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Delayed COVID relief puts some Colorado child care owners in jeopardy

Young girl in mask plays with blocks while masked and gloved woman watches
Some Colorado child care providers have recently taken out loans or sold possessions to make ends meet.
FatCamera / E+ / Getty Images

When hundreds of Colorado child care providers recently filled out surveys about their financial well-being, the desperation was palpable.

One wrote, “This is so stressful.” Another said, “We are behind on rent.” A third delivered her message in all-caps: “NOT ENOUGH FUNDS TO KEEP DAY CARE ABOVE WATER.”

After nearly two years of pandemic-related problems, many child providers continue to face grave financial challenges, with some taking out loans or selling possessions to make ends meet. Others say they are on the brink of closing for good unless grants promised by the state arrive soon.

It could be a month or more until the first payments go out.

“People are so tired,” said Dawn Alexander, executive director of the Early Childhood Education Association of Colorado, which conducted the survey. “There comes a time when you just bend a knee and say, ‘I’m done.’”

The survey by Alexander’s organization, which represents private providers around the state, found that 38% of 340 respondents said they were at risk of closing permanently. While those respondents represent a small fraction of the state’s more than 3,700 licensed child care providers, their concerns mirror those revealed in other surveys over the last year.

In some cases, child care providers are struggling because they can’t find employees to cover their classrooms. Worker shortages have plagued many industries over the last year, but providers say it’s hard to compete with higher-paying fast food and retail jobs especially in a field as demanding as child care.

For some providers, it’s not staff they can’t find, it’s customers. They say some parents are still opting to stay home with their young children, both to save money on child care and because work-from-home schedules continue to allow it.

The survey by the Early Childhood Education Association found that 40% of providers surveyed reported taking on business debt and 46% reported taking on personal debt while they wait for the latest round of COVID relief — $222 million in child care stabilization grants — to arrive.

The application for those grants, which are funded with federal dollars, was supposed to open in mid-November, but that hasn’t happened yet because state officials took longer than anticipated to select a vendor to process the grant payments, a spokeswoman for the state’s Office of Early Childhood said.

She said the grant application will now open in January, but couldn’t specify an exact date.

The non-competitive grants will be available to all licensed child care providers as well as some unlicensed providers. Once eligible providers submit an application, they’ll receive the first recurring monthly grant payments within two to four weeks, she said.

One survey respondent lamented the delay, writing, “We hoped to give staff a holiday bonus, but we’re still waiting. If we go ahead and do it without money in hand, it’s super risky. It seems like there has been enough time to find the vendor and get it rolling.”

Brenda DeMuth, who runs a before- and after-school program in her Golden home, said she’ll keep her eyes open for the stabilization grant application, but didn’t sound particularly hopeful. She recently sold her RV and has been dipping into retirement savings to make ends meet.

“I can’t hang in there much longer,” said DeMuth, who received her state child care license just before the pandemic hit.

Last school year, DeMuth served some children attending remote school. This year, she has only three of six slots filled for after-school care and none for before-school care. She’s tried handing out fliers, advertising online, and even sometimes parking her “Golden Explorers” child care van at nearby elementary schools. Nothing has worked.

It’s not the scenario DeMuth, who will soon be 60, envisioned when she left her executive assistant job a few years ago. She planned to spend her pre-retirement years running a child care business as she had decades ago when her son was little. Then, just as she received her state child care license in January 2020, the pandemic hit.

This year, she’s on track to earn only $20,000 and worries about burning through her retirement money well before she turns 65.

About 25 miles away in Commerce City, Valerie Holman and Drenna Hill, who own The Learning Experience child care center in the fast-growing Reunion development, faced their own set of financial trials this fall.

They had plenty of families seeking child care, but too few teachers. Staff shortages prompted them to close some classrooms for two months — leading to a loss of $30,000 because they credited parents for the lost days of care. Holman and Hill recently reopened the rooms. While they are spending extra money on overtime pay and substitute teachers, Holman said they’re losing less than before.

The Learning Experience-Reunion center originally opened in September 2019 and stayed open even after the pandemic hit, serving the children of essential workers.

“Our brand is for working families, Holman said. “We felt like we couldn’t close. We had to figure something out.”

They’re still in that mode, with Holman routinely putting aside her administrative duties so she can cover for teachers who are out sick or absent for other reasons. The center has room for 148 children, but has only 90 enrolled because of staffing limitations. Holman said the center will break even once they add five more children.

“It’s getting better little by little, but we still need some help,” she said.

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