The child care industry is in crisis, with programs closing and families losing access to reliable care. Overregulation, while well-intentioned, is driving up costs and pushing providers out of business. To ensure the survival of child care programs and maintain child safety, some degree of deregulation is urgently needed.
The Burden of Over-Regulation
Child care centers are among the most heavily regulated industries in the United States. While regulations aimed at promoting safety and quality care are crucial, many of these rules are outdated, unnecessarily complex, and disproportionately affect small businesses. Child care providers are required to comply with a maze of state, local, and federal requirements, ranging from staff-to-child ratios to detailed physical space standards. Many of these requirements, although well-intentioned, create significant barriers for programs, especially those serving lower-income communities.
In an environment where child care providers are already operating on thin margins — facing challenges such as rising wages, property taxes, and insurance costs — the added administrative burden is often too much to bear. Many providers are forced to close their doors or operate at reduced capacity, ultimately leaving fewer options for families in need of care. For-profit and nonprofit providers alike find themselves struggling to stay afloat, despite their best efforts to ensure a safe, nurturing environment for children. This is especially difficult when they find that they are now competing with publicly funded school districts who are enrolling 3 year olds as loss leaders to secure UPK funding from the family the following year.
High-quality child care requires elements like lower staff-to-child ratios, well-compensated and trained educators, developmentally appropriate curricula, safe environments, and family engagement—all of which drive up operational expenses per child. For example, smaller ratios mean more staff per group, increasing payroll, while competitive wages and benefits are needed to retain skilled workers, adding to labor costs that often account for 60-80% of a program's budget. As shown in a cost analysis by the Hunt Institute (referencing Table IV on true cost modeling), the true cost of care at higher quality standards is significantly above lower-quality benchmarks and state averages for infant care, directly inflating per-child expenses. Their chart on page 24, if you do the math shows the cost average cost increase for high quality:
Infant (0-12 months) - $7,853
Toddler (1 year old) - $8,498
Toddler (2 year old) - $8,498
3 year old - $3,408
4 year old - $2,260
TOTAL fiscal impact for families over a 5 year range of services: $30,517 (if averaged is $6,103 more a year per child in cost for care).
This undermines affordability, as providers must either raise tuition (pricing out families) or absorb losses, leading to financial strain, closures, or reduced quality—evident in page 24's Table III, where child care rivals housing as a core household expense, ranging from $1,009 to $2,261 monthly for a two-child family across U.S. counties. Without sufficient public funding to bridge this gap these quality improvements paradoxically make care less accessible. This is how you break an industry.
The Case for Child Safety Through Flexibility
Deregulation does not mean compromising child safety.
Rather, it means prioritizing child safety through a more flexible, common-sense approach. Regulations that place unnecessary restrictions on child care providers — such as overly rigid space requirements or excessive paperwork — take valuable time and resources away from the core mission of child care programs: ensuring the well-being of the children in their care.
The safety of children is not dependent solely on the number of square feet per child or mandating a decrease in staff-to-child ratios. In Colorado, for example, research was used to support a reduction in staff-to-child ratios for the UPK program, despite the study explicitly stating it could not be used to justify changes to ratio requirements. Despite significant public opposition and an absence of evidence showing current ratios compromise child safety, the Colorado Department of Early Childhood (CDEC) is proceeding with plans to lower Universal Pre-K (UPK) ratios to 1:11 by July 2026 and 1:10 by July 2027. Flexibility in regulations would allow programs to focus on what truly matters: creating safe, nurturing environments where children can learn, grow, and thrive.
Protecting the Future of the Industry
Without responsible deregulation, the child care industry risks collapse. Rising insurance and staffing costs, driven by regulatory compliance, threaten financial viability. April data shows that currently 2 out of 3 community based programs in Colorado are operating below profitable levels. A Business cannot sustain when they cannot operate at a profitable level because they are not positioned then to replace failing equipment, or other items as needed. They are burning through any reserves that they have just to sustain their business. If programs continue to close, families will lose access to quality care, and providers may cut corners, potentially compromising safety. Sensible deregulation can ensure programs remain open and financially sustainable while maintaining high safety standards.
A Call to Action
Responsible deregulation in the child care industry isn’t just an economic necessity — it’s a matter of child safety and future stability. Advocates, policymakers, and families must work together to rethink our current regulatory framework, finding a balance between safety and flexibility that allows child care providers to operate successfully. By supporting sensible deregulation, we ensure that child care programs remain open, that children are cared for in safe, loving environments, and that workers are paid what they deserve and can stabilize insurance costs for programs.
ECEA Members ONLY Content This Week
- Did you know....? Revisiting basic tax information for businesses.
- Check you computer systems to make sure this won't negatively affect you.
- UPK providers - If you haven't read this you need to!
- New Workforce Data Dashboard Operational
- News
- New member resources you can download from the ECEA Store for free: CO Early Childhood Data Landscape 2025 (under Data), Early Intervention RFI presentation
- Advocacy in Action - What to expect in next weeks update
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