A Bill for an Act
Page 1, Line 101Concerning requirements for child care centers owned by an
Page 1, Line 102institutional investment entity.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)
The bill requires a child care center owned by an institutional investment entity to meet the following requirements in order to receive state funding:
- The child care center may only charge a wait list fee of no more than $25; and
- The child care center shall post and update accurate child care pricing on the child care center's website.
- Allow a child care center to maintain ownership of the property used to operate the child care center; and
- Upon acquisition of a child care center, provide at least a 60-day notice to all child care center employees and families with children enrolled at the child care center if the institutional investment entity intends to lay off child care center employees or change enrollment or eligibility requirements for the child care center.
The bill requires an institutional investment entity to meet the following requirements in order to receive state funding:
The requirements of the bill apply only to institutional investment entities that own 5 or more child care centers and to child care centers that are owned by an institutional investment entity that owns 5 or more child care centers.
This Unofficial Version Includes Committee
Amendments Not Yet Adopted on Second Reading
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. Legislative declaration. (1) The general assembly
Page 2, Line 3finds that:
Page 2, Line 4(a) Colorado families need and deserve an abundance of
Page 2, Line 5high-quality, affordable child care options, and such a system benefits
Page 2, Line 6Colorado children, parents, communities, businesses, and the state
Page 2, Line 7economy;
Page 2, Line 8(b) Large for-profit child care center chains backed by
Page 2, Line 9institutional investors have been proliferating in Colorado, and these child
Page 2, Line 10care center chains have a profit maximization motive distinct from
Page 2, Line 11nonprofit, community-based, or small noninstitutional investor-backed
Page 2, Line 12for-profit child care programs;
Page 2, Line 13(c) Child care center chains have, at times, engaged in
Page 2, Line 14profit-driven actions contrary to the best interests of staff, enrolled
Page 2, Line 15families, and the health of Colorado's overall child care system. These
Page 2, Line 16actions include targeted or sudden closures of child care sites and real
Page 2, Line 17estate transactions that harm the financial position of child care sites.
Page 3, Line 1(d) As more public funding becomes available to support
Page 3, Line 2Colorado's child care system, expansion of child care center chains is
Page 3, Line 3likely and may result in the capture of public dollars for the private gain
Page 3, Line 4of investors;
Page 3, Line 5(e) The government has long taken an active role in establishing
Page 3, Line 6guardrails against profit-maximizing behavior by private businesses,
Page 3, Line 7particularly those in which there is a strong public interest, such as private
Page 3, Line 8educational institutions, hospitals, banks, and airlines;
Page 3, Line 9(2) Therefore, the general assembly declares that it is necessary to:
Page 3, Line 10(a) Define large for-profit, institutionally backed child care center
Page 3, Line 11chains as a distinct class of child care program; and
Page 3, Line 12(b) Establish guardrails that mitigate profit-maximizing behavior
Page 3, Line 13in child care, including preventing child care center chains from:
Page 3, Line 14(I) Levying excessive ancillary fees, such as wait list fees;
Page 3, Line 15(II) Not being transparent about the full price of services;
Page 3, Line 16(III) Forcing sale-leaseback arrangements that enrich investors,
Page 3, Line 17leaving child care sites with unnecessary debt; and
Page 3, Line 18(IV) Conducting mass layoffs or site closures without reasonable
Page 3, Line 19notice to staff and enrolled families.
Page 3, Line 20SECTION 2. In Colorado Revised Statutes, add 26.5-1-118 as
Page 3, Line 21follows:
Page 3, Line 2226.5-1-118. Private equity acquisition of child care centers -
Page 3, Line 23applicability - definition. (1) As used in this section, unless the
Page 3, Line 24context otherwise requires, "institutional investment entity"
Page 3, Line 25means a person or company that would be considered an
Page 3, Line 26investment company under the federal "Investment Company
Page 3, Line 27Act of 1940", 15 U.S.C. sec. 80a-3, except for the application of
Page 4, Line 1subsection (c)(1) or (c)(7); or considered a venture capital fund,
Page 4, Line 2as defined in 17 CFR 275.203(I)-1; and that has ownership of at
Page 4, Line 3least twenty percent of a child care center or company that
Page 4, Line 4operates or franchises child care centers. "Institutional
Page 4, Line 5investment entity" includes an entity that holds at least a
Page 4, Line 6twenty percent share of a company that operates or franchises
Page 4, Line 7child care centers and that is publicly traded on a stock
Page 4, Line 8exchange, and also includes an entity that is the beneficial
Page 4, Line 9owner of a franchised child care center regardless of whether
Page 4, Line 10the franchise is independently operated. Any center or company
Page 4, Line 11that is at least twenty percent owned by, or has twenty percent
Page 4, Line 12of its public shares owned by, an institutional investment entity
Page 4, Line 13is an institutional investment entity for purposes of this section.
Page 4, Line 14(2) A child care center owned by an institutional
Page 4, Line 15investment entity shall post and update child care pricing on
Page 4, Line 16the child care center's website pursuant to the requirements of
Page 4, Line 17section 26.5-5-332 (5).
Page 4, Line 18(3) (a) Upon acquisition of a child care center, an
Page 4, Line 19institutional investment entity shall provide at least sixty
Page 4, Line 20days' notice to child care center employees and families who
Page 4, Line 21have children enrolled at the child care center if the
Page 4, Line 22institutional investment entity intends to lay off child care
Page 4, Line 23center employees or change enrollment or eligibility
Page 4, Line 24requirements for the child care center as a result of the
Page 4, Line 25institutional investment entity's acquisition.
Page 4, Line 26(b) The department may require an institutional
Page 4, Line 27investment entity to annually submit information related to
Page 5, Line 1the institutional investment entity's general financial
Page 5, Line 2condition. This information may include audited financial
Page 5, Line 3statements.
Page 5, Line 4(4) (a) The requirements described in subsection (2) of this
Page 5, Line 5section apply only to a child care center that is owned by an
Page 5, Line 6institutional investment entity that owns five or more child
Page 5, Line 7care centers.
Page 5, Line 8(b) The requirements described in subsection (3) of this
Page 5, Line 9section apply only to an institutional investment entity that
Page 5, Line 10owns five or more child care centers.
Page 5, Line 11(5) If a child care center does not comply with the
Page 5, Line 12requirements of this section, the department may take further
Page 5, Line 13disciplinary action pursuant to section 26.5-5-317 (2).
Page 5, Line 14SECTION 3. Effective date. This act takes effect upon passage;
Page 5, Line 15except that section 26.5-1-118 (2), Colorado Revised Statutes, as enacted
Page 5, Line 16in section 1 of this act, takes effect only if Senate Bill 25-004 becomes
Page 5, Line 17law, in which case section 26.5-1-118 (2) takes effect on the effective
Page 5, Line 18date of this act or Senate Bill 25-004, whichever is later.
Page 5, Line 19SECTION 4. Safety clause. The general assembly finds,
Page 5, Line 20determines, and declares that this act is necessary for the immediate
Page 5, Line 21preservation of the public peace, health, or safety or for appropriations for
Page 5, Line 22the support and maintenance of the departments of the state and state
Page 5, Line 23institutions.