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New report digs into factors behind Colorado’s high child care costs

Colorado’s high commercial property taxes, higher-than-average quality standards and the state’s underfunded child care subsidy program are three reasons that families pay more for child care here than in 43 other states.

These factors were among several analyzed in a new brief on the cost of child care from Qualistar Colorado, an evaluator of child care quality. Overall, the report found that child care costs eat up a larger chunk of family income in Colorado not because families make less here, but rather because the cost of doing business here is higher for a variety of reasons.

One of those reasons is that commercial property taxes in Colorado are three times that paid on residential properties, a ratio double the national average. Since nearly two-thirds of child care centers are for-profit entities, they must pay commercial property taxes.

Colorado also has more stringent standards than many states on quality indicators such as student-teacher ratios, class sizes, minimum teacher qualifications, and safety regulations. While these higher standards are generally seen as a good thing, they do increase staff and facility costs and therefore the cost of care.

The brief also notes that the Colorado Child Care Assistant Program, or CCCAP, has been underfunded, with appropriations to the subsidy program lagging below inflation and increasing child care costs. For example, providers in the Denver metro area received reimbursements that were about 40 percent less than the market rate for care. Such low reimbursement rates can drive up costs for paying families.

Qualistar’s latest brief, produced with support from the Colorado Children’s Campaign and the Women’s Foundation of Colorado, is the second of three to examine child care costs in the state. The third and final brief, set to be published in late 2014, will look at recommendations to improve child care affordability.

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