Pandemic childcare funding is running out across the US: ‘The whole system is beginning to implode’ | Childcare

OhEarlier this fall, toddlers played at Westwood Academy, a popular daycare in Denver that serves children ages six weeks to five years. The room glowed with natural wood and light as preschoolers sat on colorful circles on the floor to hear a book read aloud. “Where is your circle?” » one of the children asked the teacher.

Westwood is located in west Denver, a low-income part of the city; the median family income in the surrounding area is less than $43,000 a year, according to census data.

It’s precisely because Westwood owner RB Fast serves this population that she and her peers struggle to make the budget math work. America’s child care system, primarily a paid, market-based system, has always suffered from inequities, but those inequities are growing ever wider as federal pandemic funding, a boon for many families, runs out across the country. Combine that with flat federal funding and for-profit child care aimed at wealthy families and, as Fast said, child care “has become a service for high-income families, not low-income families.”

In January, Denver joined many other Colorado counties in freezing enrollment in the state’s child care subsidy program, known as the Colorado Child Care Assistance Program (CCCAP). Given the high percentage of Westwood families using subsidies — Fast said that when it was full, the center had two-thirds of the children receiving CCCAP — the freeze made it impossible for future enrollees to afford a spot. So when a family moves, no one can replace them, despite high demand..

As a result, Westwood has seven vacancies in its 16-seat preschool class. “I have slots available and I could serve families tomorrow,” Fast said, “if there were grants.” Lack of public support can also trigger a vicious cycle: When spots aren’t filled, revenues plummet and the bottom line of the entire program collapses. If the CCCAP freeze continues indefinitely, Westwood’s future is uncertain.

Programs serving low-income families typically struggle to maintain stable operations, often relying on meager public grants available in each state through the federal Child Care and Development Block Grant (CCDBG). Even though these grants are insufficient — and nationally, only one in seven eligible families receive them due to underfunding — they can provide a financial lifeline. During the Covid-19 pandemic, the federal government injected funds into states, and that money was used to stabilize program operations and provide financial assistance to families.

Colorado, for example, awarded more than $250 million in such grants between 2021 and 2023, nearly double its current annual allocation to CCDBG. Researchers at the University of Denver’s Colorado Evaluation and Action Lab found that stabilization grants helped keep programs open while allowing them to increase staff salaries and reduce costs for parents. This was also the case nationally in states from Alabama to Alaska.

When pandemic funding began to dry up in September 2023, the impact predictably fell on low-income families and communities of color, less wealthy or less able to cope with the new shortage. However, the expiration of funds did not happen all at once; many states distributed remaining money for months or even years, and about a dozen used their own dollars to extend stabilization funding.

Now, as the country faces rising costs of living and economic uncertainty, pressures are beginning to build again. No significant increase in CCDBG appears to be on the horizon, as budget bills before Congress keep federal funding largely stable.

Against this backdrop, Philip Fisher, director of the Stanford Center on Early Childhood, noted that the center’s ongoing survey of families has begun recording some of the highest rates of reported hardship since they began tracking them in 2020. “The disproportionate impacts have been present for a long time, and they are exacerbated by current circumstances,” Fisher explained, adding that with hardship increasing even among families with young children in the middle and high income brackets, “it is becoming clear that the whole system begins to implode.”

The mother of five-month-old Denver resident Iyanah French went to apply for CCCAP when her child was born, but was told the freeze meant she couldn’t even be put on a waiting list. She found the experience “upsetting,” adding that “you have to work in this world.” She eventually found a place through the nonprofit supportive housing complex she lives in.

Even among low-income populations, child care shortages can be uneven. Colorado State Representative Lorena Garcia is also the executive director of the Colorado Statewide Parent Coalition, a nonprofit organization. She noted that “English-speaking families may get information a little quicker about what’s going on, so they may start looking for other options. But non-English-speaking families get their information a little later.”

Colorado parents aren’t the only ones feeling pinched by post-pandemic changes. Since August 1, New Jersey has frozen enrollment in its child care assistance program, citing a $30 million budget shortfall. The state also asked families already enrolled to expect an increase in their monthly copay. Other states, including Arizona and Virginia, have not enacted freezes but have grant waiting lists in the thousands. And in many states, even families able to fight for a voucher find themselves facing fewer and fewer options for using them: Child care programs in places like Indiana and North Carolina have begun closing in significant numbers due to tough economic conditions and inadequate support, including the only licensed program on the market. this last state Hatteras Island.

Experts and advocates worry that the Republican budget reconciliation bill passed this summer could worsen these trends. Melissa Boteach, policy director at the nonprofit Zero to Three, explained that the Medicaid and Snap cuts will force state legislatures to use more of scarce public dollars that could otherwise be spent on child care. Low-income families and child care workers – many of whom are low-income themselves, due to the sector’s notoriously low pay – will struggle to bear the personal impact of the cuts. Boteach said, “So on three fronts, even though the words ‘Child Care and Development Block Grant’ were not uttered in the One Big, Beautiful Bill, there will be a lot of [childcare] pain, especially for low-income families and families of color, as well as for families in rural areas.

There is, however, an apparent paradox: despite the myriad challenges facing the child care sector, the overall number of child care programs has increased slightly in recent years. Although there is no complete data for 2025, the nonprofit Child Care Aware of America reports, based on surveys in 40 states, that the number of licensed centers nationwide increased by more than 4,000 between 2022 and 2024. This increase is likely due to the growth of child care programs that serve more affluent clienteles. For example, Heather Tritten, president and CEO of the Colorado Children’s Campaign, a statewide nonprofit, says Colorado has also seen an uptick in the number of licensed slot machines over the past year. Yet Tritten questions when it comes to equitable access: “Are these the right slots? She added, “I think there’s sort of a double economy when it comes to child care: There’s child care available to people who can afford it. And then there’s child care that’s probably not available to people who can less afford it.”

Many experts interviewed for this article believed that the solution to equitable access to child care lies not simply in better funding subsidy programs, but in a transformed system that completely eliminates two-tier distinctions. Ideally, Garcia said, “our child care system would not be a private business model. It would be a public good, and we would take lessons from K-12 so we wouldn’t overpromise and underfund,” and “we would design the system on a needs-based model and not a profit-based model.”

Indeed, there are large differences in how child care and K-12 education are funded in the United States, even though they share many common features in terms of shaping children’s learning, supporting parents’ ability to work, and serving as a community infrastructure. The average funding per child in K-12 is more than $17,000, while it is less than $2,000 for early childhood care and education. The move toward a more comprehensive child care system could thus strengthen social equality in a deeper sense: Tritten, of the Colorado Children’s Campaign, concluded: “It would be great to figure out how to have this conversation in a way that is not just about the haves and the have-nots, but about all children and the needs of all children. Because no matter how much money your parents have, you still have the same needs in terms of what you need from birth to the first day of kindergarten to make sure you’re ready for school.”

This article was produced in partnership with New America’s Better Life Lab