Child-care costs surge under Biden-era rule and state law, forcing counties to freeze CCCAP

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

Colorado’s child-care system is staring down a financial hit driven by new federal mandates from the Biden administration. The rules were pitched as a way to make child care more affordable nationwide, but they shift the cost burden onto states—leaving Colorado to absorb millions in unfunded requirements at a time when access is already tight. A new analysis from the Common Sense Institute shows what this means for families: fewer available slots, county-level enrollment freezes, and real consequences for Colorado’s workforce.

The change came from the Federal 2024 CCDF Final Rule that rewrites how states run child-care assistance programs. Under the new rule, families can’t be asked to pay more than 7 percent of their income, and states must pay providers based on how many kids are enrolled, not how many days they attend—with the money going out up front instead of once the care has already been provided. 

Supporters framed these changes as stability measures for families and child-care providers. The problem is simple: they dramatically increase the cost of subsidized care, and the federal government didn’t provide any new funding to pay for the shift.

Colorado moved quickly to comply. Lawmakers passed House Bill 24-1223, which locked the state into the federal model by capping copayments, changing how providers are paid, and limiting counties from adding their own eligibility requirements. The bill lined Colorado up with the federal rule but didn’t secure long-term funding to cover the steep cost increases that come with it.

A Cost Surge Fueled by “Actual Cost of Care” Mandates

The financial strain is already showing up across the state. According to the Common Sense Institute, the average cost of serving a child through the Colorado Child Care Assistance Program (CCCAP) is expected to jump from about $6,000 to nearly $18,000 per year. The increase is tied to the federal mandate that states cover the “actual cost of care.” Colorado adopted that standard last fall when it shifted to a cost-based reimbursement system, which immediately raised provider rates and pushed CCCAP toward far higher operating costs.

Colorado depends heavily on federal dollars to run CCCAP—roughly 71% of the program’s funding comes from Washington. But the Biden administration didn’t increase the Child Care and Development Block Grant to match its new mandates, leaving the state to fill the gap.

Common Sense Institute, Figure 2 (CCCAP Total Funding by Source and Number of Children Served, FY2016–17 to FY2025–26)

A Colorado Sun report noted that state analysts estimated the shift to enrollment-based provider payments alone would cost about $33 million per year, with another $9.8 million tied to reduced family copayments—bringing the annual price tag to roughly $42.8 million, even before accounting for the full impact of the federal rule.

Counties are now responding the only way they can: by freezing access to the program. As of October, 24 counties have paused new CCCAP enrollments. The number of children pushed onto waitlists or blocked from entering the program increased from about 4,700 in April to more than 11,000. Without new funding, CSI estimates the number of children could drop by 64% resulting in more than 30,000 statewide to roughly 10,000.

Source: Common Sense Institute, Figure 4 (CCCAP Enrollment Freeze Data)

Families Already Struggling With High Costs Feel the Squeeze First

The change is hitting families with the fewest resources for childcare. Rural areas feel the strain the most. In places like Pueblo County, where there’s less than one licensed child-care seat for every three young children, losing subsidized slots can quickly turn into outright shortages.

There’s also a direct workforce impact. A recent statewide poll reported by Colorado Newsline found that one in three Coloradans had to quit a job, reduce work hours, or turn down employment because they couldn’t secure affordable child care. Among women, that number climbs to 40%.

This lines up with CSI’s projection: if even 20% of parents losing assistance exit the workforce, Colorado stands to lose more than 7,300 jobs and $1.1 billion in economic output over just a few years. A larger reduction would push those losses even higher.

The Policy Was Meant to Expand Access. In Colorado, It’s Shrinking It.

The Biden administration’s rule was intended to expand access to child care. But that isn’t how it’s playing out. Without new federal dollars, counties are cutting back on how many families they can take. And if the state doesn’t fill the gap, the program will keep shrinking, leaving low-income parents with few real choices and providers without the steady funding they were expecting.

The need for child care isn’t what’s at issue. The question is who pays for the system Washington now requires—and Colorado has now codified into law through HB24-1223. Right now, counties are holding the line, families are waiting, and a policy meant to support the workforce is instead pushing people out of it.