State Budget Compromise on...
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State Budget Compromise Unveiled
"Stop the Swipes!" Update

State Legislators Finally Agree on New 2014-15 Budget

State legislative leaders unveiled their compromise state budget late in the evening on Wednesday, July 30. The 260-page $21 billion revised spending plan for the state’s current fiscal year is expected to be voted on and passed by the NC Senate and House before the week’s end. Then, the revised budget will go to Gov. Pat McCrory and he will have 10 days to sign or veto it. If he signs it, it will replace the budget passed by lawmakers last year that the state has been operating under since July 1.

Within the new state budget, the Division of Child Development and Early Education (DCDEE) budget was cut by nearly $2 million “recurring,” which means the cuts last beyond this year, and nearly $29 million “non-recurring,” which means the cuts apply to 2014-15 only.

Subsidy Changes:

  • Does not decrease subsidy funding overall, but replaces nearly $14 million in state subsidy dollars with federal Child Care Development Fund (CCDF) and Temporary Assistance for Needy Families (TANF) block grant money, on a non-recurring basis. 
  • Market Rate Increases – Effective Jan. 1, 2015, the budget provides nearly $7 million for DCDEE to implement market rate increases based on the 2013 Child Care Market Rate Study.  Three to five-star child care centers and homes shall receive 25% of the recommended rate increase as defined by the 2013 study.  (The state House originally proposed $11 million for 40% of 2013 recommended rates, but the Senate had NO market rate increases in its budget proposal; so, 25% represents the compromise between the two.)
  • Eligibility – Effective Oct. 1, 2014 (for those currently being served the changes would not have an impact until “redetermination”), the budget changes Subsidy eligibility from 75% of state median income for all children birth to 12 to the following:
    • Age 0-5 = 200% of Federal Poverty Level (FPL)
    • Age 6-13 = 133% of FPL
    • Child with special needs of any age = 200% of FPL
  • Copay – The sliding scale for parent fees would be replaced with a flat 10% copay for all families, effective Oct. 1, 2014, and co-payments would not be pro-rated for part-time care.
  • Allocation Formula – Revises the child care allocation formula, including specifying that counties that did not have a waiting list the prior year, or had a spending coefficient of less than 95%, would not get an increase the next year unless there were “extraordinary” circumstances that led to a waiver. 
  • We believe that the budget also instructs DCDEE to use new Census data, beginning in 2014-15, to implement 1/3 of a change in the counties’ allocation, then another 1/3 change in 2016-17, then the final 1/3 in 2018-19.  It appears to be a gradual phase-in, occurring over a number of years, but it is not completely clear whether it starts this year or two years from now.  (This appears to be what the House originally proposed; the Senate had proposed continuing to use data from the 2000 Census to determine allocations per county.)
  • Directs DCDEE to study child care subsidy for 11- and 12-year olds, including available options for before- and after-school care, available resources other than subsidy to pay for before- and after-school care, and the average cost of care for 11- and 12-year olds.  Requires the Division to report its findings and recommendations to legislators no later than Nov. 30, 2014.

NC Pre-K:

  • Provides nearly $5 million in funding to address the additional average per-slot cost increase due to teacher pay raises, and provides funding for additional slots, although it is not clear yet how many additional slots.  (The House had proposed $9 million in additional NC Pre-K funding and the Senate had proposed $5 million.)
  • Replaces nearly $20 million in state NC Pre-K funding with federal TANF funding on a non-recurring basis.


  • The following language, which appeared in an earlier House budget proposal, appears to have been cut from the final compromise budget: “The Dept. of Health and Human Services shall be responsible for certifying individuals and assigning a certification level pursuant to the NC Early Education Certification based on rules adopted by the Commission.”

Teacher Pay Raises:

  • The plan also boosts early career teacher pay to a minimum of $35,000 per year by the 2015-16 school year, and restructures the teacher pay system into six broad bands rather than 47 steps.
You can review the complete 260-page budget online via the links below:
2014-15 Budget (Special Provisions)
2014-15 Budget (Money Report)


“Stop the Swipes” Update – Legislators May Postpone Regulatory Reform until Aug. 14

As we reported in earlier emails, responding to requests from NCLCCA and its provider members, the state House passed a proposed committee substitute (PCS) for Senate Bill 493 – 2014 Regulatory Reform Act that included language to delay statewide implementation of the SEEK system for subsidy and NC Pre-K until after DCDEE reports on the system to the legislature.    After it was passed by the House, the Senate failed to act on it, along with another regulatory reform bill passed by the House.  Instead, this week the Senate revealed a new regulatory reform bill – House Bill 761 – that incorporates what both chambers apparently have agreed upon, as well as a few new provisions. 

The good news is that the new bill from the Senate contains the NCLCCA-backed SEEK language.  Unfortunately, however, the language in the new bill matches the original House language, which delays statewide implementation, but does not prevent DCDEE from expanding the current pilot to additional counties, or paying providers participating in the pilot based on data from the flawed SEEK system.  NCLCCA and many of its members impacted by SEEK had asked key legislators that the language be changed to prevent payment-by-swipe until after legislators hear from DCDEE and providers about the negative impacts of SEEK.

We are now hearing that legislators may adjourn the session temporarily at the end of this week – after they pass the state budget – and return to Raleigh on Aug. 14 to work for two days on unresolved controversial bills, such as these regulatory reform bills.  NCLCCA will continue to ask legislators to revise the SEEK language to prevent DCDEE from paying providers based on SEEK data until after legislators have heard from both the Division and providers about ongoing SEEK problems.  If you serve subsidy or NC Pre-K families, watch for future emails for guidance when you can weigh in with your voice to hopefully make a difference. 
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