SENATOR MAHER LEADS SENATE TO PRIORITIZE CHILD CARE OVER PRIVATE EQUITY

Today, State Senator Ceci Maher (D-Wilton), Senate Chair of the Committee on Children, led the Senate’s passage of legislation seeking to prioritize Connecticut child care centers over private equity presence in the state.

“At a time when costs are high everywhere and families are struggling, the last thing they need is for costs in the child care market to grow further,” said Sen. Maher. “Today, the Senate is prioritizing the care and education of our children, ensuring support funds go programs needing them first, not helping monied interests profit further from their investments. We need to grow and support small businesses and nonprofits that provide these vital services in our communities.”

Senate Bill 266, “An Act Limiting The Access Of Private Equity To Funds From The Early Childhood Education Endowment,” makes a simple adjustment to funds released through the state’s Early Childhood Education Endowment, developed last year to support early care and education programs, de-emphasizing private equity companies for the release of funds.

Under the bill, early care and education programs or preschool programs with a controlling interest from a private equity entity would not receive funds from the state’s early childhood education fund until funds have been expended to all other eligible early care education and preschool programs.

The Commissioner of Early Childhood will be required to determine there are no other eligible entities that can provide these programs and that the private equity entity also meets all of the office’s applicable application standards.

The Urban Institute notes private equity firms have stakes in eight of the 11 largest child care chains with franchises in multiple states, while 15 of the largest 16 largest early childhood care and education chains receive at least some funding from private equity.

Consequences of this can range, though it’s noted large-capacity chains primarily serve wealthier families and that private equity firms often cut staff and services to reduce costs and return profits to investors. A 2007 study found large, for-profit chains have lower program quality on average than nonprofit or independent programs.

The Connecticut Citizen Action Group testified that private equity shows a larger propensity for higher failure and closure rates, which leads to worse outcomes for customers.

The bill previously passed the Committee on Children by a 12-5 tally in March before passing the Senate today on a 24-12 vote. It next heads to the House.