Federal Cuts Force North Carolina to Rethink Childcare Funding as Costs Surge
RALEIGH, N.C. — Families across North Carolina may soon face higher childcare costs as federal support dries up and the state struggles to fund vital programs. The White House’s decision to withhold $6 billion in grants has left state officials scrambling to address a crisis that threatens both working families and the broader economy.
The funding pause, announced as part of a federal review to ensure alignment with President Trump’s fiscal priorities, arrives at a time when childcare providers are already overwhelmed. More than 60% of childcare workers in the state report their centers are consistently understaffed, raising concerns about service quality and sustainability.
Childcare Costs Outpacing Rent and Tuition
According to the Economic Policy Institute of North Carolina, the average annual cost of childcare for two children now exceeds $20,000 — 25% more than the average rent in the state. For many families, the cost of sending an infant to daycare is higher than in-state tuition at UNC-Chapel Hill, putting pressure on household budgets already stretched thin by inflation and rising housing prices.
A newly released preliminary report from the NC Child Care and Early Education Task Force offers six recommendations aimed at reducing these costs. Among them:
- Forming partnerships with UNC system campuses and K–12 public schools to expand childcare options
- Providing higher reimbursements to providers who serve low-income families
“We won’t stay a top business state if we don’t have a workforce that can show up to work,” said Lt. Governor Rachel Hunt, as quoted by Queen City News.
No State Budget, Uncertain Future
Efforts to implement these changes have stalled as the North Carolina General Assembly adjourned without passing a new budget. That leaves the future of childcare funding in limbo. The Senate proposal includes $80 million annually for childcare, but there’s no guarantee it will make it into the final legislation.
Governor Josh Stein, who created the task force back in March, is urging lawmakers to act. He cited data showing the state loses an estimated $5 billion a year in economic activity when parents are forced out of the workforce due to lack of affordable childcare.
“A child tax credit, a child independent care tax cut, and a working families tax cut could mean up to $1,600 a year for certain families,” Stein said during his budget address.
His plan aims to provide targeted support for low- and moderate-income households, helping offset the cost of essentials like diapers, medicine, and daily care.
Who Gets Left Out?
Even with proposed relief, millions of families may not qualify for the federal child tax credit expansion, which would increase the maximum benefit from $2,000 to $2,200. A Columbia University study found that 19 million children in the U.S. could miss out because their families don’t earn enough under the new eligibility rules.
Additionally, the potential loss of Medicaid and SNAP benefits for some households further complicates the financial outlook for North Carolina’s working parents.
Are rising childcare costs forcing you to cut hours or change your job in North Carolina? Share your experience in the comments on saludastandard-sentinel.com.
