A $37.8 Million Problem:
How State Preschool Policy Is Displacing Colorado's Private Child Care
Colorado's Universal Preschool program promised a "mixed delivery" model. In practice, a fixed $37.8 million pool reserved exclusively for school districts is systematically crowding out the neighborhood child care centers that families depend on β and it's accelerating.
How Did We Get Here?
Understanding the funding architecture that created a structurally unequal market.
When Colorado launched Universal Preschool (UPK) in 2023, it inherited a legacy funding pool from the old Colorado Preschool Program (CPP). Rather than transitioning all preschool funding into a unified mixed-delivery stream, the state carved out $37.8 million β equal to CPP's 2022-23 spending levels β and reserved it permanently and exclusively for school districts.
This was justified as a "hold harmless" provision to protect districts during the transition. But instead of a temporary bridge, it became a permanent structural advantage. Districts nearly doubled their 3-year-old enrollment under UPK while retaining the same guaranteed funding floor β and HB26-1259 recently moved to codify this district-exclusive control into statute.
Senator Bright stopped the worst of that codification. Now the next step is making this funding accessible to qualified community-based providers through statute β not just at district discretion.
HB22-1295: UPK Enacted
Colorado creates Universal Preschool with a "mixed delivery" model. 4-year-olds funded through a statewide portal open to all licensed providers. A separate $37.8M pool from CPP retained exclusively for school districts to administer 3-year-old programming.
UPK Launches β Districts Double Down
School districts enroll 4-year-olds at massive scale through UPK while retaining their full CPP-era 3-year-old funding. Private providers gain 4-year-old access but are cut out of the 3-year-old funding stream entirely unless districts choose to subcontract with them.
CDEC Issues District-Only Guidance; HB26-1259 Attempts Codification
CDEC publishes a detailed 3-year-old preschool guidance document exclusively for school districts β cementing them as the sole administrative gateway. HB26-1259 attempts to write this district-only process into permanent statute. Senator Bright stops the codification. The fight to open this funding to mixed delivery now moves to statute.
The Window Is Open β But Won't Stay Open Long
Districts are expanding into infant/toddler private-pay care to replace lost K-12 revenue. Every month this funding stays district-exclusive, more community-based providers lose market share they cannot recover. The legislature must act to require direct mixed-delivery access.
"Neighborhood child care centers owned and operated by Colorado business owners who love children are being displaced by school districts. Parents better get used to dropping their car seats off at the local school district β it's happening faster than we ever anticipated."β ECEA Advocacy, May 2026
6 Ways This Funding Structure Undermines Private Child Care
This isn't a philosophical debate about public vs. private. These are concrete, documented mechanisms pulling revenue and families out of Colorado's private child care market.
A $37.8 Million Walled Garden β Private Providers Cannot Enter Directly
The 3-year-old historical allocation is exclusive to school districts by statute. A private child care center β no matter how high-quality, no matter how many qualifying families it serves β cannot receive one dollar of this funding directly. Their only path is as a subcontractor on district terms, at district discretion.
Districts Control the Gateway and Set Their Own Rules β With No Oversight
School districts have unilateral authority to decide which qualifying factors to prioritize, what hour rates to apply, whether to "double slot" children, and β critically β whether to contract with community providers at all. There is no requirement to share with private centers. Per CDEC's own Q&A: when demand exceeds allocation, there is no unbiased decision-making framework. The answer is simply "No."
Families Are Removed From the Private Market Before They Know It Exists
The system routes qualifying 3-year-old families to school districts first. Families are enrolled, programs are selected, and routines are established β all before a family learns that a licensed private center in their neighborhood might have served their child, often with more hours, more flexible scheduling, and sibling continuity they already value.
Districts Doubled Enrollment While Keeping a Funding Floor Sized for Half Their Scale
The $37.8M was calculated at CPP 2022-23 spending levels β when districts served far fewer 3-year-olds. Under UPK, districts have nearly doubled that enrollment while keeping the same protected revenue floor. The historical allocation doesn't shrink as districts grow; private providers absorb the market loss while districts capture the gains.
Districts Are Using Subsidized Infrastructure to Invade the Infant/Toddler Market
With K-12 enrollment down more than 10,000 students this year, districts have empty buildings, existing staff, and a revenue shortfall. Their response: expand into infant and toddler care β historically the exclusive territory of private providers. Two districts (DPS and CaΓ±on City) hold permanent statutory waivers to use 3-year-old preschool funds for children under three.
The Administrative Architecture Was Designed for Districts β Private Providers Are an Afterthought
CDEC's "3-Year-Old Preschool Program Guidance" is titled explicitly "for School Districts." It is 16 pages of district-centric reporting systems, Metrix Enroll portals, attestation processes, and internal controls. Community-based providers appear only as a potential subcontracting option. HB26-1259 sought to cement this district-only framework in statute permanently.
What Needs to Change
The legislative remedy is clear, achievable, and consistent with the original promise of a "mixed delivery" Universal Preschool program.
Direct Access in Statute
Colorado statute must require that qualified community-based providers have a direct pathway to 3-year-old UPK funding β not filtered through district subcontracting relationships. The same families, the same qualifying factors, the same children deserve access to all licensed providers who can serve them.
End the District-Only Administration Requirement
The language requiring that 3-year-old services "must be effectuated by a school district or charter school" must be replaced with language requiring administration through the same mixed-delivery system used for 4-year-olds. Districts can still participate β they simply can't be the only gateway.
Family Choice Must Be Restored
Qualifying families should be able to apply for 3-year-old funding through the UPK portal and choose any licensed provider β district or private β just as they do for 4-year-olds. Right now, non-IEP 3-year-olds are explicitly excluded from the portal. That exclusion should be removed.
Accountability for the $37.8M
Statute should require transparent reporting on what share of 3-year-old historical allocation funds flow to community-based providers versus district programs. Families, legislators, and the public deserve to know whether this money is truly serving mixed-delivery or functioning as a district subsidy.
Your Center Is Not Alone
Private child care providers across Colorado are feeling this every day. ECEA is fighting to change it β with data, with relationships, and with your voice at the table.
From an ECEA member: "We're preparing to write an appeal to families to encourage them to contact their reps about how this impacts them. ECEA has inspired us to not stay quiet. We're trying to paint the picture that childcare centers strive for qualityβ¦ but within the regulatory, tax, insurance, and legislative environment β including UPK and competition with the school district β a community-wide problem is placed on the shoulders of individual centers to figure out how to stay in operation."
β ECEA Member Provider
ECEA attends the policy meetings. We talk to legislators and administrators every week. We show up with data so you don't have to show up with complaints. But your voice β as a business owner, as someone who knows these families personally, as a Colorado taxpayer β is the most powerful thing in this conversation. Join us.
Every Colorado Child Deserves a Choice
of High-Quality Care
The fix is within reach. Here's how you can help move it forward.
Join or renew your ECEA membership to fuel ongoing advocacy and legislative representation.
Share this page with fellow providers, parents, and community leaders who need to understand what's at stake.
Contact your state legislators and tell them: Colorado's private child care industry deserves direct, equal access to 3-year-old UPK funding.
