I too have read that croup is contagious... however... My daughter had croup when she was 18m onths old. She ended up in the hospital for 2 nights with sever ear infections as well as croup. She never passed it on to anyone. Now, whenever she get's a cold (and she's 9) It always seems to end with that croupy cough. She has never passed it on to anyone else that I know of and she's always been in home daycares. I don't have a policy on coughs. If they are well enough to participate and they are not running a fever they are good to go in my opinion.

I wouldn't discuss with the parents. If it's bad enough to warn the parents then the child shoudln't be in your care in my opinion.