U.S. Rep. Josh Riley introduced legislation Wednesday that would require private equity firms buying childcare providers to hold them for at least four years and restrict investors from pulling money out of those businesses during that period.
The Protecting Childcare from Private Equity Act would prohibit dividends, other payouts and stock buybacks for four years after an acquisition. Riley, a Democrat representing New York's 19th Congressional District, said the restrictions are intended to discourage firms from buying, cutting costs and quickly reselling childcare businesses.
The bill also would require the Securities and Exchange Commission to track who owns childcare providers and record when those businesses are bought and sold. It would direct the federal government to study how private equity ownership affects tuition, staff wages, quality of care and the availability of childcare slots.
Riley's office said private equity firms back 13 of the nation's 16 largest for-profit childcare chains, including KinderCare and Bright Horizons. The release said those chains have largely grown by acquiring independent providers rather than opening locations or adding childcare capacity.
The congressman's office cited studies finding that childcare centers often increase tuition and fees after acquisitions. It also cited a nonpartisan congressional analysis that linked investor-owned childcare centers with lower quality of care, high employee turnover and low wages.
"We can't let them swoop into our communities, buy up daycares, and squeeze families for every dollar they can get," Riley said. "This is about creating guardrails to stop predatory investors from pricing out families, and making sure every parent has access to local, high-quality childcare they can actually afford."
The bill is cosponsored by Democratic Reps. Greg Casar of Texas, Gil Cisneros of California, April McClain Delaney of Maryland, Suhas Subramanyam of Virginia and Eugene Vindman of Virginia.
The release did not identify a Senate sponsor or provide a timeline for congressional action.
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