How Colorado will boost child care with latest round of federal COVID aid

Two preschoolers paint with brushes in purple and turquoise on paper at a desk.
Colorado officials outlined their plans last week for spending the latest round of federal COVID aid earmarked for early childhood. (Emily Elconin for Chalkbeat)

The latest round of federal COVID relief money will begin making its way to Colorado’s 4,700 licensed child care providers this fall, with a sizable chunk earmarked to reduce parent tuition costs.

The funding for early childhood — nearly $500 million from the federal COVID aid package known as the American Rescue Plan — represents a massive one-time infusion into a low-wage, high-turnover industry that’s increasingly recognized as essential for working parents, employers, and the economy. 

The money comes as child care businesses work to recover from the turmoil of the pandemic and state leaders prepare for two ambitious initiatives: the creation of a new stand-alone early childhood department by next summer and the launch of free universal preschool in 2023.

Grace Eckel, senior policy adviser for the state’s Office of Early Childhood, said of the federal stimulus money, “This is a truly historic level of investment in early childhood.” 

She said the annual budget for Colorado’s Office of Early Childhood is about $200 million, meaning the American Rescue Plan funding is more than double what the office typically spends on early childhood efforts in a year. 

Two previous federal COVID relief packages — one approved just after the pandemic hit and one nine months later — plus a special state appropriation have also helped Colorado’s early childhood industry stay afloat during the pandemic. Those three efforts earmarked just over $200 million to early childhood initiatives.

State officials will spend the new $472 million in federal early childhood money in two stages. They outlined their plans for the first phase — $275 million to be released over the next nine months — at an online town hall meeting Thursday. They’ve not yet announced how they’ll spend the remaining $197 million, but Eckel said it will go out starting in late spring. 

Here are four themes from Thursday’s meeting

Cash for providers, discounts for parents

Most of the $275 million set to be released in the first phase — $222 million — will go directly to child care providers in the form of child care stabilization grants. The non-competitive grants will be available to all licensed providers as well as some unlicensed providers. For licensed providers, grants will range from $8,600 to $128,000, depending on the provider’s size and state quality rating. 

Providers will be required to spend about half of their total grant to reduce tuition costs for parents. Statewide, that means nearly $102 million in tuition reduction funding, with families expected to save an average of $450 per child over nine months, according to state estimates.

The application window for stabilization grants will open in mid-November. 

Bonuses to create more slots and provide hard-to-find care

One-time bonuses to encourage child care providers to open, expand, or raise their quality are a key part of the state’s spending strategy. For example, child care stabilization grants will include bonuses for providers who serve babies and toddlers or children with special needs, or offer non-traditional hours. Licensed care for babies and toddlers is the most expensive to provide, and parents often face long waitlists or a lack of high-quality options.  

The state will also offer bonuses of up to $4,000 to providers who boost their ratings on the state’s five-level rating system, Colorado Shines. Providers who serve babies and toddlers will get a bigger bonus than those who don’t. Finally, the state will give $5,000 bonuses to 480 unlicensed child care providers who get licensed by the state, a process that ensures they meet basic health and safety standards. 

Grants to keep and recruit early childhood educators

American Rescue Plan money, combined with earlier rounds of state and federal aid, will fund efforts to beef up the early childhood workforce. These include a $50 million sustainability grant program offering licensed providers $2,100 to $31,500 for employee pay, benefits or training, or so providers can hire additional staff. 

The application for these competitive grants will open in mid-November. Recruiting and retaining early childhood staff is a chronic problem in the field, especially as the pandemic ramped up job stress and retail businesses boosted wages to attract workers. 

Starting this fall and continuing for two years, the new federal money will also allow prospective early childhood teachers to take two introductory courses for free at the state’s community colleges and 4-year universities. In addition, the federal dollars will fund paid apprenticeships for prospective early childhood teachers and provide one-time payments to experienced staff who agree to mentor new teachers. 

Money for air quality and other health efforts

State officials plan to give $3 million to providers so they can replace heating and cooling systems — a response both to indoor ventilation problems highlighted by COVID and the increasing prevalence of wildfire smoke in Colorado. The application for these competitive grants will open in mid-December. 

The American Rescue Plan will also send about $6 million to Colorado child care providers to fund health and mental health programs. The application for these competitive grants will open in mid-December. The state has allocated an additional $2 million for provider training focused on children’s social and emotional skills and behavior. The state’s regional early childhood councils or other intermediaries will provide these trainings.

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