BEVERLY, Mass. — 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.
“For her in the infant class, it’s going to be what, like $2,400 a month,” Julie Johnson said of her youngest child.
As a two-income family, the Johnsons get 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,” Mike Johnson said. “There just is no savings.”
The state has been more generous with daycare operators. Through the Commonwealth Cares for Children grant program, known as C3, Massachusetts has put about $1.72 billion of its own money into direct operating grants for child care providers since fiscal 2022 — roughly 73% of the $2.36 billion the program has paid out, according to state data. The rest came from the federal government.
During the pandemic, federal stabilization grants kept daycares across the country from closing. When that money ran dry on Sept. 30, 2023, Massachusetts did something few states did: It kept the grants flowing with state dollars. The Century Foundation, a nonpartisan think tank, has called Massachusetts a ‘national leader’ for continuing operating payments directly to providers.
Child care policy expert and author Elliot Haspel said the idea is that steady funding stabilizes providers. “They’re going to be able to keep their doors open, they’re gonna be able to retain their staff better, they are going to be able to serve more families in a more stable way,” he said.
A 25 Investigates analysis found many of the biggest checks are going to for-profit centers backed by multinational companies, private equity firms and Wall Street investors. State law says the grants can be used to make child care more affordable for families, including by ‘reducing tuition and fees.’ But the state’s own data shows most centers have raised tuition.
Over several months, 25 Investigates reviewed more than 46,000 C3 payment records the state posts online and cross-referenced company names and ownership structures to estimate how much each corporate family has received.
The analysis simply grouped payments by daycare brand names and their sister brands and added up what each received. It does not factor in any formulas the state may use to calculate funding or apply its cap. 25 Investigates asked each chain to review and confirm its totals.
Where the biggest checks go
Centers associated with KinderCare Learning Companies have received roughly $40.7 million in state and federal C3 money, based on 25 Investigates’ estimate. The Portland, Oregon-based company trades on the New York Stock Exchange — it raised $576 million in its initial public offering — and is controlled by funds advised by Swiss private equity firm Partners Group. Its former CEO made $5.3 million in total compensation last year, according to the AFL-CIO’s Executive Paywatch.
KinderCare said all of its C3 money goes to local teachers. “KinderCare directs 100% of its C3 funding toward our educator wages in Massachusetts,” a spokesperson said, adding that the company’s Massachusetts educators have seen a 19.3% increase in wages since 2022.
Cadence Education and its sister brands, including Next Generation Children’s Centers, have collected roughly $38.2 million, by 25 Investigates’ count. Scottsdale, Arizona-based Cadence is owned by funds advised by private equity firm Apax Partners, whose portfolio has ranged from Bazooka bubble gum to Ole Smoky moonshine, according to its website.
Cadence said all of its C3 money stays in Massachusetts and pays for staff wages, benefits, and classrooms. “C3 funding helps us support educator wages and benefits and continue delivering high-quality care for Massachusetts children and families,” a Cadence spokesperson said. “Cadence complies with all EEC requirements governing the C3 program and the funding we receive remains entirely in Massachusetts.”
Little Sprouts and its sister brands — First Chapters and Heartworks — have collected an estimated $34.2 million. The chain is headquartered in Lawrence, but its parent company, Babilou Family, and that company’s private equity backer, Antin Infrastructure Partners, are nearly 3,500 miles away in France. Babilou has described itself as a leading European group with 900 million euros in annual revenue and 15,000 employees.
Little Sprouts did not respond to three emails from 25 Investigates asking how that money benefits Massachusetts families.
A spending cap with no waivers on paper
“We need to make sure that the public funds are actually supporting the things that we know make a difference for kids and families,” said Laura Valle-Gutierrez, a fellow at The Century Foundation.
Valle-Gutierrez pointed to guardrails enacted by state lawmakers. Starting in fiscal 2025, state law says a for-profit provider operating more than 10 centers in Massachusetts can’t receive more than 1% of the total yearly C3 pot unless the commissioner of the Department of Early Education and Care grants a waiver after finding the extra money is in the state’s best interest.
In fiscal 2025, that limit worked out to about $4.75 million based on the $475 million budgeted in FY2025.
By 25 Investigates’ calculation, several chains appear to have topped it: Little Sprouts’ parent, Babilou Family, received about $7 million that year, KinderCare about $6.6 million and Cadence about $6.3 million. So 25 Investigates requested their waivers.
It turns out none exist — at least not on paper.
Instead, the Massachusetts Department of Education and Care (EEC) said it created a policy that automatically exempts individual centers where at least a quarter of the children receive state child care financial assistance. C3 money paid to those centers doesn’t count toward a chain’s cap, which means a chain’s total grants can exceed the 1% mark without breaking the rule. In fiscal 2026, Bright Horizons, Cadence, KinderCare and Little Sprouts all had exempt sites, according to the department.
The Department of Early Education and Care (EEC) said the exemptions keep money flowing to centers that serve many low-income families, and state law gives its commissioner the power to grant them as they are being applied. “In accordance with state law, EEC limits C3 funding for large, for-profit child care organizations while allowing exemptions for individual sites that serve a significant number of low-income families,” the department said in a statement. “This approach ensures that funding continues to support families who depend on affordable, high-quality child care.”
More seats, higher tuition
State studies show C3 is adding daycare seats, but tuition keeps rising. An August state data brief found 62% of child care centers raised tuition in the past year, compared with 21% of home-based family child care providers. Yet centers have received roughly four times as much C3 money — about $1.9 billion, compared with about $446 million for home-based providers since the program began.
The same report found 70% of fiscal 2025 C3 spending went to workforce costs and educator turnover fell from 32% to 22%. Nearly half of programs said C3 allowed them to delay planned tuition increases.
25 Investigates asked every C3 recipient it contacted for documented proof that its C3 money stays in Massachusetts. None provided it. KinderCare said any supporting documentation could be requested through the state.
For the Johnsons in Beverly, the math is simple. “That money doesn’t belong in the pockets of anybody but the families who are trying to make sure that their kids are safe and healthy,” Julie Johnson said.
This is a developing story. Check back for updates as more information becomes available.
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