With the release of the NC House of Representatives’ budget this week and the Senate passing its proposal last month, a clearer picture is emerging of the direction the state will take in the upcoming fiscal year. Four notable trends are evident in the early childhood budgets proposed by each body. Both budgets:
Increase funding for Pre-K. Both budgets provide new money to NC Pre-K.
Reduce state funds in early childhood programs. Although overall funding does not decrease, state funds are being replaced with federal and lottery funds.
Make it harder for working families to access assistance to afford child care. Both proposals change the eligibility criteria for working families to access assistance to afford child care.
Increase teacher salaries. Both budgets give teachers a pay raise, however the amount and conditions differ.
This chart compares the proposed budget provisions impacting young children by the Governor, Senate and House.
Increase in Pre-K Funding
- $9 million increase
- Replaces state funds with $4 million from federal funds and $49.17 million from lottery receipts
- $5 million increase
The Senate proposal would fund an additional 1,000 slots for children to attend NC Pre-K. The House budget includes funding for additional slots and funds for a teacher pay raise. NC Pre-K teachers who work in programs in public schools are paid salaries based on the NC Public School Salary Schedule for Certified Staff. Certified staff would receive a pay raise under the House budget.
North Carolina’s Pre-K program is one of only five in the nation to meet all ten NIEER benchmarks for state quality standards, according to the 2013 State of Preschool Report. In the latest evaluation of NC Pre-K, researchers found that children are progressing at an even greater rate during their participation in NC Pre-K than expected for normal developmental growth.
During the 2012-13 school year, 26,617 children were served. According to the Division of Child Development and Early Education, an estimated 70,000 children met the eligibility requirements that year.
- For more information, see When it Comes to Pre-K, Some is Good and More is Better.
Reduction of State Funds
- Replaces $15.8 million of state funds with federal funds for NC Pre-K
- Replaces $49.17 of state general funds with lottery funds for NC Pre-K
- Replaces $13.98 million of state funds with federal funds for child care subsidy
- Replaces $7.1 million of state funds with federal funds for NC Pre-K
- Replaces $13.8 million of state funds with federal funds for child care subsidy
State investments in early childhood programs have been on a downhill trend. In Fiscal Year 2000-01, North Carolina invested 2.1% of its state general funds in early care and learning programs—Smart Start and child care subsidy. By Fiscal Year 2012-13, the share had dropped to 1.3%, and the dollars then funded three programs—Smart Start, child care subsidy and NC Pre-K. During that 12-year period, child care subsidy peaked at $88.6 million of state funds and fell to $44 million by Fiscal Year 2012-13.
Investments in high quality early education yields higher graduation rates, reduced crime, higher earnings, and better jobs. As a result, economists estimate that every dollar invested in early education produces up to a 10% return on investment through increased personal achievement and social productivity.
Harder for Working Families to Afford Child Care
Although the starting dates differ, the House and Senate plans are very similar. Currently, children birth to age 13 whose families earn 75% of the state median income are eligible. Under the proposed plans, children birth through age five would be eligible if their family income is 200% of the Federal Poverty Level or less. For a family of three, their income would now have to be $39,580 or less as compared to the current $42,204 or less.
Children six to 13 would be eligible if their family income is 133% of the Federal Poverty Level or less. For a family of three, their income would now have to be $26,321 or less as compared to the current $42,204. In 2012, the average cost of school-age center-based child care in North Carolina was $4,298. A single mother earning the state median income spent 20% of her income on child care at that rate.
The House proposal will not impact families currently being served until their regularly scheduled eligibility redetermination.
Child care subsidy helps low-income working families afford child care. Research shows that subsidy benefits children, parents and businesses. Children from families receiving subsidy are more likely to be in higher quality, licensed centers and have greater stability in care; businesses experience fewer child-care related work disruptions; and mothers are more likely to be employed or in school.    
Increase Teacher Salaries
- Provides an average salary increase of 5%
- Repeals legislation passed during the 2013 legislative session eliminating career status (tenure) for current teachers
- Creates a Professional Status Teacher Salary Schedule
- Provides teachers that opt into this schedule an average salary increase of 11.2%. Participation is conditional upon teachers forfeiting career status and longevity benefits. Teachers that do not opt into the Professional Status Teacher Salary Schedule will continued to be paid on the current salary schedule and will not receive a raise
The House is expected to vote on the budget by the end of the week. The budgets will then go to a Joint Conference Committee to negotiate the differences between the two bills.
 NC Pre-Kindergarten (NC Pre-K) Program Requirements and Guidance, North Carolina Department of Health and Human Services, Division of Child Development and Early Education, 2012.
 Child Development and Early Education Update to Joint Legislative Oversight Committee on Health and Human Services. North Carolina Department of Health and Human Services, 2014.
 NC Pre-Kindergarten Facts. North Carolina Division of Child Development and Early Education, 2013.
Lessons Learned: A Review of Early Childhood Development Studies. Burr, J. & Grunewald, R. (2006).
 Letter to the National Commission on Fiscal Responsibility and Reform. Heckman, J. J
 Parents and the High Cost of Child Care 2013 Report. Child Care Aware of America, 2013.
Tarnai, J., Impacts of HB3141 on the working connections child care program. 2011, Social & Economic Sciences Research Center: Pullman, WA. p. 1-81
Johnson, A.D., R.M. Ryan, and J. Brooks-Gunn, Child-care subsidies: Do they impact the quality of care children experience? Child Development, 2012. 83: p. 1444-1461.
Forry, N.D. and S.L. Hofferth, Maintaining work: The influence of child care subsidies on child care-related work disruptions. Journal of Family Issues, 2011. 32(3): p. 346-368.
Blau, D. and E. Tekin, The determinants and consequences of child care subsidy receipt by low- income families. 2001, Joint Center for Poverty Research: Chicago, IL. p. 1-33.