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Mary Moody bought Silver Bluff Kids Early Learning Center in 2023, one of in western North Carolina at the time. The owners cited insufficient childcare subsidy funding.

Today, the Canton center, where around 75% of children rely on child care subsidy funding, is facing the same challenge, Moody said.

鈥淭he price of groceries, the price of supplies and materials, our insurance costs, like everything has increased 鈥� except our subsidy reimbursement rates,鈥� she said.

Childcare programs need more subsidy funding, advocates say, to make ends meet and serve low-income working and student parents. Advocates are asking for $101 million this short legislative session to increase the rates facilities receive through , which helps afford care.

鈥淚t鈥檚 about stabilizing the childcare sector right now, because before we can even think about expanding childcare programs, we have to sustain what we have,鈥� said Leanna Martin, director of early childhood policy and research at nonprofit .

Since the state legislature passed a full budget in 2023, the state has experienced a net loss of 262 licensed programs, according to from the Gov. Josh Stein鈥檚 office.

In March, Stein鈥檚 鈥渃ritical needs budget鈥� for the rest of the fiscal year.

Legislators went home last fiscal year without passing a full budget. Both the and proposals included around $80 million per year in subsidy funding to update rates.

Without increased subsidy funding, childcare will continue to become less accessible and more expensive, said Dan Rockaway, president of the and CEO of Sounds and Colors, which has four childcare centers in Wake and Orange counties.

鈥淚t鈥檚 what keeps parents in the workforce and classrooms open,鈥� Rockaway said. 鈥淏ut to truly work, subsidy rates also need to be better aligned with the actual cost of providing high-quality care, otherwise the gap continues to grow and access remains out of reach for too many families.鈥�

鈥業n free fall鈥�

Many childcare programs have had to make up for the loss of pandemic relief funding, which ran out in March 2025. The state encouraged programs to use that funding to increase teachers鈥� wages. When the money ran out, providers have had to find other ways to fill the gap and retain staff.

In Moody鈥檚 case, she has chosen not to hire an extra 鈥渇loater鈥� in order to maintain her staff鈥檚 wages. Instead, her and her assistant director fill in to maintain required child-to-staff ratios when a teacher is out.

鈥淭hat makes things really challenging now, really tight, and it has been since March of last year,鈥� she said.

Moody said she could raise tuition rates, but she knows parents cannot afford to pay more. Since her program is operating a waitlist, she has considered opening another center in the area to meet the demand.

鈥淏ut again, that鈥檚 the problem, is the funding,鈥� she said. 鈥淚 mean, the funding just isn鈥檛 there.鈥�

, which Stein established last year, has been studying funding and policy solutions to high costs and low access.

The group in January 2026, including creating a statewide subsidy floor, providing childcare for childcare employees, and offering childcare to public sector workers. The group has also discussed creating an endowment that multiple entities may contribute to.

Incremental changes will not be enough to recruit and retain teachers, said Henrietta Zalkind, director of the Down East Partnership for Children, a local Smart Start partnership serving young children and families in Nash and Edgecombe counties.

鈥淭he system is in free fall,鈥� said Zalkind, a long-time early childhood advocate. 鈥淎nd we need to acknowledge where we are.鈥�

She said direct funding to increase teachers鈥� wages would make the largest difference in the short-term, pointing to of education-based wage supplements from the from nonprofit Early Years. Child care teachers in North Carolina made an average of $14.20 an hour in 2024, .

What difference would higher subsidy rates make?

Right now, the rates programs receive cover less than half of the actual cost of care, according to from Candace Witherspoon, director of (DCDEE).

Higher subsidy rates would help child care programs relying heavily on the program keep their lights on, Martin said.

鈥淚t brings consistency into the system 鈥� and reduces that market volatility to ensure providers receive a reliable baseline that more closely reflects the cost of care,鈥� she said.

The $101 million ask would establish a floor rate for infants and toddlers based on a and increase rates for 3- to 12-year-olds based on . The floor rate would mean all facilities serving infants, 1-year-olds, and 2-year-olds would receive, at minimum, the average statewide rate based on age and quality level.

The based on location, quality rating, and age. Martin pointed to Randolph County, which receives $867 per infant in a five-star setting. In neighboring Davidson, programs receive $1,236 for serving the same age child at the same quality level. A floor rate would increase rates in Randolph County by $600 per child per month, Martin said.

Advocates in called for a floor for all ages. This session鈥檚 ask prioritizes care for infants and toddlers because it is the most expensive and hardest to access across the state. Establishing a floor would nearly double the amount many rural providers receive to care for the youngest children, Martin said, and send about $27 million to programs in rural communities.

鈥�(The request) is a practical, feasible approach that鈥檚 going to have the greatest impact on our childcare providers,鈥� she said. 鈥淭he increased reimbursement will allow them to reinvest into their staff, into their operations.鈥�

Increasing rates will also make it more likely that programs will participate in the program, which is voluntary, said Rockaway, president of the NC Licensed Child Care Association and CEO of Sounds and Colors.

鈥淚f subsidy doesn鈥檛 go up, then childcare centers are either forced to close if they鈥檙e heavily subsidized 鈥� or child care centers that are on a mix of subsidy and private parents can increase their rates, but then will take fewer subsidy children,鈥� he said.

What about waitlists?

Meanwhile, thousands of families are waiting for subsidies to afford care. , 55,166 children were receiving subsidies and 8,319 children were on waitlists.

Enrollment is slightly up and waitlists are slightly down , when 54,676 children were served and 10,892 children were on waitlists.

Local agencies administering subsidy funds had to start waitlisting families in fall 2024 when federal pandemic relief funding ran out, according to DCDEE in an emailed statement to EdNC:

During the pandemic, states received American Rescue Plan Act (ARPA) funding. This extra funding helped North Carolina pay for childcare subsidies and keep waitlists lower. This federal funding ended in September 2024. In order to comply with federal requirements, which do not allow the removal of vouchers from children already participating in subsidized programs, North Carolina instead had to slow enrollment into the programs which led to an increase in the waitlists for potentially eligible children.

Overall, the total available funding decreased significantly from June 2024 to September 2024鈥攆rom $617,789,488 to $557,023,832. This decrease in funding has reduced the number of children served through the subsidized child care program.

In order to tackle those waitlists, it has to make financial sense for facilities to participate in the program, Martin said. NC Child has done research on steps the state could take to eventually reimburse providers at the actual cost of care. This year鈥檚 ask is the first of four steps, eventually totaling $380 million per year.

鈥淚nvesting in the subsidy not only sustains the programs now, but it鈥檚 really sustaining our future, and it鈥檚 an economic imperative and an economic investment,鈥� Martin said.

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