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Crayons are organized by color in Early Childhood University's preschool classroom Tuesday, July 25, 2023, in Greeley, Colo. (Tanya Fabian, Special to The Colorado Sun)

A preschool in Greeley that has shepherded countless kids through the first years of their education over the past 21 years may welcome its last class of 4-year-olds next month, eyeing an uncertain future as it dives into the state’s newly expanded preschool program.

Nearby, a different preschool that caters to mostly children of low-income families has only been able to fill a quarter of its classrooms for the start of the school year and is weighing its options — which could include closing its doors.

Preschools across Colorado are sprinting to make final preparations for the start of the state’s expanded preschool program, known as universal preschool. And with less than a month until the first day of school, many question whether they’ll have enough state funding to stay open. That question has bubbled up in the past month, after Colorado’s new Department of Early Childhood changed the way it will calculate how much funding preschool providers will receive during their first few months of the program. 

Instead of paying a provider for the number of students it has the capacity to educate, as originally promised, the department will now dole out funding based on the number of students enrolled. It might seem like a subtle shift, but to preschool providers who already run their programs on thin margins, it could mean the difference between continuing their classes and closing them down for good.

The new approach “definitely cuts providers off at the knees with their ability to step into this first year of (universal preschool) and have adequate facilities and adequate staff ready to go, trained,” said Scott Bright, owner of ABC Child Development Centers, which has 25 preschool sites across Weld County, six of which will participate in Colorado’s expanded preschool program. “This is a system that providers have been hesitant to jump into because they haven’t gotten clear answers from the departments on how this is all going to go down.”

A textured owl toy is part the ‘cozy corner’ in Early Childhood University’s preschool classroom Tuesday, July 25, 2023, in Greeley, Colo. (Tanya Fabian, Special to The Colorado Sun)

The Early Childhood department, which has a $322 million budget for its inaugural year of the expanded preschool program, previously pledged to compensate preschools participating in universal preschool based on the number of 4-year-olds they had room to educate, regardless of whether they filled all their seats. That’s a much more predictable and reliable method of funding, providers say.

During a Jan. 12 meeting among members of the department’s Rules Advisory Council, M. Michael Cooke — then a universal preschool representative from Gov. Jared Polis’ office — said that through monthly state payment to providers from August through October, those providers would receive a dollar amount based on their capacity, regardless of whether providers could fill all their seats. Then in November, she added, the department would reassess how many kids had actually enrolled in provider programs and adjust payments based on those numbers.

“We want to be helpful,” Cooke added. “We don’t want to create a situation where we’re creating a budget shortfall for community partners. We don’t want to create a situation where there has to be a layoff of staff.”

However, as the state tried to balance the number of preschool slots available with the number of kids actually being enrolled, it became clear that the scale tipped too far. Data “showed a significantly higher number of available seats in the universal preschool system than participating families,” Early Childhood department spokesperson Hope Shuler wrote in an email to The Colorado Sun, noting that there were about two seats open for every child whose family applied.

Writing supplies are pictured in Early Childhood University’s preschool classroom Tuesday, July 25, 2023, in Greeley, Colo. (Tanya Fabian, Special to The Colorado Sun)

Bright, who also serves as board president of the Early Childhood Education Association of Colorado, sees the decision to change funding as something of a bait-and-switch after the Early Childhood department simply couldn’t afford to pay all participating providers for the surplus of preschool slots.

“They realized they ran out of money based on the promise they made, and now providers are left carrying the load,” said Bright, who typically keeps his business afloat with no more than two weeks of operating cash in the bank at any one time.

Without upfront payment from the state for all kids who enroll in universal preschool at his centers, Bright said he won’t have the funds to pay his staff.

Preschoolers whose families enroll them last minute may face a delayed start

Under the revised funding plan, which Shuler said was communicated to providers by June 27, the state assessed the number of kids enrolled in programs on July 9. Programs will receive funding Aug. 1 based on that count of kids. However, the latest round of matching preschoolers with specific programs — so far it has facilitated four sets of matching — was completed later in July. That means providers could end up with preschoolers on the first day of classes who they haven’t been paid to educate. They won’t receive funding for those students until the next payment from the state, scheduled for Sept. 8.

Each month from August through May, Shuler said, providers will receive a payment determined by the number of students enrolled in their program on the 15th of the previous month. The sum will be adjusted each month so that the amount given to providers accounts for any enrollment swings and reflects the number of students in their classrooms. 

That leaves providers like Bright feeling pinched. 

“It is very difficult for a provider to hire their staff, prepare their facilities for kids and then not necessarily have all of those seats full but yet have to pay payroll and have to pay the mortgage payment and have to turn the lights on and have to turn the heat and/or AC on,” Bright said. “It’s very difficult for us to do that when you’re now told late in the game that we’re only going to pay you based on enrollments and we’re going to true up your enrollments every month.”

The state is rolling out something of a financial safety net for providers so that they’re guaranteed at least the same amount of funding they received last year under the state’s previous preschool program, called the Colorado Preschool Program. At the end of the school year, the state will compare the amount paid to each provider this year under universal preschool to the amount paid to each provider last year through the Colorado Preschool Program, according to Bright. If a provider earns less in universal preschool than the amount they earned last year through the Colorado Preschool Program, the state will pay them the difference, he said.

It’s not yet clear whether providers like Bright who own more than one preschool center — including two that participated in the Colorado Preschool Program and six slated to be part of universal preschool — will be compensated for each licensed facility, which will affect the amount of funding owed by the state.

The Early Childhood department on Tuesday was not able to clarify details of its plan to ensure providers receive at least as much funding this school year as they did last year.

Bright added that he can’t wait until the end of the school year for funding that is crucial to his ability to keep running his business.

The only financial path forward, he said, involves keeping kids who enroll last-minute on the sidelines until the state pays providers for them. That means, for instance, that any family who enrolls their 4-year-old from late July through mid-August will have to wait to start universal preschool until September, when Bright receives money from the state for that particular child.

The Early Childhood department doesn’t believe any preschools will have to postpone the start times for any kids, with Shuler writing in an email that “payments will be reconciled for the next month and providers will receive pay if children start earlier.”

She said the department is also confident that the first payment in August, along with the monthly payments recalculated to compensate providers for any enrollment changes, will “help support providers” and are “much more provider-friendly” than other preschool subsidy programs that have paid based on the number of kids attending their program.

Bright noted that under the Colorado Preschool Program he received funding for the entire school year starting in August with monthly payments through May, contingent on his facilities having all seats funded by the state filled with kids by Nov. 1. 

He doesn’t see another option other than a delayed start for kids who enroll late.

“I would drown my company if I were to provide services that I was not paid for,” he said.

Potential layoffs and closures loom over preschools

Bright and other preschools are also worried about having to shutter centers altogether. 

One of the six ABC Child Development Centers Bright owns that is participating in universal preschool has 12 classrooms, only three of which are full with kids whose families have opted into universal preschool. He needs all classrooms full to stay financially whole at the center, which mostly serves low-income families.

He expects all the classrooms to fill by November, but to keep the school open until then, he needs the upfront funding from the state. If the school stays open with empty classrooms, he’ll have to lay off teachers and will be unable to accept new students until the state pays their tuition.

Melissa Lelm, director of Early Childhood University, sits for a portrait in a preschool classroom Tuesday, July 25, 2023, in Greeley, Colo. (Tanya Fabian, Special to The Colorado Sun)

Meanwhile, Melissa Lelm, director of Early Childhood University in Greeley, has enrolled only 33 students through universal preschool, far short of the 96 licensed spots in her center. The state has matched another 10 students with her facility, but though Lelm has repeatedly called and emailed those families to encourage them to accept their match, she’s been met with silence. At the same time, she has to renew her lease this year with her landlord wanting to raise her rent.

“I don’t know if we’ll be in business at the end of May of 2024,” said Lelm, who has worked in early childhood education for more than 40 years.

Lelm recently laid off four employees who are now collecting unemployment, keeping only one teacher and one teacher assistant on her staff. And as the Early Childhood department pivots to paying providers based on the number of kids enrolled, she anticipates her reserves will dwindle as she tries to cover even the smaller payroll. She’s applying for grants to help fill in the gaps and has so far collected $26,000, including from the state’s Child Care Stabilization and Workforce Sustainability Grants and a $4,000 state Capacity Building Grant that can fund necessities such as furniture and educational and health care materials. 

“That money will go very quickly for payroll and rent,” Lelm said.

Early Childhood University, a preschool provider in Greeley, Colo., will have drastically reduced enrollment during the 2023-24 school year. Here, the building is seen on Tuesday, July 25, 2023, in Greeley, Colo. (Tanya Fabian, Special to The Colorado Sun)

She might be forced to lay off her teacher assistant if enrollment continues to stagnate, but Lelm knows that having more than one trained adult in the classroom helps kids and teachers form better bonds.

Lelm wonders if she’ll be up against the same uncertainties around how many students she’ll serve and how many staff she needs each year of universal preschool — if she manages to stay open.

“I just hope it works,” she said. “I don’t know if they thought it through thoroughly enough.”

CORRECTION: This story was updated at 11:33 a.m. on July 26, 2023, to correct the date that preschool providers will receive their first payment for universal preschool from the state. They will receive that payment Aug. 1, and the state will distribute other regular payments to providers on the 8th of each month.

Erica Breunlin is an education writer for The Colorado Sun, where she has reported since 2019. Much of her work has traced the wide-ranging impacts of the pandemic on student learning and highlighted teachers' struggles with overwhelming workloads...