NC Budget Bill Allocates Remaining Federal Pandemic Response Funds Inequitably

The NC Legislature allocated the rest of the federal CARES Act funding (about $1 billion) in a quick 2-day session last week. The NC Senate avoided significant debate on the bill by gutting another bill and inserting the budget provisions, which allowed it to go directly to a vote on the floor rather than moving it through the committee process. The House had the opportunity only to vote the bill up or down, with no amendments. The result is a budget bill that includes some important pandemic-related investments but overall allocates funding in an inequitable way. It remains to be seen whether the Governor will sign the bill.

Inequitable Use of Funds

The General Assembly chose to take an inequitable approach to allocating the funding. For example, nearly half the funds ($440 million) were allocated to provide one-time $335 payments to every household in NC with a child, to offset costs of virtual learning and child care. A more equitable approach (similar to the one taken at the federal level with stimulus payments) would have been to concentrate the funding on overburdened and under-resourced families – those who have been most heavily hit by this pandemic.

In addition, the one-time payments will run through the tax system, meaning that families who did not make enough income to pay income taxes last year (and who therefore need the investment the most) will need to apply to the state by October 15th (through an as-yet unidentified process) to receive their one-time payments, while higher-income families who paid income taxes last year will receive it automatically. It is very likely that the most under-resourced and over-burdened families will not know to request their payments and will therefore miss out on this benefit. The General Assembly could have chosen a different mechanism that ensured that every family received their one-time payment.

Investments in Early Childhood

The bill includes some funding through DPI and DHHS that will support early childhood, such as:

Child Care:

  • $35 million in operational grants for licensed child care providers
  • $8 million to DCDEE to support low income households using remote learning options for caring for young children
  • $6 million for PPE in child care settings

K-12 Public School:

  • Average daily membership will be held harmless, which means schools will not lose funding as a result of lower enrollment due to the pandemic
  • $20 million for personal protective equipment for public schools
  • $20 million to the YMCAs to facilitate remote learning for school-aged children during the day. Some child care advocates are concerned that in trying to solve the problem of school-aged child care during the pandemic, the General Assembly is providing too much regulatory flexibility to community-based organizations (such as around background checks, TB tests, fire inspections, and first aid certification) and that it threatens the integrity of child care licensing.
  • $17 million in additional grants to districts for serving exceptional children who have lost services as a result of school closures, which DPI is encouraged to use for in-person services
  • $10 million in additional funding for student connectivity
  • $1 million for the new teacher support program
  • Various allocations to specific school districts

Other Areas:

  • $12 million to domestic violence centers and sexual assault programs
  • $6 million in additional funding to food banks
  • $800,000 to continue $100/month additional payments to foster families

Early Childhood Needs Not Included in the Budget Bill

House committees heard in recent weeks from DPI and DHHS on what those agencies need to ensure continuation of safe and healthy education for young children, starting at birth. The Governor also submitted a proposed budget addressing the needs of young children and their families during the pandemic. Many of these items were not included in the final budget. A few examples include:


  • Increases to Pre-K admin and reimbursement rates
  • Increased investment in Smart Start 
  • Bonuses for early educators, though the $35 million in operational grants to child care providers can be used to provide short-term bonuses

K-12 Education:

  • Bonuses for school personnel
  • K-12 transportation funding to use buses to deliver meals, provide internet hot spots, and deliver non-digital instructional resources
  • Training on the science of reading
  • School-based mental health support
  • Space X Pilot program to extend internet connectivity to students and educators in very hard to reach locations
  • Increase to Disadvantaged Student Supplemental funding
  • Increase to Limited English Proficiency funding

Other Areas:

  • Reduce Medicaid coverage gap
  • Funds to DHHS for crisis services to respond to significant increases in mental health stressors due to the pandemic
  • Increased unemployment payments

Next Steps

The NC House and Senate have ended their sessions and do not plan to return unless there is new pandemic funding at the federal level. There is some indication that there may be additional federal funding for child care in a spending bill Congress is working on.