State lawmakers propose new way to tackle Colorado’s child care crisis

This story first appeared at cpr.org.

DENVER — Thousands of Colorado families are shut out of full-time work because they can’t afford or can’t find child care. State lawmakers will consider a bill Thursday that proposes a new market-based way to fund child care assistance for low-income families.

SB26-180, a bipartisan effort, would create a separate, state-level childcare fund to help subsidize child care for low-income families. 

The bill would create an “Investment Performance Authority,” a special fund designed to attract voluntary investment from government-related entities and grow over time. The goal is to stabilize Colorado’s child care system, which has been in crisis for years.

“It’s a huge crisis on every front,” said Sen. Janice Marchman, a Democrat from Loveland, a bill co-sponsor. “Since COVID, we’ve lost just thousands of child care slots. Providers closed and just never opened again.”

Half of Coloradans live in a child care desert, where the number of children exceeds the number of licensed child care seats. Child care in Colorado is also some of the least affordable in the nation. The average cost of infant care in a center in Colorado is $21,000 a year.

The freeze of a state assistance program and high costs are leaving thousands of families unable to work or work full-time.

The Colorado Child Care Assistance Program, known as CCCAP, which subsidizes care for low-income families, is in dire straits.

More than 24 counties, including Colorado’s 10 most populous, have frozen enrollment or instituted waitlists due to expired federal pandemic relief and rising costs. Nearly 14,000 children statewide are on waitlists. Some providers are on the verge of closing.

The proposed fund is designed to skirt state budget cuts and TABOR limits. The money would go directly to families via counties, not CCCAP, but would still target low-income families — especially those on waitlists.

TABOR caps are constitutional limits on how much money the state can keep and spend.

“I feel like the solution that I've brought to the table … doesn’t cost taxpayers another dime, doesn't cost us challenges within the general budget," said Sen. Scott Bright,  a Republican from Plattville, who has worked on the proposal for months. 

How the fund would work

Public funds are often held in low-risk accounts. This bill would allow state enterprises to voluntarily invest that money through the new authority to pursue higher returns. A portion of the interest generated would be distributed to counties for child care assistance.

The authority is a separate legal entity so it wouldn’t be subject to state budget cuts.

Bright said that the authority would allow state enterprises — which already exist outside the state budget — to invest in higher-yield accounts and use the returns to fund child care.

“There are several billion dollars sitting out there in enterprise cash funds… if we could get a fraction… we could generate a good chunk of money. There are still safe options out there that provide a better rate of return. Let’s invest that … and share the upside.” 

Marchman said lawmakers must look for innovative ways to fund child care, given limits on the state general fund. 

A state enterprise is created by the government but operates with some independence, like CollegeInvest, the Colorado Transportation Investment Office and the Health Insurance Affordability Enterprise. “SPAs” or special-purpose authorities are legal entities created by statute to serve a specific public goal. The Colorado House Finance Authority, Great Outdoors Colorado and the E470 Public Highway Authority are examples.

Child care advocates say by allowing more parents to work, Colorado’s economy could grow by $2 billion. They argue the bill treats child care as an essential infrastructure.

“It's really the first time we're establishing a state fund for child care… We do have a CCCAP state match, but we've never really put skin in the game,” said Mathangi Subramanian, director of early childhood policy at Colorado Children’s Campaign. “To me, it's sending the message that… the state considers child care a public good… worth investing in.”

She’s excited by the prospect that the bill may help more providers stay open. 

Advocates say access to quality child care helps parents work and improves long-term outcomes like graduation rates, emotional development and future earnings.  

Subramanian said child care is even more critical now. Under a 2025 federal law, the government added or expanded work requirements for public benefits like Medicaid and food assistance. States must implement the requirements by 2027.

“This bill won’t solve the child care crisis overnight, but it will reduce the harm of these freezes for the families who need help the most,” said Christina Walker, senior director of policy at Healthier Colorado. “And at a moment when Colorado’s budget is under serious strain, it does so without tapping the general fund, making this a lifeline that doesn’t come at the expense of other critical priorities.”

The bill has the support of Gov. Jared Polis, who has made child care and the implementation of universal preschool for 4-year-olds a signature issue. In a statement, his office said the state must find creative solutions so families can access child care.

“The governor also recognizes that the state has an opportunity to invest funding in a way that provides higher returns, and is hopeful that this bill can provide a much needed boost to the economy by investing in the child care sector. “

The bill will be heard in the Senate Finance Committee on Thursday.