Policy Position

Child Care

in Education
Featured Image
Gina Narvaez, center, reads a Blues Clues book to her daycare children Frida before breakfast. Narvaez, a home child care provider, is one of 15 providers that the child development center has, which is currently at a critical shortage. The maximum capacity of home child care providers is currently 30.


The Subsidized Child Care Program is one of North Carolina’s longest-running welfare programs. The state began offering subsidies for child care services in 1964. The program provides vouchers to eligible families for child care services offered in any number of settings — licensed child care centers, family child care homes, religious-sponsored programs, and informal arrangements such as care by a relative or care in the child’s home.
To qualify, parents must meet both situational and financial criteria. Parents must be employed (or seeking employment) or enrolled in an education program. They may also qualify if their child has developmental needs or is receiving child protective and/or welfare services. Income eligibility depends on income and family size, but subsidy recipients are required to contribute between 7 and 10 percent of gross income to the cost of child care.
The Division of Child Development and Early Education, a division of the North Carolina Department of Health and Human Services (DHHS), oversees the Subsidized Child Care Program and evaluates the quality of all licensed child care centers and family child care homes in North Carolina. County social services departments actually administer the subsidy program. A third entity, the N.C. Child Care Commission, adopts regulations that ensure DHHS compliance with legislation passed by the N.C. General Assembly.
While state and county agencies manage the program, the federal government supplies most of the dollars for the Subsidized Child Care Program. Only about one-fifth of the funding for the Subsidized Child Care Program comes from the North Carolina General Fund. The remainder of the funding for the program comes from two federal grants, the Child Care and Development Fund (CCDF) and Temporary Assistance for Needy Families (TANF). Although hundreds of millions of state and federal dollars are appropriated for child care subsidies, it is important to put the program in perspective. Most preschoolers do not spend their days in centers or homes where paid staff care for them. Stay-at-home mothers, working mothers and fathers, relatives, and neighbors supply the vast majority of care provided to preschoolers, and on a nonpaid basis.

Key Facts

  • The total budget for child care subsidies in North Carolina was $342.3 million in 2015-16. The North Carolina General Assembly provided $42.2 million of that total.
  • Around 83 percent of parents who receive a child care subsidy are employed, another 2.3 percent are seeking employment, and 3 percent are working adults who are also enrolled in an educational institution.
  • Nearly 84 percent of parents receive a subsidy due to household income.
  • As of October 2015, an average of 67,000 children per month received subsidized child care services. This represents around a quarter of the nearly 250,000 children enrolled in regulated facilities throughout North Carolina.
  • North Carolina has nearly 4,700 regulated child care centers and over 2,100 regulated family child care homes. Approximately nine out of 10 parents who receive a child care subsidy choose to send their children to child care centers.
  • According to DHHS data, 73 percent of children receiving subsidized child care are in programs with a 4 or 5 Star Rating, the two highest quality ratings awarded by the state.
  • Over 30,000 children were on wait lists for the Subsidized Child Care Program as of October 2015. In general, wait lists reflect economic conditions and federal government funding levels.
  • Research suggests that subsidies expand economic opportunities for low-income families and improve the quality of care provided to children.


  1. Use longitudinal administrative data on child care subsidy participation to assess entry, exit, and reentry trends and the impact of eligibility, provider, and program funding changes on household income and child care arrangements. Child care subsidies should furnish financial stability for adults and promote developmental gains for children.
  2. Determine whether there is a relationship between subsidy use in North Carolina and children’s social-emotional, cognitive, health, and behavioral development. Child care subsidies should provide both short- and long-term benefits, not just supervision, for participating children.
  3. Policymakers should limit regulation of day-care operations to health and safety requirements only. Parents should make their own decisions about the trade-offs between price and child-staff ratios or qualifications.



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