family child 45
care home operators regarding their rights under Article 7A of Chapter 110 of 46
the General Statutes, as enacted by subsection (a) of this section. 47
(2) Create model response templates and informational materials for use by 48
licensed operators in disputes with homeowners associations, landlords, and 49
local governments. 50
General Assembly Of North Carolina Session 2025
Page 28 Senate Bill 1015-First Edition
(3) Update the Department of Health and Human Services' public website, 1
licensing portal, and printed materials to inform current and prospective 2
licensees of the protections established by this section. 3
SECTION 11.2.(e) There is appropriated from the General Fund to the Department 4
of Justice, Office of the Attorney General, the sum of one hundred thousand dollars ($100,000) 5
in nonrecurring funds for the 2025-2026 fiscal year to do each of the following: 6
(1) Train attorneys and staff within the Consumer Protection Division or other 7
appropriate division on the e nforcement provisions of Article 7A of Chapter 8
110 of the General Statutes, as enacted by subsection (a) of this section. 9
(2) Establish a complaint intake process for licensed family child care home 10
operators alleging violations of G.S. 110-107.26, 110-107.27, or 110-107.28, 11
as enacted by subsection (a) of this section. 12
(3) Prepare and publish an annual summary of complaints received and 13
enforcement actions taken under this act, to be submitted to the Joint 14
Legislative Oversight Committee on Health and Human Services no later than 15
October 1 of each year. 16
SECTION 11.2.(f) This section is effective when it becomes law and applies to all 17
acts, ordinances, and agreements entered into on or after that date. For HOA governing 18
documents and lease agreements existi ng before the effective date of this section, provisions 19
contrary to this section are void and unenforceable as of the effective date. 20
21
REMOVE CLASS I FELONY CRIMINAL PENALTY FOR CHILD CARE FACILITY 22
OPERATIONS AND REPLACE WITH ENHANCED CIVIL PENALTY 23
SECTION 11.3.(a) G.S. 110-103(b) is repealed. 24
SECTION 11.3.(b) G.S. 110-103.1 is amended by adding a new subsection to read: 25
"(b1) Notwithstanding subsections (a) and (b) of this section, any person who operates a 26
child care facility who (i) willfully violates G.S. 110-99(a) or (ii) willfully violates this Article 27
while providing child care for three or more children for more than four hours per day on two 28
consecutive days, may be subject to an enhanced civil penalty not to exceed five thousand dollars 29
($5,000) per violation per day. In determining the amount of the penalty, each of the following 30
shall be considered: 31
(1) The nature, circumstances, and severity of the violation. 32
(2) The degree of willfulness. 33
(3) The history of prior violations. 34
(4) The potential threat to child health, safety, or welfare. 35
(5) Whether the operator took prompt corrective action." 36
SECTION 11.3.(c) There is appropriated from the General Fund to the Department 37
of Health and Human Services, Division of Child Development and Early Education, the sum of 38
fifty thousand dollars ($50,000) in nonrecurring funds for the 2025-2026 fiscal year to implement 39
the following: 40
(1) Update enforcement protocols, internal policy guidance, and staff training 41
materials to reflect the repeal of the Class I felony provision under 42
G.S. 110-103(b) and the establishment of the enhanced civil penalty 43
framework under G.S. 110-103.1(b1), as enacted by subsections (a) and (b) of 44
this section. 45
(2) Develop and disseminate guidance to child care facility operators and the 46
public regarding the revised penalty structure applicable to violations of this 47
Article, including the circumstances under which enhanced civil penalties 48
may be assessed. 49
General Assembly Of North Carolina Session 2025
Senate Bill 1015-First Edition Page 29
(3) Coordinate with the Department of Justice and the Administrative Office of 1
the Courts to ensure consistent implementation of the revised penalty 2
framework across enforcement and prosecutorial functions. 3
SECTION 11.3.(d) There is appropriated from the General Fund to the 4
Administrative Office of the Courts the sum of twenty -five t housand dollars ($25,000) in 5
nonrecurring funds for the 2025-2026 fiscal year to implement the following: 6
(1) Update charging instruments, case management systems, and related forms to 7
reflect the repeal of the Class I felony classification under former 8
G.S. 110-103(b), as enacted by subsection (a) of this section. 9
(2) Provide notice and guidance to district attorneys, clerks of superior court, and 10
other relevant court personnel regarding the statutory changes enacted by this 11
section and their application to pending and future cases. 12
SECTION 11.3.(e) This section is effective when it becomes law and applies to 13
violations occurring on or after that date. This section does not affect the prosecution or 14
punishment of a person for an offense committed before the effective date of this section. 15
16
AMEND CHILD CARE LAWS TO INCLUDE DEFINITION FOR LICENSE -EXEMPT 17
FAMILY, FRIEND, AND NEIGHBOR PROVIDERS 18
SECTION 11.4.(a) G.S. 110-86 is amended by adding a new subdivision to read: 19
"(6a) License-exempt family, friend, and neighbor (FFN) child care provider. – An 20
individual who satisfies each of the following: 21
a. Provides child care to one or more children who are not the individual's 22
own biological, adopted, or stepchildren, or children for whom the 23
individual is a legal guardian. 24
b. Operates in a setting, including the caregiver 's home or the home of 25
the child, that is not required to be licensed as a child care facility 26
under this Article by virtue of the number of children served, the nature 27
of the arrangement, or an applicable exemption under G.S. 110-86(2). 28
c. Has a preexisting familial, social, or community relationship with the 29
child or the child's family, including, but not limited to, a grandparent, 30
aunt, uncle, sibling over the age of 18, family friend, or neighbor. 31
d. Is in compliance with all applicable requirements for legally operating 32
a child care arrangement under State law, including, but not limited to, 33
any notification, disclosure, or registration requirements adopted by 34
the Department pursuant to this Article. 35
The term does not include individuals who are required to obtain a license 36
under this Article. Nothing in this subdivision shall be construed to require 37
license-exempt FFN providers to obtain a license, to register with the State, or 38
to comply with any requirement not otherwise applicable to unlicensed child 39
care arrangements under this Article, unless otherwise required by law." 40
SECTION 11.4.(b) There is appropriated from the General Fund to the Department 41
of Health and Human Services, Division of Child Development and Early Education (Division), 42
the sum of thirty thousand dollars ($30,000) in nonrecurring funds for the 2025-2026 fiscal year 43
to implement the following: 44
(1) Update public -facing materials, including the Division's website, printed 45
guides, and licensing portal, to incorporate the definition of "license -exempt 46
family, friend, and neighbor (FFN) child care provider" established under 47
G.S. 110-86(6a), as enacted by subsection (a) of this section, and to clearly 48
communicate to the public the legal status of FFN providers and the 49
distinction between license-exempt FFN arrangements and licensed child care 50
facilities. 51
General Assembly Of North Carolina Session 2025
Page 30 Senate Bill 1015-First Edition
(2) Revise internal legal guidance documents, policy manuals, and staff training 1
materials within the Division to reflect the new statutory definition and its 2
application to eligibility determinations, program access, and enforcement 3
decisions. 4
(3) Update the Division's data collection and reporting systems to enable tracking 5
of license-exempt FFN providers as a distinct provider category, including the 6
number of such providers accessing State or federally administered programs, 7
the number of children served, and any relevant dem ographic or geographic 8
data, to the extent such information is voluntarily reported or otherwise 9
available to the Division. 10
SECTION 11.4.(c) Existing exemptions from child care facility licensing 11
requirements under G.S. 110-86(2), including care provided by relatives and cooperative parent 12
arrangements, are retained without modification. G.S. 110-86(6a), as enacted by subsection (a) 13
of this section, shall be construed consistently with those exemptions. 14
SECTION 11.4.(d) This section is effective when it becomes law. 15
16
PART XII. EFFECTIVE DATE 17
SECTION 12.1. Except as otherwise provided herein, this act becomes effective July 18
1, 2026. 19