Colorado is the sixth-least affordable state for child care in the nation. Costs for center-based care average 14% of a two-parent household’s median income and 45% of a single parent’s median income. The federal affordability benchmark is just 7%.

Colorado also faces significant shortages in access to slots in licensed child care programs. In 2023, more than 40,000 Colorado parents reported quitting a job, turning down a job or significantly changing a job because of problems with child care.

Recently, several Colorado counties passed measures to subsidize child care through local taxes. Despite these advancements, Colorado’s child care system is facing a fiscal crisis that is likely to affect families and children for years to come.

Child care disruptions for families with infants and toddlers are estimated to cost the state more than US$2.7 billion in lost economic productivity and revenue. Ensuring access to affordable child care supports workforce participation and enhances the well-being of children and families.

I study early care and education policies and programs that promote children’s cognitive, behavioral and social-emotional learning. My research lab at Colorado State University has been investigating the consequences of a lack of access to high-quality, affordable child care on child and family outcomes.

Colorado’s Child Care Assistance Program

Since the late 1990s, the Colorado Child Care Assistance Program has subsidized the cost of child care for parents and caregivers with lower incomes who are working, searching for work or pursuing education. My research shows these subsidies are a critical lifeline that help lower-income families access child care.

Subsidies allow families to prioritize factors other than cost, such as location, in their search for child care. From 2023 to 2024, the Colorado subsidy program served more than 30,000 children in the state. That’s about 10% of those who qualified, which is typical for most states.

A federal March 2024 rule from the Administration for Children and Families caps family co-payments at no more than 7% of household income. It also requires reimbursement rates to reflect the full cost of care, whereas previously subsidy payments were based on what families could afford to pay.

Although intended to improve affordability for families and adequately compensate child care programs, the rule included no additional federal funding. In Colorado, meeting these new requirements is projected to cost the subsidy system approximately $43 million more per year.

These changes, combined with the expiration of COVID-19 relief funding that provided Colorado an additional $465 million to stabilize and expand child care assistance, has created growing financial instability for the subsidy system.

Approximately one-third of Colorado counties are experiencing an enrollment freeze for their child care subsidies. This means new applicants cannot access subsidized care until the freeze is lifted. There is no set timeline for when that will occur.

Without additional funding that would allow the freeze to be lifted, enrollment in Colorado’s Child Care Assistance Program is estimated to decline by 64%, falling from about 30,000 to just 10,000 enrollees. As children age out or families no longer qualify, spots that would normally open up for new enrollees will remain unfilled during the freeze.

Zooming in on Larimer County

I have been studying the impacts of the enrollment freeze in my hometown of Larimer County, Colorado. It’s a geographically diverse region that includes urban centers such as Fort Collins and Loveland, mountain destinations such as Estes Park, and rural agricultural communities. Like elsewhere in the state, child care costs pose a significant financial strain on local families.

A household in Larimer County with a median income of $64,919 and two children under the age of 5 spends approximately 37% of its income on child care. Due to budget constraints, Larimer County has had an enrollment freeze in the Colorado Child Care Assistance Program since February of 2024. The county has effectively paused the intake of new applicants for subsidies.

Recently, we administered surveys to 88 families in Larimer County. Approximately half of those surveyed were currently receiving a subsidy and half had applied but were unable to access it because of the freeze. We compared families using advanced statistical modeling that controlled for any differences between groups, allowing us to isolate the effects of the subsidy freeze on family outcomes.

In unpublished research that is being prepared for peer review, we found families affected by the freeze used fewer paid child care hours, faced higher costs, expressed greater concerns about costs, and reported more difficulty paying for care. They also had less reliable and stable arrangements, were less satisfied with their care, experienced higher child care-related stress and displayed greater risk of depression.

But that’s not all. Families without a subsidy reported missing twice as many workdays. When extrapolated across the 425 families in Larimer County affected by the freeze, this translated to over $2.2 million in lost annual earnings.

Local initiatives driving solutions

Recognizing the gaps in affordable child care, counties across Colorado introduced ballot measures to fund local solutions through tax revenue.

These measures come after the state established a universal preschool program in 2022. The following year, the program provided up to 15 hours per week of tuition-free, high-quality preschool for more than 85,000 children.

Measures in Larimer, San Miguel, Garfield, Pitkin and southwest Eagle counties will directly fund child care through sales or property taxes. Measures in Gilpin, Hinsdale, Ouray and Eagle counties will generate funds through lodging taxes.

In Larimer, voters passed a measure that established an additional countywide sales tax of 0.25%, or 25 cents per 100 dollars. The measure is expected to generate $28 million annually for child care assistance and workforce compensation.

In San Miguel, voters passed a measure to opt-out of a state limit on the existing property tax levy of 75 cents for every 1,000 dollars of assessed property value. This will allow the county to retain nearly $1 million annually to support local child care affordability.

In Eagle County, voters passed a measure approving a lodging tax increase from 2% to 4% on hotel stays and short-term rentals that will raise approximately $4.5 million annually to lower child care costs.

Revenue from these initiatives will provide child care tuition to families, expand child care slots, support quality improvement and raise wages for child care workers.

These local investments cannot by themselves resolve Colorado’s statewide child care funding deficit, but they have the potential to transform access and quality within communities where they are implemented.

Colorado is not alone in these issues. Many other states are facing subsidy enrollment freezes and are exploring regional solutions to stabilize funding.

For example, ballot measures in Cincinnati, Ohio, and Seattle, Washington, also recently passed, providing reliable funding for child care assistance, preschool quality and workforce compensation.

With the uncertainty of the state and federal funding landscape, municipalities across the country may look to Colorado as a model for locally driven strategies that address community needs.

Read more of our stories about Colorado.

Jenn Finders has received funding from the National Science Foundation, Indiana Family and Social Services Administration, and North Central Regional Center for Rural Development.