Representative Emily Sirota leaned into the microphone and said what several of her colleagues had been circling around for three hours.
"This is kind of a weak presentation, quite frankly," she told the Colorado Department of Early Childhood's finance chief. "And you haven't really made the case and made your points very clear."
It was a remarkable moment — a committee chair publicly dressing down a department that had just spent most of a January morning presenting charts that, as Representative Taggart had already established, showed variable costs as fixed costs, projected declining caseloads that couldn't be reconciled with the concept of continuous eligibility, and a five-year financial plan that, at its core, amounted to: wait for families to leave the program on their own.
The January 13th meeting of the Colorado Joint Budget Committee was supposed to be a routine budget hearing. It turned into something closer to an intervention.
A Program Serving 5 to 6% of Children by 2030 — and Calling It Sustainable
The Colorado Child Care Assistance Program — CCAP — is the state's primary subsidy helping low-income working families afford child care for children from birth through age 13, and up to 18 for those with special needs. It is state-supervised and county-administered, drawing roughly 22% of its funding from the federal Child Care and Development Fund, known as CCDF.
Last state fiscal year, CCAP served just over 27,000 children through approximately 2,300 providers. That sounds substantial until you hear the next number: that figure represents about 11% of the fiscally eligible population in Colorado. The program has never served the majority of families who qualify for it. It is, by design, a partial solution.
But what the Joint Budget Committee learned on January 13th is that the partial solution is getting much smaller. Of Colorado's 64 counties, 19 are on a full freeze — meaning no new families are being admitted, period — and five more are on a waitlist. Nearly 13,000 children from almost 9,000 families are on freeze or waitlist lists as of the hearing date.
Director Sarah Dawson of the CCAP division added a detail that landed like a punch: of those nearly 13,000 children, exactly six are on an actual waitlist. All the others are frozen. "That's why no one's rolling off," she said. "They're frozen."
The Plan Was Attrition. Lawmakers Called It Unacceptable.
Senator Barbara Kirkmeyer had come prepared. Looking at the department's five-year financial projection — Slide 8, the document everyone kept returning to — she read aloud what the numbers actually said: the department's plan projects the CCAP caseload dropping from roughly 21,000 children served in FY25-26 all the way down to approximately 14,500 by FY29-30, by simply not letting new families in as existing ones age out or become ineligible.
"What does that mean?" Kirkmeyer asked. "We're going to serve 5 to 6% of the population. That is not a financial plan that is sustainable."
The mechanism driving the decline is attrition. Under a freeze, a county stops serving new families entirely. As families naturally leave the program — their income rises above 85% of the state median, their child ages out, a parent stops working — the caseload shrinks. Approximately 3,500 children have rolled off the program this way since the freeze began. No new families take their place.
Representative Taggart seized on the internal contradiction. "If there's attrition, there should be a one-to-one relationship that another child can take that place," he said. "I don't understand going from 27 to 21. What's the purpose of having wait lists if we don't allow those folks to move up?"
Director Dawson explained that the vast majority of counties — 19 of them — are on a freeze, not a waitlist, which is why attrition produces decline rather than replacement. A waitlist slows enrollment. A freeze stops it entirely.
$51 Million Sitting There. Families Locked Out.
Representative Kyle Brown had been quiet through much of the early sparring. Then he made the committee's frustration concrete.
"I'm not entirely convinced, based on your responses to us, that you have any sort of plan to end the CCAP freeze in my county," he said. "And yet we have this roll-forward balance of $51 million in the current fiscal year and $34 million in the next year. And the wait list and freeze impacts are far less than that."
The department's CFO, Jeannie Stefanik, explained that CCDF is a reimbursement-based program — the state spends first, then draws down federal dollars — and that year-over-year appropriations exceed the federal grant award, requiring the fund balance to roll forward for long-term program sustainability. The deficit, she said, wouldn't actually commence until FY29-30.
Brown wasn't satisfied. "I think you have a sustainability problem even with your financial projection, and I'm not sure you have much of a plan to make sure that these programs are ever fully funded."
Senator Kirkmeyer pressed further, asking why the department had never simply told the JBC what it would actually cost to serve 9 to 11% of eligible children — its own historical service level — with adequate funding. "You're not letting the JBC know, or anyone, quite frankly, know how much general fund money would be needed," she said.
Dr. Lisa Roy, the department's executive director, acknowledged the department does have a sense of what full funding would require but said it tries to "live within our means, knowing that the state is struggling to make decisions."
The CFO eventually provided a number: a $105 million one-time infusion would be needed to serve all children currently on the waitlist and freeze. Vice Chair Senator Jeff Bridges — himself the father of an almost-two-year-old — suggested the real number is higher. "My guess is that the number of folks who apply for this will go up" if the freeze ends, he said, estimating the true cost of opening the program to all eligible comers could be "at least 125, maybe 150, maybe even 200 million."
The Charts Were Wrong. The Director Agreed.
Before the committee could even get to the dollar figures, Representative Taggart had spotted a fundamental problem with the presentation itself.
The department's financial charts showed certain costs as flat, fixed lines across years — but the underlying costs were, in fact, variable, tied to caseload numbers that were themselves changing. Taggart called it out directly.
"These financial charts have to be accurate — they just have to be accurate," he said, "and variable cost is a variable cost and it needs to show as a variable cost and not as a fixed cost. Our financial picture is not at all complete and with all due respect it's not accurate either."
Director Dawson acknowledged it: "You're absolutely right. All of these costs are variable."
The Chair asked the department to provide revised charts before the next meeting.
A Federal Funding Bomb, Ticking Since January 6th
Layered on top of all of this was a crisis that hadn't existed a week earlier.
On January 6th, the department received official notification that CCDF federal funding would be restricted by the federal Administration for Children and Families (ACF). On January 9th, a federal court granted a 14-day temporary restraining order blocking the freeze. But ACF had also made separate, nationwide changes to the federal payment management system requiring additional documentation for every drawdown request — changes distinct from the TRO.
The department's CFO put the exposure in stark terms: if ACF does not reimburse Colorado for remaining CCDF expenses, the shortfall would be approximately $91 million over the remainder of the fiscal year, with program impacts expected as soon as January 30th. Up to 120 CDEC staff would be directly impacted. CCAP quality activities, licensing, and department administration would all be affected.
As of January 12th — the day before the hearing — the department had received one disbursement under the new documentation requirements. Senator Bright asked whether a meeting was scheduled with federal partners to resolve the situation. Deputy Executive Director Stephanie Beasley said no meeting was scheduled as of the hearing date, but the department was seeking clarity with every draw request submitted.
Senator Kirkmeyer, who had spent years watching federal funding cycles, was blunt: "It's been wildly unpredictable to say not only what the federal government is going to do, but what the state rulemaking is going to be."
A Law That May Need to Be Unmade
In 2024, the Colorado legislature passed HB 24-1223, mirroring a sweeping federal CCDF rule package that included new family copayment requirements, prospective pay for providers, enrollment-based pay, and slot contracts. The intent was to align state law with federal requirements and improve stability for providers and families.
Then the federal government, in the first week of January 2026, published a proposed rule package that would rescind many of those same 2024 requirements — including the family copayment provision. Colorado had put those requirements in statute. Now the department was asking the legislature to take them back out.
But the department couldn't fully explain what it was asking for. The Chair had to put it on the record explicitly: "I think it would be helpful going forward to be very clear about what it is you are asking the General Assembly to do."
Director Dawson clarified that the department is not seeking a full repeal — it wants the flexibility to respond to federal changes through rulemaking rather than statute. Dr. Roy pointed out that the legislature had already given the executive director authority to do rulemaking. Vice Chair Bridges cut to the chase: "We could just take this out of statute and then just allow you to say this is what the federal requirements are... And then you would have the flexibility to do that."
Senator Kirkmeyer asked the pointed follow-up: "Then why did we pass the legislation?" Dr. Roy said she could not explain all the reasons.
One provision — the copayment requirement — is embedded in statute in a way that requires implementation in August 2026 regardless of what happens at the federal level or with appropriations. The other three provisions only take effect if additional federal appropriations are received. Kirkmeyer asked the department to provide specific cost estimates for fully funding CCAP at both the 10% and 7% copay levels for FY26-27 — numbers the department did not have available at the hearing.
The State's Broader Fiscal Hole
The CDEC hearing didn't occur in a vacuum. Earlier in the morning, JBC staff director Craig Harper had laid out a structural deficit that frames every dollar the legislature debates this session.
For FY25-26, the state faces gross general fund revenues of approximately $16.9 billion against obligations of $17.7 billion — a shortfall of roughly $744 million. The following year narrows slightly but doesn't close. Both December revenue forecasts leave the state more than $300 million below its 15% reserve requirement. The governor's budget request proposes drawing down that reserve from 15% to 13% — and even at that lower threshold, the state would still be approximately $35 million short.
To bridge the gap, the budget relies on approximately $1.1 billion in one-time money over two years, including $400 million from the Pinnacle fund and spending $333 million of the reserve.
JBC staff analyst Ms. Bickle presented a separate memo tracing how the state got here. She found that approximately $8 billion in one-time revenue flowed into state coffers over recent years — including $3.8 billion in ARPA funds, approximately $2 billion in enhanced federal Medicaid matching funds, approximately $800 million in excess reserve transfers, and approximately $1.3 billion in excess state education fund reserve. That one-time windfall, her memo concluded, indirectly fueled ongoing general fund spending growth of almost 40% between FY18-19 and FY24-25 — against CPI growth of about 25 to 26%.
Senator Kirkmeyer argued the problem was a failure of political will at the moment it mattered most. When the state's budget office identified the structural deficit in March 2021, she said, "we should have been cutting" — but instead the state transferred over a billion in cash funds to the general fund and gave state employees 5% salary increases two years in a row while provider rate increases went to zero.
Harper himself offered an unusual candor about the forecast: he has seen more economic uncertainty in the current projections than in any prior year of his career.
The Votes That Did Pass — And One Staff Disagreement
Not everything was gridlock. The committee approved a series of supplemental requests with unanimous 6-0 votes, including $630,000 in general fund to keep the Colorado Civil Rights Division running after HUD workshare funding evaporated following federal agency reductions. Senator Kirkmeyer asked what would happen if the committee voted no; JBC staff Michele Curry answered plainly: the division anticipates losing seven employees, and housing discrimination enforcement and investigation "will not be able to happen."
The committee also approved $12.2 million in cash fund transfers from the Colorado Department of Public Health and Environment to the general fund, and added a procedural efficiency by directing that all such approved transfers be packaged into a single omnibus bill.
The one interesting departure from staff recommendations came on a Department of Personnel vehicle fleet supplemental. Staff recommended denial under a 10-year established criteria for reductions under 10% of the long bill appropriation. But JBC staff director Harper overruled his own team's recommendation from the dais, advising the committee to "go ahead and approve the department's request in this case and take the cut now" — arguing the state needs the $1.4 million in general fund savings and shouldn't assume reversions that might not materialize. The committee followed Harper's recommendation over staff, 6-0.
What Happens Next
The Department of Early Childhood left the hearing with a homework list. Before the next substantive engagement, it must produce revised financial charts showing variable costs as variable, specific cost estimates for fully funding CCAP at both copay levels for FY26-27, and a clear, written explanation to the General Assembly of exactly what statutory changes it is requesting to HB 24-1223 — amendment versus removal, and under what conditions each provision would or wouldn't apply.
The JBC's next meetings are Thursday — covering the Department of Education (excluding school finance), public health and environment, Labor and Employment, the Department of Law, and a first human services presentation — and Friday, with figure setting, including what Harper identified as the most time-intensive item: public safety.
The federal TRO on CCDF funding was set to expire within days of the hearing. If ACF does not continue reimbursements, the department projected program impacts within two weeks of the hearing date — meaning decisions that were unresolved in the hearing room could be forced by the federal calendar before the legislature acts.
If the $91 million federal shortfall materializes and the state does not backfill it, the roughly 27,000 children currently served by CCAP face direct disruption — and the 13,000 already frozen off the program have no path back in. If the legislature finds the $105 million or more needed to end the freeze, it would have to come from somewhere in a budget that is already $744 million short of obligations. And if HB 24-1223 is not amended before August 2026, the copayment reduction goes into effect — adding cost to a program that, by the department's own math, cannot sustain its current caseload, let alone grow it.
For the nearly 9,000 Colorado families currently frozen off child care assistance — families who qualified, applied, and were told to wait indefinitely — the hearing offered a precise summary of their situation: the state knows roughly what it would cost to help them, has chosen not to ask for that money, and is watching the number of children it serves shrink by design.