Child-Care Providers Sound Alarm as Pandemic-Era Aid Expires

Pandemic-era federal aid for America's child-care system has expired, leaving states and families scrambling to cover rising costs and prevent closures.

The loss of billions in stabilization grants marks the most significant funding shift in early-childhood care since the pandemic, with consequences rippling across the workforce and economy.

The expiration of COVID-19 stabilization funds this fall has pushed many child-care centers, especially those serving low-income families, to the brink. The temporary program, launched in 2021, distributed about $24 billion nationwide to keep centers open and workers employed during lockdowns and labor shortages.

With that federal lifeline gone, providers warn of reduced access and higher tuition for parents already facing inflation.

Analysts say the lapse exposes deeper structural weaknesses in the child-care sector due to the reliance on temporary relief.

Federal subsidies, such as the Child Care and Development Block Grant, reach only a fraction of eligible families, roughly one in seven, leaving states to bridge the gap. Many states that used temporary pandemic funds to expand eligibility or stabilize wages must now scale back.

In Colorado, the state's Child Care Assistance Program (CCCAP) has frozen new enrollments due to budget shortfalls. The pause means that even when centers have open seats, families who rely on public subsidies can't use them.

"We have the space, but not the support," said RB Fast, who runs Westwood Academy in Denver. Her preschool classroom of 16 has seven empty spots. "I have slots available, and I could serve families tomorrow," she said, if federal subsidies were restored.

Fast added that without assistance, "child care has become a service for high-income families, not low-income families." Her comments echo concerns about the nationwide reality that, as costs rise, access will increasingly depend on income rather than need.

However, to receive child-care assistance through the grant, families have always needed to meet income, work, education, and residency criteria, and have a child under a certain age.

Although COVID-19-specific funding has ended, families can still apply for programs like the Child Care and Development Fund (CCDF) if they need care due to work, school or job training.

Conservative policy experts argue that the crisis highlights the risks of temporary federal interventions that inflate costs without long-term sustainability. They argue that child-care reform should focus on deregulation, parental choice, and targeted tax relief rather than open-ended subsidies.

Analysts at the Heritage Foundation, for instance, have proposed using tax credits and flexible spending accounts to help parents pay for care without maintaining temporary aid levels.

Still, state officials across party lines acknowledge that a stable child-care system is critical for economic growth.

Some states are exploring permanent funding models or partnerships with employers to sustain operations. For now, however, the transition away from pandemic-era support has left providers and families in limbo, underscoring the broader challenge of replacing temporary emergency aid with lasting solutions.

Heritage Foundation, for instance, have proposed using tax credits and flexible spending accounts to help parents pay for care without maintaining temporary aid levels.

Still, state officials across party lines acknowledge that a stable child-care system is critical for economic growth.