Colorado lawmakers are testing a big-money fix for an equally big child-care mess: let certain state-run enterprises play the markets, skim off the investment gains and send the profits to counties to help cover child-care subsidies. The proposal has already cleared a narrowly divided Senate Finance Committee, setting up a tense fight over whether public cash should be used to chase private returns just to keep infants and toddlers in care.
How the fund would work
Senate Bill 26-180 would set up an Investment Performance Authority that eligible state enterprises and some special funds could choose to use instead of the state treasurer for investing their money. According to the bill summary, the authority would hang on to enough to pay its administrative costs and maintain a reserve, return the principal to participating enterprises and then send a share of earnings to counties for child-care assistance. An appointed board would oversee the operation, with the bill text on the Colorado General Assembly website spelling out its powers and makeup. Sponsors say the structure is designed to keep this revenue stream outside both the state’s general fund and the TABOR cap.
Supporters say it buys time and avoids new taxes
Backers cast the authority as a way to build a steadier funding source for child care without raising taxes or leaning on the general fund, while hoping the broader economic payoff could be substantial. Supporters estimate the approach could generate more than $2 billion in potential economic activity, according to reporting by Colorado Public Radio. Sponsors also note the authority would need time to build up its reserves, and say counties likely would not see meaningful disbursements until the 2027-28 fiscal year, according to The Colorado Sun.
Thousands of families are already locked out of care
The proposal lands in the middle of a crunch that is already shutting families out. Dozens of counties have paused new enrollments or put families on waitlists for the Colorado Child Care Assistance Program, leaving roughly 13,800 children on freezes or waitlists as of April 1, based on data from the Colorado Department of Early Childhood. Advocates also point out that in fiscal year 2024-25, CCCAP reached only about 11 percent of income-eligible children, a gap highlighted in analyses by the Bell Policy Center.
Providers say market returns cannot paper over lost funding
On the ground, child-care providers say the existing shortfall is already forcing hard choices. In reporting for Colorado Public Radio, the CEO of Warren Village said about 40 families have been unable to access child-care assistance for months. Another nonprofit, Hope House Colorado, described six-figure losses that have stretched programs and staffing. Providers argue that counting on investment earnings to fill the budget gap is both risky and slow compared with straightforward state funding.
Legal questions loom
The state treasurer and several policy organizations are warning that the plan may be on shaky legal ground. Treasurer Dave Young told the Senate committee the bill would “enact a blatant violation of the Colorado Constitution and create a serious risk to public funds,” with witnesses cautioning that a special-purpose authority investing public money could trigger costly litigation, as reported by The Colorado Sun. Opponents also contend that enterprises that opt in could jeopardize their special-purpose status if earnings are diverted from their statutory missions.
What is next at the Capitol
On April 30, the Senate Finance Committee advanced the bill to Appropriations on a 5-4 vote. Sponsors expect additional hearings in the coming days as lawmakers weigh whether this financial gamble is worth the potential payoff. Counties, providers, and the treasurer’s office are all watching closely while the state scrambles to cover holes opened by shifting federal rules and a tighter budget.
Whether the Investment Performance Authority ends up as a temporary bridge to broader child-care reform or as the center of a courtroom fight will depend on how lawmakers and legal advisers answer key questions about risk, oversight, and timing, and on whether voluntary investments can actually produce the reliable subsidy stream that families and providers say they need right now.
