Section 1.

Requires the Department of Health and Human Services (DHHS), Division of Child Development and Early Education (Division), to develop a plan to separate the quality rating improvement system (QRIS) from the requirements and payments for participation in the State subsidized child care program using the market rate study submitted in 2026 by May 1, 2026. Allows for the continuation of the star-rating system, but specifies that the ratings cannot impact the rate of reimbursement for licensed childcare centers or homes. Directs the Division to ensure that the next market rate study also includes recommended rates that are not segmented by star-rating and prevents it from implementing the rates until authorized to do so by the General Assembly.

Amends Section 9D.3 of SL 2023-134 (concerning child care subsidy rates) as follows. Removes provisions (1) generally requiring religious sponsored child care facilities to be paid at the one start rate and (2) generally requiring licensed childcare facilities with two or more stars to receive the market rate for the license level. Instead, now requires licensed childcare centers and homes, including religious sponsored child care facilities, that meet the State’s minimum licensing standards, that are participating in the subsidized childcare program to be paid the applicable market rate or the rate they charge privately paying parents. Makes conforming changes. Removes provisions requiring the Division to continue implementing policies based on the star rating system, as described.  Amends GS 110-90 to specify that a rated license has no impact on the rate at which a child care facility is reimbursed for subsidized child care. Instructs that Section 1 of the act should not be construed as impacting the NC Prekindergarten program. Requires the NC Child Care Commission (Commission) to adopt, amend, or repeal any rules regarding separating the star-rating system from requirements and payments for reimbursement for subsidized child care. Requires the Division to submit a progress report on developing the plan to the specified NCGA committees by April 1, 2026, with a final report due two months from the date the new rates are implemented.

Section 2.

Changes the definition of lead teacher in GS 110-86 (definitions pertaining to childcare facilities) to a person responsible for the described activities for no more than two (was, one) groups of children in a childcare facility.

Section 3.

Expands the types of materials DHHS must consider in evaluating the education levels of in conjunction with issuing a rated license to a child care facility in GS 110-90 to include the NC Early Childhood Credential, based on experience.

Section 4.

Expands the schools covered by the Division’s policy on school facilities used by out-of-school childcare governed by GS 110-91(6) to include middle schools. Makes conforming change.

Section 5.

Instructs, in new GS 110-91(6a) that any building and grounds which are currently approved for school occupancy and which house a public or private elementary or middle school are deemed to have met the sanitation, fire, and building code requirements for a licensed child care facility when the building and grounds are serving the same, or a subset of the same, school-age children in an out-of-school child care program. Directs the Commission to adopt or amend any rules to ensure uniformity and consistency in application of the exemptions for school-age children in out-of-school childcare programs.

Section 6.

Amends GS 110-91(7)a (staff/child ratios for childcare centers), as follows. Increases the minimum group size for children aged 0 to 24 months from 10 to 15 children and from 12 to 18 for children aged 12 to 24 months. Specifies that if a childcare center is operating under voluntary enhanced requirements, the maximum group size for toddlers aged 2 to 3 years may be increased from 18 to 20 children when the child care center maintains a 1:9 staff-child ratio. Sets forth maximum group sizes for infants and toddlers ranging from groups of 12 with a child/staff ratio of 1:4 for children aged 0 to 12 months to groups of 20 with a child/staff ratio of 1:8 for children 2-3 years if the childcare center is operating under the highest voluntary enhanced requirements. Provides that for groups of children 1 year of age or older, the staff/child ratio during nap time complies with the requirements of rules adopted by the Commission if (1) at least one person remains in the room, (2) all children are visible to that person, and (3) the total number of required staff are on the premises and within calling distance of the rooms occupied by children. Makes conforming change.

Section 7.

Adds the following to the required qualifications for child care staff listed in GS 110-91(8). Allows five years of documented experience teaching in a licensed child care facility in the State to be equivalent to the NC Early Childhood Credential (Credential).  Specifies that only administrators and lead teachers are required to have the Credential. Other staff must meet the standards developed by DHHS that do not include the Credential or its equivalent.

Section 8.

Makes conforming change to Section 8 of SL 2024-34 (QRIS modifications) to account for the new five-year work experience alternative to the Credential added to GS 110-91(8), above.

Section 9.

Specifies that the Weikart Youth Program Quality Assessment ("Weikart Program") will be added as an assessment tool for evaluating out-of-school childcare programs and awarding of a star-rating. Requires the Division to take the described steps and have the Weikart Program available for applicants not later than six months after the act becomes law.

Section 10.

Requires the Division to assign credit for continuing education courses to community college courses on the same basis as those offered by the Commission.

Section 11.

Requires the Division to do the following: (1) by December 1, 2025, in consultation with the NC Community Colleges System, create a School Age/Out-of-School Care Credential that aligns with a new curriculum course and continuing education course entitled "Introduction to School Age Care and Education and (2) award the North Carolina Early Childhood Administration Credential or the North Carolina Family Child Care Credential to individuals who have successfully completed continuing education courses that are equivalent to child care curriculum courses, as determined by the Community Colleges System, as described.

Section 12.

Requires the Commissioner of Insurance to establish a workgroup to examine the potential for developing group liability insurance plan opportunities for all childcare providers consisting of the specified stakeholders.  Requires the workgroup to submit its findings and recommendations, as described to the specified NCGA committees and the Fiscal Research Division by January 1, 2026.