North Carolina Experiences Drop in Licensed Child Care Programs as Funding Cliff Nears

According to data from the NC Child Care Resource and Referral Council (CCR&R) in partnership with the NC Division of Child Development and Early Education (DCDEE), North Carolina has experienced a nearly 4% decline in licensed child care programs since the start of the pandemic.

Between February 2020 and the end of 2023, there has been a net loss of 203 licensed child care programs in the state, reducing the total from 5,242 to 5,039. These losses are expected to increase further this year.

The early childhood education sector in North Carolina received temporary stability through federal funding during the pandemic. However, this funding expired in September 2023 and will run out for the state after June 30.

A report from the Century Foundation warned that without intervention from the state or federal government, approximately 1,178 licensed child care programs in North Carolina are at risk of closing.

Current situation and challenges

Following the approval of a state budget in September 2023 that did not prioritize early childhood education, licensed child care centers and family child care homes have been struggling to secure funding beyond the summer.

Shay Jackson, a licensed provider of a family child care home in Forsyth County, expressed concern about the future of their program, stating, “They may possibly lose a great quality [program], because I am not gonna be able to sustain and I’m trying to think ahead. I’m literally like, updating my LinkedIn account.”

At the federal level, the U.S. House of Representatives passed a bill in January to extend the child tax credit. However, its fate in the Senate remains uncertain. While this legislation has the potential to lift 400,000 children out of poverty and improve the economic circumstances of 3 million more children, it does not directly address the child care crisis.

The General Assembly’s short session will begin on April 24, providing members with limited time to implement policies that can mitigate the negative impact of the funding shortfall on North Carolina’s child care system.

EdNC is closely monitoring program closures, with a particular focus on three subgroups of counties — those with high Indigenous populations, counties with a majority Black or mixed-race population in the northeastern corner of the state, and the 18 counties in the southwestern corner that fall within the focus area of the Dogwood Health Trust.

While the third-quarter data showed modest net gains in licensed child care sites for these three subgroups, changes occurred in the fourth quarter. The Dogwood counties experienced a decrease from 386 to 385 licensed child care sites compared to February 2020. The majority-Black counties saw a slight increase with a total of 204 sites. The counties with high Indigenous populations observed an overall increase from 99 to 105 sites, although there was a slight decrease from the third quarter to the fourth quarter.

Remaining uncertainties

The data provided by the CCR&R Council in partnership with DCDEE specifically focuses on licensed child care programs. It does not account for friend, family, and neighbor (FFN) care, which may be preferred for various reasons such as quality, accessibility, and affordability. Tracking data on FFN care is challenging due to its exclusion from state regulatory structures.

EdNC has recently published research on early childhood investment and policy in five leading states. The report highlights four potential strategies — advocacy from the business community, grassroots organizing, streamlining governance, and identifying/creating new funding streams — that could assist North Carolina in reclaiming its position as a leader in early childhood education. It remains to be seen if local and state policymakers will embrace these strategies or others in time to alleviate the negative impact of the funding cliff.