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Despite predictions, fewer Colorado child care providers closed permanently during the pandemic — but the struggle continues

A preschool girl stands outside holding an insect on her finger while a classmate and a teacher look at it.
Fewer Colorado child care providers closed during the pandemic than some early childhood groups predicted, but experts say the industry is still limping along.
Allison Shelley / The Verbatim Agency for EDUimages

Soon after the pandemic hit in the spring of 2020, advocates feared the child care industry would be decimated, with providers shuttering their businesses in record numbers.

But in Colorado, that worst case scenario did not come to pass.

Only about 7% of licensed providers serving young children closed permanently from April 2020 through March 2021. That’s well below closure rate predictions of 40% or more that came out of surveys by some national early childhood groups.

For some state and local early childhood advocates, the closure numbers represent a piece of good news after a difficult year — evidence that government relief efforts helped many providers stay afloat during their darkest financial days. At the same time, both advocates and providers are quick to note that the industry was fragile even before the pandemic hit and that some Colorado providers continue to teeter on the brink of survival.

“They’re limping along and that’s, I think, the story now,” said Suzanne Delap, research director at Early Milestones Colorado, which has conducted a series of child care provider surveys during the pandemic. “Not so much are you open? But how are you doing?”

Many providers still have empty seats because parents have lost jobs and can’t afford to pay for child care, or remain nervous about their children contracting COVID. An Early Milestones survey this spring found that 43% of providers said they’d be able to continue operating at current enrollment levels for less than six months.

Sunshine Academy, a 38-seat child care center in Denver’s West Colfax neighborhood, is in such dire straits.

Run by a mother-daughter team, the center exclusively serves children from low-income families who are eligible for state child care subsidies. Only 40% had returned to care by late May — leaving a big gap in the center’s budget.

Asked if she and her mother had considered closing the center permanently during the past year, Co-director Fatin Ahmad said, “absolutely.”

Financially, things are still tenuous and Ahmad and her mother, Suhair Alhamad, are frustrated. They say their state relief grant of $3,450 fell far short of what they needed to cover expenses at the top-rated center. Plus, with parents earning low wages at Taco Bell, McDonald’s, or in hotel housekeeping, there’s no chance they can pay to save their child’s spot at Sunshine Academy the way families at some centers do.

“We definitely like to help the single mom, the people who are low income, but at the same time the state needs to help us to stay in business … because who’s going to help us if they don’t?” said Alhamad.

Pre-pandemic attrition continues

During the first 12 months of the pandemic, 263 of about 3,700 licensed providers serving young children closed permanently in Colorado, according to state records. During the same period, 122 new providers opened.

Overall, the net loss of providers was 3.8% — a little higher than the previous year, and a little lower than the year before that. In other words, the state’s chronic child care provider decline continued during the pandemic, but didn’t get dramatically worse.

State leaders say state relief grants, along with other efforts to soften the pandemic’s financial blow, helped stabilize the child care sector and stave off a catastrophic number of closures in Colorado. In the year after the pandemic hit, the state sent $44 million to child care providers in the form of three rounds of grants — the first two paid for with funds from the first federal aid package and the third with state general fund money.

“We were hearing 50% closures at the beginning of the pandemic,” said Mary Alice Cohen, director of the state’s office of early childhood. “What you’re seeing ... is the success of all those funding strategies we formulated.”

Now, she said, with money from the second and third federal aid packages, which will start going out in the coming months, the field is moving from stabilization efforts to expansion and innovation.

Money from the second federal aid package — $119 million — will fund sustainability grants for providers, increased child care subsidy rates, and efforts to mint new early childhood workers, among other things. More than $500 million for early childhood from the third federal aid package has yet to be allocated.

Cohen said, “This is our opportunity now to not just do these immediate quick fixes but to create a new system so that when we’re through the pandemic we’re not facing the challenges we were facing pre-pandemic.”

But some experts worry the pandemic has made those challenges all the harder to surmount.

“One of the fears now is that child care may not be a field that anyone wants to enter,” said Delap, of Early Milestones. “It’s become less attractive because of COVID. The issues were exacerbated and I think it’s no longer just attrition. … We’re going to have a hard time developing.”

Emily Bustos, president and CEO of Denver’s Early Childhood Council, said the state’s investments helped many providers stay open last year, but a lot needs to change over the next few years, especially as the state heads toward the 2023 launch of universal free preschool.

“If we can modify and make it an industry that isn’t just about your love of teaching children but that you can live on, we have a better shot,” she said.

Pivoting to expansion

For some providers, the possibility of grants to expand their buildings and add more seats is a welcome development. One of them is Susan Rider, a longtime center director in Denver’s Sunnyside neighborhood.

Last fall she closed the Little Friends Learning Center after the church where it was housed pulled the plug. Luckily, over the summer, Rider heard about a new center slated to open just up the street. She and the owner got in touch, and in October she, her staff, and a handful of enrolled children moved to the new Linden Early Learning Center.

The new location can accommodate only about half the number of children Little Friends could. But now Rider is applying for $100,000 in state expansion grants to fix up her current building along with an adjacent building in the hopes of more than doubling the program’s size.

Looking back over the past year, Rider’s describes something of a roller coaster: worry over lost enrollment and staff layoffs, thoughts of retirement, and then relief when the new center opened in October.

These days, “We’re all very hopeful,” Rider said. “We’re not financially set, but we’re making do.”

Lori Janssen, who runs Futures Early Learning Center in the western Colorado town of Clifton, is in a similar situation. She describes getting through the early part of the pandemic “by the skin of our teeth.” What saved the center was a forgivable federal loan to cover staff pay and a rule change allowing for more child absences than usual through the state child care subsidy program.

Now, Janssen’s hoping to move to a new site because the rent on her building is set to go up to an untenable rate. She’ll seek state expansion grant money to improve the new building and buy equipment.

In the meantime, her enrollment has bounced back to normal levels, and there’s even a waitlist for some classrooms — in part because two nearby child care centers have closed, increasing the demand for her spots.

“We were blessed with some of the fallout of COVID,” she said.

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