A day after the Trump administration announced an unprecedented freeze on federal funds, the shocked child care providers and advocates for the poor in Colorado worked around the clock to refute the unsubstantiated allegations of fraud in the program.
The providers and advocates said that if the funds stay frozen, it will have a devastating impact on not only thousands of Colorado families but also the state's economy.
On Tuesday night, the U.S. Department of Health and Human Services sent letters to Gov. Jared Polis, announcing that it was freezing funding for three federal programs: Child Care and Development Fund, Temporary Assistance for Needy Families, and Social Services Block Grant. In addition to Colorado, the freeze is happening in California, Illinois, Minnesota and New York as well.
All three programs support low-income families’ access to job training, financial support and child care on the road to self-sufficiency.
The federal government said a freeze on certain child care and family assistance funds in Colorado will stay in place until a review is conducted and Colorado is found to be complying with federal requirements.
But the freeze hits Colorado, where it is already hurting: child care. If it remains, Colorado would be short $91 million for the remainder of this fiscal year for the child care funds alone.
The state has a limited buffer of a few weeks and expects federal funds for child care to be exhausted by Jan. 31. That would impact 27,000 children from 18,000 families and a range of consultants, specialists and contractors hired to train and improve child care quality.
Other federally funded programs’ defunding will impact 120 state workers by Feb. 15.
“These actions by the Trump administration will hurt vulnerable Coloradans across every part of this state,” Polis said in a statement. “This important help for lower-income families is administered by the counties, and the sweeping data demands this request would place on counties - especially on short and impossible timelines - are unrealistic and risk disrupting services.”
Uncertainty
The announcement has sent waves of fear through the early child care provider community and organizations that help families become self-sufficient.
“It’s unprecedented, and it’s also not super clear how long this freeze will be in place,” said Mathangi Subramanian, director of early childhood policy at the Colorado Children’s Campaign.
She warns the consequences extend beyond child care — impacting workforce participation, family stability, child safety, and the broader state economy.
“Every year Colorado loses over $3 billion a year in unrealized income because folks don’t have child care, so the funding freezes are not just going to affect these families directly; it’s also going to affect our entire economy.”
One of the federal funding sources provides the bulk of funding for the Colorado Child Care Assistance Program, which provides subsidies for low-income working families. About 2,500 providers in Colorado accept that assistance — more than half of all providers.
If funds stopped at the end of the month, most providers say they couldn’t afford to keep their doors open. Even families who do not receive that child care assistance, commonly called CCCAP, could be affected if providers close, especially in rural areas where 51 percent of Colorado is considered a child care desert.
Many providers in low-income neighborhoods receive most of their revenue through the federal CCCAP program. If federal funds stop, counties can’t pay private child care centers. Most centers wouldn’t be able to stay open for more than 30 days without the reimbursements.
Krystal Gastineau, the director and owner of Cribs 2 Crayons Child Care in Aurora, serves 45 children, of whom 24 receive CCCAP subsidies. She doubts she could survive without her CCCAP families.
“We wouldn’t be able to pay our rent,” she said. “It’s the fear of the unknown that is the worst part right now.”
She said the consequences would be dire for families.
“One of two options: the parent loses their job, and the parent stays at home with their child, or these children are sent to unlicensed programs … then their health and safety is impacted.”
Polis said Colorado is committed to supporting families.
“No child should go without food, stability, or opportunity because of punitive federal action, and we are exploring all options to make sure Colorado children and families are supported.”
How much money would be frozen
Colorado’s Department of Early Childhood receives about $138 million a year in Child Care and Development Fund money to help low-income Colorado parents work, pursue education or participate in job training while their children are cared for. The amount represents one-fifth of the department’s entire funding.
Federal government alleges fraud
A letter to Polis stated that HHS’s Administration for Children and Families is “concerned by the potential for extensive and systemic fraud in Colorado Child Care and Development Fund services that rely on federal funding.”
A freeze on funding in Minnesota was triggered in late December 2025 by viral allegations of fraud at Somali-run child care centers in Minneapolis.
The Administration for Children and Families said it has reason to believe Colorado is also “illicitly providing illegal aliens with CCDF benefits intended for American citizens and lawful permanent residents.”
“Families who rely on child care and family assistance programs deserve confidence that these resources are used lawfully and for their intended purpose,” said Deputy HHS Secretary Jim O’Neill. “This action reflects our commitment to program integrity, fiscal responsibility, and compliance with federal requirements.”
The department is placing Colorado on a “temporarily restricted drawdown” of funds until a review is complete. It’s asking the state to implement additional fiscal accountability requirements.
The department will require the five states to submit a justification and receipt documentation before any federal payment is released. It has also launched a dedicated fraud reporting portal at childcare.gov to allow parents, providers and community members to report suspected fraud and program misuse.
Colorado’s child care system was already in a crisis
CCCAP serves only about 11 percent of the families who are actually eligible under federal rules. In addition, before the freeze, Colorado already had a waitlist for CCCAP funding that was 13,000 kids long. Nineteen counties have an enrollment freeze.
Gastineau of Cribs 2 Crayons Child Care was hurt by that freeze. When her latest group of children moved up to kindergarten, she could not fill the slots because of the CCCAP freeze. She has eight children enrolled in that class, when her licensed capacity is 24.
Subramanian said those freezes are due to COVID-19-era funding drying up, chronic underfunding of child care, and an audit that found the state was underpaying child care providers. The state had to raise reimbursement rates, but it reduced the number of families the system could afford. Providers already operate on incredibly thin margins.
“This (federal funding) freeze is really kicking us while we’re down,” she said.
Push back on fraud allegations
Advocates and state officials say Colorado has robust fiscal accountability systems and internal controls to prevent fraud that exceed federal minimum standards. The system requires daily, jointly confirmed attendance tracking before payments. Monthly, risk-based monitoring at both county and state levels identifies and addresses issues early, according to state officials. Families also have to verify their income, activity and residency.
Dawn Alexander, executive director of the Early Childhood Education Association of Colorado, said Colorado’s safeguards are much stronger than many other states.
“We have every confidence that the department has all of the qualifiers that they need to dissuade any concerns with the feds about the CCCAP program and how it’s operating,” she said. “The big unknown are the politics that are involved… when you mix anger with politics, it can have a devastating impact on people.”
Some providers pushed back against the allegation that there is fraud in the system. Attendance is tracked through an “ATS system” that requires parents to sign their child in and out with a PIN. Providers can enter attendance in the system manually, but it must then be verified by a parent within nine days, or the provider is not paid for those days, said Shirley Kelley, who works at a school district program.
She said to be eligible for CCCAP, children must be citizens or have legal status and that the application requires a birth certificate or other identification.
“The truth is, this has nothing to do with fraud and, as it applies to Colorado, everything to do with Tina Peters and access to voter data ... Among other things,” she said. “This will hurt providers and will hurt vulnerable children and families.”
The Department of Early Childhood and Polis said they will work closely with child care providers and families to navigate the evolving situation.
| This story is part of a collection tracking the impacts of President Donald Trump’s second administration on the lives of everyday Coloradans. Since taking office, Trump has overhauled nearly every aspect of the federal government; journalists from CPR News, KRCC and Denverite are staying on top of what that means for you. Read more here. |
