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HB 412

Child Care Regulatory Reforms.

2025-2026 Session Introduced by Dean Arp and 8 co-sponsors

HB 412 decouples QRIS star ratings from subsidy reimbursement and requires a market-rate study to set non‑tiered rates, potentially expanding provider capacity.

Signed by Gov. 7/1/2025
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Bill Summary · HB 412

HB 412 — Child Care Regulatory Reforms (North Carolina)

Status: Signed by Governor (Session Law 2025‑36), 7/1/2025

Purpose / Intent

HB 412 aims to simplify and deregulate aspects of North Carolina’s child care system to (1) separate the voluntary quality‑rating system (QRIS/star ratings) from state subsidy reimbursement policies, (2) reduce regulatory barriers that can limit supply or increase provider costs, and (3) study options to improve affordability and provider capacity — including exploring group liability insurance options for entities serving minors.

Key provisions

  • Decouple QRIS star ratings from subsidy reimbursement:

    • The Division of Child Development and Early Education (the Division) must develop a proposed plan — and complete a new market‑rate study — that separates the Quality Rating and Improvement System (QRIS) from subsidized child care eligibility and reimbursement rates.
    • Star ratings become voluntary for licensed centers/homes and shall not affect the reimbursement rate paid for subsidized care (a rated license “shall have no impact” on subsidy reimbursement).
    • The market‑rate study must include recommended rates that are not segmented by star‑rating.
    • New reimbursement rates may not be implemented without federal (ACF) approval and authorization by the General Assembly.

  • Deadlines and reporting:

    • Market rate study and proposed plan due to the General Assembly and oversight committees by May 1, 2026.
    • Progress report due April 1, 2026; final report due within two months after any new rates are implemented.

  • Regulatory and licensing adjustments:

    • Clarifies/updates mandatory licensing standards (space, equipment, playgrounds, etc.). Example: minimum indoor space requirement cited as 25 sq ft per child (with maximum outdoor standard references).
    • Revises staff definitions and grouping rules: a “lead teacher” is responsible for planning/implementing for no more than two groups; maintains/adjusts specified staff‑to‑child ratios and group sizes for infants/toddlers and allows certain relaxations under voluntary enhanced requirements.
    • Treats school buildings (approved for school occupancy) differently for out‑of‑school programs: playgrounds/athletic fields of schools are treated as part of the building when used for after‑school care; fields/playgrounds that do not meet licensure standards must be noted on a program’s licensure/rating information.

  • Insurance workgroup:

    • Establishes a workgroup to examine the potential development of group liability insurance plans for certain entities providing services to minors (details on membership and timing are to be determined in implementing actions/rules).

Who is affected

  • Licensed child care centers and family homes (including faith‑based providers).
  • Families receiving subsidized child care (potential changes to payment structures).
  • Division of Child Development and Early Education; North Carolina Child Care Commission; county social services agencies.
  • State policymakers (must approve any reimbursement changes) and federal Administration for Children and Families (must approve CCDF‑related changes).

Timeline & implementation

  • Enacted as Session Law 2025‑36; signed 7/1/2025.
  • Division must deliver the market rate study and proposed decoupling plan by May 1, 2026; progress and final reporting deadlines noted above.
  • Rule changes and Commission actions will be needed to implement many statutory changes.

Potential effects / considerations

  • Could lower barriers and costs perceived by some providers and expand supply by removing reimbursement ties to star ratings.
  • May shift how subsidy funds are targeted; the General Assembly and federal approval required before reimbursement changes take effect.
  • Administrative workload: Division and Child Care Commission will need to complete studies, draft rules, and manage reporting; fiscal impacts will depend on later reimbursement policy choices.
  • Quality‑of‑care safeguards remain a focus: statute requires plans be consistent with federal Child Care and Development Fund (CCDF) requirements and maintain measures for quality.

Compiled from official sources — confirm details with the bill’s official record.

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