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Guest blog by: Pamela Harris, PhD
President & CEO of Mile High Early Learning

Child Care Assistance Program Policy Changes

In 2024, federal rules and state legislation made strides toward making child care more affordable and stabilizing the child care industry. The Child Care Assistance Program provides subsidies to working families to offset the cost of child care.

To qualify, a person must:

• be working or going to school
• not exceed a certain income threshold, or receive TANF
• have a child birth to 13 years old

The new legislation limited parent co-pays to no more than 7% of income. It also mandated that child care providers be paid based on a child’s enrollment, and not daily attendance. Counties will begin paying based on enrollment in August 2026.

The federal government also mandated that Colorado study child care costs based on a different method. Child care providers were being reimbursed at 25% of the market rate. The new method would determine child care provider reimbursements based on the actual cost of providing care. It would not rely upon market rate surveys. In the past, child care providers had to be incentivized to participate in CCCAP because of the low reimbursement rates.

Because the rates were so low, this process determined that only infant and toddler rates needed to be increased by 400%.

These strategies were intended to:

• improve access to CCCAP
• stabilize the child care industry
• cover the actual cost of child care

However, instead of moving forward, the implementation of these policy changes has had a severe impact on the child care sector.

CCCAP Freezes

The increased reimbursement rates are being implemented over a three-year period. Yet 21 counties have already responded by establishing freezes or waitlists for CCCAP enrollment. In those counties, no additional children can be served until the freeze ends. The estimated time for these freezes has stretched from two years to ten years.

If the freeze lasts more than two years, families with infants and toddlers will not be able to receive subsidies. Therefore, the higher reimbursement rates would be meaningless. After five years, for the most part, only families with children 5 years and older will have access to CCCAP.

Counties are also paying based on child absences rather than on overall enrollment. At least one county is not paying for major federal holidays. However, child care businesses still need to pay our workforce and operational costs based on enrollment. There is a reason that the child care industry has low wages and inadequate benefits. It is difficult to budget when funding is unstable.

Child care providers and school districts blend funding from different sources in order to cover their operating costs. Neither can rely on a single source of revenue for their programming. Unfortunately, CDEC and counties now prohibit the blending of CCCAP and Universal Preschool funding for a child. Community based child care providers are hardest hit by this mandate, which is another destabilizing factor for the child care industry.

Family and Community Impact

In Colorado, 65% of children under 6 have all available parents in the labor force. Research shows that many parents cannot secure child care that is compatible with work schedules and commutes.

In 2020–2021, 14% of children birth to age 5 in Colorado lived in families in which someone quit, changed, or refused a job because of problems with child care, which is higher than the national rate.

Women are five to eight times more likely than men to experience negative employment consequences related to caregiving. Between 2019-2021, the percentage of children living in families where no parent had full-time, year-round employment increased by 7%.

While the estimated costs for implementation of these changes may seem daunting, the actual cost and its impact on the child care sector have been even more devastating. The lack of affordable child care comes with an estimated annual economic cost of $2.7 billion in lost earnings, productivity, and revenue.

Effects on Children

Most important and most often overlooked is the impact on children. Children who participate in quality early childhood programs have higher levels of empathy and resilience, improved academic outcomes, and are more likely to graduate from high school. Children without access to quality early care are at greater risk for difficulties in school, poorer health outcomes, and behavioral concerns.

CCCAP currently serves close to 29,000 children statewide. Denver County Human Services reports that 3,200 children currently receive child care subsidies, but their funding capacity will support only 2,000 children. CDEC estimates that CCCAP will actually serve 64% fewer families across the state. That means 18,500 children will no longer have access to child care subsidies.

And yet parents still need to work. So, where will the children go?

Sources:
Colorado Fiscal Institute 2022
First Five Years Fund 2025
Denver Great Kids Community Assessment Update 2023
Colorado Department of Early Childhood