CCCAP Update

Wow!  There is a LOT going on right now.

1) The federal government dropped the proposed new rule set for CCDF.  The rules propose 9 pages of changes to the federal regulations.  Now THAT sets the stage for de-regulation!  The rule rescinsion had to happen because the previous administration attempted to build a field of dreams (everything we want in a child care system) without funding.  This does not stop states from funding these things when they are able.  Here are a few of the critical things that are being proposed by the federal rules:

• Repeal the requirement to cap family co-pays at 7%
• Repeal the mandate to use some grants/contract for direct services to infants and toddlers, children with disabilities, and children in underserved geographic areas.  Federal funding to support these populations will instead be available through certificates or vouches for families to access the providers of their choosing, including faith-based providers.
• Repeal the mandate to pay in advance of care  
• Repeal the mandate to pay based on enrollment only 6 states have implemented the requirement to date.  Many have additional modifications needed, like the state adding a "stop paying me for this child" button added to their portal.  Otherwise, they tell the state repeatedly to stop payments to no avail and then 3 months later are receiving demands for overpayments for thousands of dollars.

You can read the federal rule proposal and submit public comment here:  https://www.federalregister.gov/documents/2026/01/05/2025-24272/restoring-flexibility-in-the-child-care-and-development-fund-ccdf#h-35 Under public inspection is a pdf that you can review in plain language that explains the proposal in greater detail.  We will provide you with details for public comment on this in the near future.  That is due by the first part of February.

2)  DEVELOPING --Within the past 24 hours the media started circulating that the federal government was going to be withholding funding for five states, including Colorado.  That is because historically we've been declared a "Sanctuary State" and allowed the usage of federal funds in some circumstances to be utilized to support people who are not U.S. Citizens.  We were told by CDEC last week that we got our quarterly appropriation.  What we don't know is if the department will have access to the weekly spenddown accessing those funds.  If they must meet additional requirements to access those funds, we are uncertain whether authorized state general funds can be utilized in the mean time to sustain the program while the department meets with the federal government to alleviate their concerns.   We have a meeting with CDEC department heads tomorrow so we will find out more about what they learn over the next 24 hours.  We will put that into our regular ECEA Child Care Update in our Members Minute.

3) The meeting yesterday went really well.  It was nice to have so many people in the room together thinking outside of the box for industry solutions.  We identified the obstacles and possible solutions.

Obstacles

1) Cost of Quality (Audit to increase reimbursements).  This is more of a cost driver because it also had the additional cost of changing from a market rate survey to the alternate rate methodology.  Already between the model change and audit, CO CCCAP has increased it's cost of care by $13.6M. (Puts us at about 75% of what other parents pay for care instead of 50%). October of 2026 if CDEC does not receive a waiver for the final incremental increase the total cost for the cost of quality implementation in CO is $20.4M every year above what the program previously cost.

2) Federal Rule would have cost us $70 M more a year.  Now with the waiver and the proposed rule set it's likely to be closer to $60M.

3) HB24-1223 - Requires a parent co-pay cap at 7%.  This costs the state an extra $9.85 M a year for CCCAP.

4) Stimulus roll off

5) CCDF Fund Balance (I'm still trying to figure this one out)

6) County Level flexible policies that they have descretion on.  No price tag for these policies was outlined.  

Solutions

Thirteen options were raised.  There will be legislative conversations on these to see which are feasible based off of statute, etc.  We will continue the conversation to determine what our new target rate is for CCCAP participants.  Historically only 11% of eligible families participate.  We need to define what percentage of eligible families we can support.  That would give us a target to hit as we figure out the fiscal impacts of various policies solutions.

We will keep you posted as these conversations continue!

Just a note:  The federal Senate budget is the option that would help the CO industry most as it would increase funding for Head Start by $12.4B and CCCAP/CCDF by $8.8B.

Want to talk about it?  Join our meet up next Wednesday.  We will spend the first 30 minutes showing you CareerPlug and then will talk about CCCAP and any other questions you have.  You can find the meet up in our community pages on the members only site.