Summary of HB 1086 (Session 2025) — Child Care Initiative Funds/Reform/Study
Date Filed: April 28, 2026
Sponsor: Representative Arp (with co-sponsors Rhyne, Lambeth, Paré)
Purpose of the Bill
- Establish a state-supported initiative to expand and reform aspects of the North Carolina child care system.
- Create career advancement pathways for child care workers, expand mental and behavioral health services in child care settings, reform child care center administrator requirements, study liability insurance options for providers, and update Smart Start bidding practices.
- Provide funding and a special fund to support these efforts and ensure ongoing program viability.
Key Provisions by Part
Part I: Career-Ready Lead Teacher Academy Pilot Program
- Objective: Create a two-year pilot to expand career-ready lead teacher academies statewide, building on existing successful programs in Johnston and Wayne Counties.
- Entities Involved: North Carolina Partnership for Children (NCPC), in partnership with the Community Colleges System Office, and local partnerships.
- Program Design:
- Target: Individuals with no prior child care experience who want to pursue a career in child care.
- Deliverables: Free, comprehensive training plus required health screenings, background checks, and fingerprinting; upon completion, participants earn the North Carolina Early Childhood Credential to begin teaching in licensed programs.
- Enrollment Goals: Each academy enrolls at least 10 students (ideally 15) and runs up to eight hours per day across a two- to three-week period.
- Frequency: Community colleges to offer up to three academies per year; at least one academy aligned with the end of the public school year to accommodate students.
- Stipends: Local partnerships may provide a one-time stipend (not less than $150). An additional $500 state-funded stipend is available after completing one year of full-time employment as a lead teacher, contingent on meeting specific employment milestones (start within 3 months of graduation; complete one year in the same center within a 12-month period).
- Credentialing: Graduates receive the NC Early Childhood Credential, enabling immediate employment as lead teachers.
- Evaluation and Reporting:
- Progress reports to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division by March 31, 2027; final report due December 31, 2027, covering participation, outcomes, new slots created, costs, and statewide expansion considerations.
- Funding:
- $1,476,000 in nonrecurring General Fund money (2026-2027) to DCDEE for the NCPC to implement the pilot, including:
- $972,000 for state portion of tuition costs (2026-27)
- $504,000 for stipends (2026-27)
- Local partnerships must provide at least 25% matching funds.
- Funds allocated evenly among participating local partnerships; unexpended funds roll forward within the Part; cannot be used for general administration.
Part I additional: Provisional Early Childhood Care Credential (Section 1.9)
- Establishes a Provisional Early Childhood Care Credential for 16-17-year-olds preparing to work in licensed programs.
- Requirements:
- Completion of approved early childhood or related coursework and micro-credentials demonstrating health and safety competencies.
- Pathways and Recognition:
- By age 18, individuals may receive the full NC Early Childhood Credential to be employed as lead teachers.
- Aimed at creating a pipeline of young workers into the field.
Part II: Child Care Mental and Behavioral Health Services Funding
- Funding: $15 million (nonrecurring) from ARPA Temporary Savings Fund (2026-2027) to NCPC to expand on-site mental and behavioral health services for children, families, and staff in child care settings and out-of-school programs.
- Allocation: Funds distributed to local partnerships and used for services under specified budget codes (Health Care Access and Support, Parent Education, Quality Child Care, Parents as Teachers). This is intended to supplement rather than supplant existing Smart Start mental health spending.
- Reporting: Progress report due March 15, 2027; final report due November 15, 2028, detailing recipients, services provided, and expansion recommendations.
- Special Fund: Additional funds under this Part are not subject to certain existing administrative and match requirements and may roll forward as needed.
Part III: Child Care Reforms / Center Administrators
- Administrative Credentialing:
- Amends G.S. 110-91 to allow two staff members’ combined education and experience to meet Level II or III administrator requirements, provided the staff person is on-site at least 20 hours per week and the center receives QRIS credit as if a single administrator met the requirements.
- Allows an administrator to earn the North Carolina Early Childhood Administration Credential without completing certain coursework (EDU 261 and EDU 262 or equivalents) if the administrator has:
- An associate degree or higher in business administration or a related field, or
- Two years of verifiable business or administrative work experience.
- Effective Date: Part III becomes law upon enactment.
Part IV: Study Insurance Program for Child Care Providers
- Study Mandate: The Department of Insurance must hire a consulting/actuarial/brokerage firm to study the feasibility of establishing liability insurance coverage for NC child care providers, including state-supported captive insurance, risk-pooling, joint underwriting/ reinsurance, or other models.
- Study Elements:
- Data collection on losses and operations to assess feasibility, premiums, and reserves.
- Evaluation of general liability coverage including sexual abuse/molestation (SAM) coverage options.
- Public funding needs for capitalization and potential alternatives.
- Market analysis of traditional and E&S markets, availability, and barriers to coverage.
- Potential participation by commercial insurers and feasibility of an assigned risk pool.
- Recommended program design and relevant legislative/funding changes.
- Collaboration: DHHS DCDEE to cooperate with the Department of Insurance.
- Timeline: Report due by June 1, 2027.
- Funding: $350,000 nonrecurring from the General Fund to the Department of Insurance for 2026-2027 to conduct the study.
Part V: Update Bidding Requirements for Smart Start
- Revisions to bidding thresholds and processes under S.L. 2023-134 for contracts with NCPC and local partnerships:
- For small contracts (up to $5,000–$15,000): single written policy.
- For contracts above $5,000–$15,000 up to $25,000: three written quotes.
- For contracts above $25,000 up to $40,000: more formal process such as a Request for Proposal (RFP).
- For contracts $40,000 or more: formal RFP with necessary advertising.
Part VI: Effective Date
- General effective date: July 1, 2026, with specific provisions taking effect as indicated in the sections.
Potential Impacts
- Increases in the availability of trained lead teachers through free, state-supported academies, with credentialing leading to immediate employment opportunities in licensed centers.
- Expanded mental and behavioral health supports in child care settings, improving support for children, families, and staff.
- Administrative flexibility for center leadership, potentially streamlining qualifications for administrators while maintaining quality standards and QRIS credit.
- Exploration of public-private funding mechanisms for liability insurance, aiming to reduce providers’ risk exposure and improve access to coverage.
- Enhanced procurement transparency and competitiveness for Smart Start-related contracts.
- Creation and maintenance of a dedicated NCPC Special Fund to hold and deploy funds for Smart Start initiatives.
Notes
- The bill includes reporting requirements to legislative oversight committees and specifies that nonreverting funds may be carried forward within the program.
- Local partnerships are required to provide a 25% local match for Part I funds.
- The bill emphasizes collaboration among NCPC, community colleges, public schools, and other state entities to implement pilot programs and scale successful initiatives statewide.
If you’d like, I can provide a side-by-side comparison with current law or a plain-language one-page fact sheet for constituents.
