NEDERLAND — On Tuesday, January 6, 2026, Colorado Governor Jared Polis received notification from the U.S. Department of Health and Human Services (DHHS) that funds from three federal programs—Child Care and Development Fund, Temporary Assistance for Needy Families, and Social Services Block Grant—were to be frozen to the state, as well as to California, Illinois, Minnesota, and New York, due to allegations of fraud. 

“The Trump Administration has made clear its commitment to rooting out fraud, protecting taxpayer dollars, and ensuring program integrity across all federal benefit programs,” Alex J. Adams, Assistant Secretary for DHHS’s Administration for Children and Families (ACF), wrote in his letter to Polis. 

“ACF is concerned by the potential for extensive and systemic fraud in Colorado Child Care and Development Fund (CCDF) services that rely on federal funding. These concerns have been heightened by recent federal prosecutions and additional allegations that substantial portions of federal resources were fraudulently diverted away from the American families they were intended to assist.

“Additionally, ACF has reason to believe that the State of Colorado is illicitly providing illegal aliens with CCDF benefits intended for American citizens and lawful permanent residents.”

This funding freeze will cause Colorado to lose out on a total of $317 million for 2026 from all three funding streams, which includes a remaining $67.4 million being withheld from the $138 million that was expected for the CCDF.

The state estimates to lose up to $91 million in child care funding for 2026 if the freeze persists. Additionally, the state’s federal funding reserves for childcare are expected to be depleted by the end of the month, an issue projected to impact up to 27,000 children from 18,000 families.

Other subsidy programs expected to be impacted include the Colorado Child Care Assistance program, Temporary Assistance for Needy Families (known as Colorado Works), and many programs offered through the Colorado Department of Human Services. 

Collectively, the funding freeze on all five states will result in more than 500,000 children in over 44,000 programs being impacted, families losing up to $400 million in earnings annually due to the potential loss of child care, and businesses losing up to $119 million in revenue annually due to workforce issues as a result of a loss of child care.  

Democratic Leadership in the Colorado Legislature and members of the Joint Budget Committee—including Speaker Julie McCluskie of Dillon, Senate President James Coleman of Denver, House Majority Leader Monica Duran of Wheat Ridge, Senate Majority Leader Robert Rodriguez of Denver, Committee Chair Emily Sirota of Denver, and Committee Member Judy Amabile of Boulder—released a statement to the Trump Administration in response to the freeze.

“Gutting programs that equip tens of thousands of Coloradans with resources to provide and afford child care is a direct attack on working families. Federally supported programs strengthen Colorado’s economy and create strong pathways for workers to earn more and thrive.”

Republican Representative Jeff Crank of Colorado District 5 issued a statement in support of DHHS’s pursuit to eradicate fraud, citing alleged issues regarding child care centers in Minnesota run by Somali Americans.   

“After the exposed fraud was discovered in Minnesota, I support efforts by the Trump Administration to root out fraud and ensure taxpayer dollars are being spent appropriately across the country.

“I am eager for the State of Colorado to work with the Administration and encourage transparency in our processes so we can ensure funding for legitimate programs continues.”

Minnesota does have a history regarding child care fraud, as evidenced by the results of a state investigation in 2019, which found several million dollars’ worth of fraud was being conducted within the state’s child care system, specifically by centers billing for services which were not rendered or even offered. 

A Minnesota state department’s report by the Inspector General conducted in 2025 found that 11% of payments made in 2023 to the 1,155 child care centers investigated involved some errors.

As for Colorado, representatives of the state’s child care agencies and subsidy programs deny DHHS’s allegations of fraud, and reiterated the already stringent regulation and oversight that is being followed to ensure that child care centers in Colorado are being run legitimately. 

“We have a licensing specialist who visits randomly at minimum once a year to inspect the program from a ton of different standards,” Stephen LeFaiver, Executive Director of TEENS, Inc., explained about state regulation in an interview with The Mountain-Ear. 

“We have to be quality rated through the Colorado Shines program, which we are level 5; the staff have to meet certain qualifications; any safety issue or injury has to be reported and investigated; we have to report attendance records; childcare assistance has to be verified by both the organization as well as the parents for attendance. The universal pre-k application and renewal process is also monitored through attendance.”

TEENS, Inc. is not only Nederland’s premier nonprofit teen center, it is also the home of the Chinook West alternative high school program, a major partner in the management of Lookout Mountain Academy, and is also the organization that directly manages the New Explorers Learning Center, Nederland’s only child care center. 

“The freeze would hit us not just from a financial standpoint but also our quality assurance,” stated LeFaiver as he detailed how TEENS, Inc. will be impacted by the impending funding freeze. “We’ll lose all of our funding for child care assistance, which would equate to around $4,000 a month.”

“The other thing that would be really impacted are the local childhood councils, like the Early Childhood Council of Boulder County. We receive money for supplies, for professional development, and we also receive coaching and consultations just to make our programs better.” 

On February 4, 2025, the Nederland Board of Trustees voted to approve the ground lease between The Town of Nederland and TEENS, Inc. for 750 West 5th Street—for 99 years, at the cost of one dollar a year—for the construction of a much larger New Explorers child care center.

The 9,700 square foot building is currently under construction, though the financial landscape in 2025 has put a strain on TEENS, Inc.’s fundraising efforts, not just for their organization’s regular operations, but for the $7 million facility, for which just over 50 percent has been raised so far.

“We had a major funder not come through with a six figure contribution, and we lost multiple state grants,” LeFaiver said. “Luckily we were able to compensate for it in a lot of ways, but it was the tightest year we’ve had in a decade; and absolutely we’re planning for 2026 to be worse.”

TEENS, Inc. has been advised not to expect certain state and federal funding sources in the new year, and currently $1 million in funding for the New Explorers project remains in an unapproved budget on Senator Michael Bennet’s desk.

“Senator Bennet put us into his budget for capital improvements because he recognizes the need in this area,” LeFaiver continued, “and he put us in the budget for $1 million. But the federal budget has to be passed, and the delay from the government shutdown has pushed the approval to the end of January.

“A million dollars would go a very, very long way towards making it a reality to have that building open in the fall.”

LeFaiver spoke of how a severe reduction in expected funding for an organization like TEENS, Inc. affects them both in the short and long term, and forces them to find a balance between cutting costs and altering operations without affecting the programs and services available to the youth of the community.

“The ramifications hit hard when you’re talking about employee morale and professional learning and development. There’s also increased competition for what funding is available, because every organization is stretching for dollars from sources that may not have been the best fit previously.”

“We’ve also cut back on staff,” LeFaiver continued. “We didn’t fill a 32 hour a week position this year, and we reduced our teen center hours, effectively closing an hour earlier three days a week. 

“We’re trying to be strategic with what cuts make the most sense at this time.” 

The original letter from the DHHS states that the funding freeze will remain in effect until the state is found compliant with “fiscal accountability requirements” that the department’s ACF branch plans to implement.

Those requirements include the submission of verified attendance documentation, which is mandated to establish “actual units of service delivered,” referring to the days or hours of service. Information regarding the “contemporaneous payment information maintained by the provider or State” must also be submitted.

While Colorado Attorney General Phil Weiser lobbed another lawsuit against the Trump Administration for the federal freeze—bringing Weiser to nearly 50 lawsuits against the President over his second term so far—US District Judge Arun Subramanian ruled on Friday, January 9, that the five states affected by the funding freeze were legally permitted 14 days before the freeze could take effect to prepare their arguments regarding validity of the freeze in court.