NEW REPORT: Merkley Unveils Child Care Investigation Exposing Safety Lapses, Drain of Public Resources in Private Equity-Backed Centers

Report Identifies Four Key Findings that Validate Public Concern Over Private Equity's Increased Role in Child Care Industry

WASHINGTON, D.C. - As the cost of child care continues to skyrocket, U.S. Senator Jeff Merkley (D-OR), Ranking Member of the Senate Budget Committee, released a first of its kind investigation on the effect that private equity involvement in the U.S. child care industry has on child safety. The investigation analyzed publicly available information and licensing data from three states-California, Texas, and Virginia-and focused on the two largest for-profit child care companies by capacity: KinderCare Learning Companies (KinderCare) and Learning Care Group (LCG), and their private equity backers, Partners Group and American Securities, respectively. Collectively, KinderCare and LCG have a combined licensed capacity to enroll over 375,000 children throughout the U.S.

Merkley asked both companies, and their private equity backers, to provide information and documents, such as financial records, ownership structure, tuition and cost trends, safety standards, and employment practices,to better understand the effects of private equity investment in the child care industry. All four companies responded with brief narratives and no underlying records.

"From housing to health care and now child care, private equity firms are taking control of American industries that working families rely on and running them into the ground. Wall Street's profits-over-people playbook fails families every time, and now we have evidence that private equity is raking in bundles of cash while making child care less safe," said Ranking Member Jeff Merkley.

"These private equity-backed child care centers refused to provide records while publicly available data from their centers show clear evidence of more complaint-triggered inspections and more serious safety violations than centers not backed by private equity; all while collecting millions of taxpayer dollars. It's outrageous.

"Families deserve affordable, high-quality care without compromising their children's safety. Congress must act now to curb predatory private equity practices and ensure all children have the resources they need to thrive," Merkley concluded.

The report established four major findings, a link to the full report is available at the end of this release:

1. KinderCare and Learning Care Group rely heavily on public funding.

• Approximately one-third of KinderCare's and LCG's total revenue is from public funding programs, including subsidies. KinderCare collected roughly $1 billion in subsidy-supported tuition in fiscal year 2025.

1. KinderCare's and Learning Care Group's private equity backers and owners, including Partners Group and American Securities, respectively, extracted over $1.25 billion in dividends, leaving the child care companies with substantial debt.

• KinderCare and LCG have borrowed more than $1.25 billion to pay dividends to their owners: $620 million at KinderCare and at least $636 million at LCG. These obligations reduce financial flexibility and make it more important to know how the companies balance debt service and investor payments against child safety, staffing, and affordability-information the companies did not provide as requested.

1. Across three states, KinderCare and Learning Care Group have more frequent, more serious, and more persistent safety problems than centers not backed by private equity.

• Based on Democratic staff analysis of child care licensing and violation records in California, Texas, and Virginia, KinderCare and LCG centers were cited more often, more seriously, and more repeatedly than for-profit chains with no private equity backer ("non-PE chains") and all other centers.
• The two companies drew complaint-triggered inspections at roughly twice the non-PE chain rate and up to four times the rate of all other centers and accumulated high-risk violations at up to three times the non-PE chain rate.

1. All four companies refused to provide key records.

• Despite repeated requests, KinderCare, LCG, Partners Group, and American Securities did not provide the documents and data needed to determine how public subsidies and tuition revenues are allocated among safety, operating costs, workforce investments, debt payments, and returns to investors.

Merkley has been calling attention to the poisonous role of private equity in American life, from housing to youth sports. Merkley led the charge to kick hedge funds out of the housing market as large institutional investors gobble up homes in communities across the United States, driving up both purchase prices and rents for single-family homes. His initiative to limit institutional investors from purchasing single-family homes was included in the 21^st Century Road to Housing Act, which became law this year. Also this year, he cosponsored the Let Kids Play Act, legislation to stop Wall Street from pricing kids out of sports. The proposed legislation from Sen. Chris Murphy (D-CT) bans private equity firms from taking over youth sports, shutting down the vulture practices they use to jack up costs, and getting money back to the families who have been ripped off. Merkley also previously cosponsored the Corporate Crimes Against Health Care Act, the Take Back Our Hospitals Act, and the Stop Corporate Takeovers of Physicians Act to fight back against private equity abuses in health care.

The full report, titled Who Profits from Child Care?, is HERE.

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