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For-Profit Child Care Chains Donated to Manchin After He Blocked Universal Care

The chains called on Manchin to support legislation that would only help low-income families, protecting their profits.

"Private equity has no place in early childhood education," said Annie Schaeffing, director of strategic initiatives at Bank Street College.

As child care centers across the U.S. were closing or struggling to stay open last year and appealing to the Democratic Party to pass far-reaching aid for the industry and families as part of the Build Back Better Act, a coalition of deep-pocketed nationwide chains was working to ensure the families they serve would not benefit from the legislation, fearing reduced profits.

In a report on private equity firms taking interest recently in investing in child care chains such as Bright Horizons and Primrose Schools, The New York Times noted on Friday that several nationwide for-profit chains used their lobbying arm, the Early Care and Education Consortium, to express concerns to lawmakers about Build Back Better (BBB), the Biden administration’s domestic spending plan.

Journalist Katherine Goldstein tweeted that the consortium’s ability to lobby lawmakers showed that parents and caregivers need groups representing them on Capitol Hill as well.

Although the consortium publicly advocated for the passage of the BBB, its lobbyists said in meetings on Capitol Hill that the program would cast too wide a net as it sought to lower child care costs for families across the country, including those who send their children to for-profit chain centers.

Chad Dunkley, who co-chairs the consortium’s board and runs New Horizon Academy, a chain with locations in five states, told the Times that the group “got nervous,” while executive director Radha Mohan said the legislation was based on “an incomplete cost analysis” and would offer benefits to families with higher incomes than the consortium recommended.

Biden’s proposal, which was pushed by progressives including Sen. Bernie Sanders (I-Vt.) and Rep. Pramila Jayapal (D-Wash.), would have limited out-of-pocket child care costs to 7% of a family’s income and required centers to pay living wages to all employees, with federal and state governments providing aid to child care programs. Families making $250,000 with two children would have had their child care costs capped at $17,500 total, the Times noted as an example.

The chains, which charge upwards of $40,000 yearly per child in some parts of the country, may not have openly stated in legislative meetings that they were concerned about their profit margins, but as the Times reported, Bright Horizons wrote in its 2021 annual report that universal child care would pose a risk to the chain.

“A broad-based benefit with governmentally mandated or funded child care, such as universal preschool, could reduce the demand for early care services at our existing early education and child care centers due to the availability of lower cost care alternatives, or could place downward pressure on the tuition and fees we charge, which could adversely affect our revenues,” said the company.

KinderCare, another nationwide chain, said in a U.S. Securities and Exchange Commission document last month as it filed for its initial public offering that its “continued profitability depends on our ability to offset our increased costs through tuition increases.”

Executives whose child care centers are part of the consortium donated to right-wing Sen. Joe Manchin (D-W.Va.) after he refused to support the BBB last December, and met with him around the same time, calling on him to support federal child care funding targeted to lower-income families — not the vast majority of the families who can attend for-profit chains.

“The idea that we should limit child care benefits only to low-income families means we will forever keep child care as a welfare program as opposed to a universal right supporting all parents and kids,” said Elliot Haspel, author of Crawling Behind: America’s Child Care Crisis and How to Fix It. “It also leaves out the millions of middle-class families who are struggling.”

The Times report proves, said Annie Schaeffing, director of strategic initiatives at Bank Street College, that “private equity has no place in early childhood education.”

Haspel expressed hope that Democrats who pushed for the BBB will take aim in the new congressional session at the for-profit chains that worked to kill the legislation as they continue pushing for federal child care funding.

“I sincerely hope incoming Senate Health, Education, Labor, and Pensions Committee chair Sen. Sanders holds hearings on the rise of investor-backed child care chains, their impact on parents and kids, and policies to curb their unfettered profit-seeking as we strive for a system that works for all,” said Haspel.