Julie and Mike Johnson are raising two children under 3. That takes plenty of time — and an extraordinary amount of money. Together, daycare for their kids costs the Beverly couple about $4,500 a month, or more than $50,000 a year.
A Boston 25 News investigation reveals that billions in Massachusetts taxpayer funds from the C3 grant program are flowing to for-profit daycare chains backed by Wall Street and international private equity firms. Despite these subsidies intended to stabilize childcare and raise teacher pay, tuition costs for families continue to rise, and the state has bypassed legal funding caps via automatic exemptions.
Answers uncovering the truth.
Boston 25 News investigates 25 investigates following your tax dollars
into the daycare industry where tuition is among the highest
in the country. Even if you don't have kids, you're helping pay for it.
Investigative reporter Ted Daniel followed the money to Wall Street
and private equity firms an ocean away.
Back during the pandemic, federal grants kept daycares from closing.
When that money ran dry,
Massachusetts was the only state to keep all of it flowing.
More than a billion with a B.
25 investigators found many
of the biggest checks aren't going to the neighborhood spots.
They're going to for-profit chains answering to Wall Street.
We'll go in there.
For Julie and Mike Johnson of Beverly,
raising two kids under three takes lots of time
and an incredible amount of money.
You know, like for her in the infant class,
it's going to be, what, like $2,400 a month.
What would be a rough...
Total of two kids a month for you.
About $4,500 a month.
That's more than $50,000 a year.
As a dual-income family, there's no state help to offset the cost.
It reminds me a lot of my college experience
where my dad worked three jobs to get my sister and myself through.
Yeah, there just is no savings, I think, while our kids are in daycare.
Massachusetts is more generous with daycare operators.
Child care policy expert
and author Elliot Haspel explains the thinking behind that.
They're going to be able to keep their doors open.
They're going to be able to retain their staff better.
They're going to be able to serve more families in a more stable way.
The Healey administration has poured around $1.7 billion
into the daycare industry
through the Commonwealth Cares for Children, or C3, grant program.
Raising $576 million in its IPO.
Daycares associated with KinderCare Learning
Company have received around $37 million
in state and federal money, by our estimate.
Backed by a Swiss private equity group and traded on Wall Street.
Getting into more centers, serving more families.
Its former CEO made $5.3 million in total comp last year.
KinderCare says all of its C3 money goes
to local teachers with pay up nearly 20% since 2022.
Cadence Education and its sister brands have
collected roughly $38 million by our count.
Cadence is owned
by a private equity firm whose portfolio ranges from bubble gum
Taboos.
Cadence says all its C3 money stays in Massachusetts for staff wages,
benefits, and classrooms.
Little Sprouts and its sister brands have collected
an estimated $34 million.
The chain is headquartered in Lawrence,
but its parent company and that company's private equity backer?
...are nearly 3,500 miles away in France.
A leading group in Europe with a turnover of 900 million euros.
Little Sprouts did not respond
when we asked how that money is benefiting Massachusetts families.
We need to make sure that the public funds are actually supporting
the things that we know make a difference for kids and families.
Laura Vallegutierrez points to guardrails enacted by state lawmakers.
Big for-profit chains aren't supposed to get more than 1% of the...
Total yearly C3 pot, unless the state grants them a waiver.
We identified several chains that by our calculation appear
to have topped the limit in fiscal
year 2025, so we requested their waivers.
It turns out none exist, at least not on paper.
The Healey administration tells us it created a policy instead,
automatically exempting
centers where at least a quarter
of the kids get state child care assistance.
A state study shows C3 has increased classroom seats
and educator pay, but tuition?
It keeps rising.
A survey released in August found 62%
of centers raise tuition compared with 21% of home-based
daycares. Yet centers get roughly four times as much C3.
That money doesn't belong in the
pockets of anybody but the families
who are trying to make sure that they're.
Their kids are safe and healthy.
We asked every C3 recipient we contacted
for documented proof their C3 money stays in Massachusetts.
Not one provided it.
EEC says the exemptions keep money flowing
to centers that serve many low-income families.
And it says state law gives its commissioner the power
to grant the exemptions as they're being applied.
For 25 Investigates, I'm Ted Daniels.
