Bill Text: NY A11613 | 2025-2026 | General Assembly | Introduced
Bill Title: Relates to regulating private equity in child care; requires certain child care providers to report certain information to the office of children and family services; establishes additional reporting requirements for child care providers that participate in the New York state child care assistance program or receive certain public funding, and for child care providers that include a significant equity investor; establishes certain conditions on the use of public funds received by child care providers; establishes statewide reporting requirements related thereto.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced - Dead) 2026-07-29 - referred to children and families [A11613 Detail]
Download: New_York-2025-A11613-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 11613 IN ASSEMBLY July 29, 2026 ___________ Introduced by COMMITTEE ON RULES -- (at request of M. of A. Rosenthal) -- read once and referred to the Committee on Children and Families AN ACT to amend the social services law, in relation to private equity in child care The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The social services law is amended by adding a new section 2 390-p to read as follows: 3 § 390-p. Child care providers; private equity. 1. As used in this 4 section, the following terms shall have the following meanings: 5 (a) "Affiliate" shall mean: 6 (i) a person, entity, or organization that directly, indirectly, or 7 through one or more intermediaries controls, is controlled by, or is 8 under common control or ownership of another person, entity, or organ- 9 ization; 10 (ii) a person, entity, or organization whose business is operated 11 under a lease, management or operating agreement by another entity, or a 12 person substantially all of whose property is operated under a manage- 13 ment or operating agreement with another entity; 14 (iii) an entity that operates the business of substantially all of the 15 property of another entity under a lease or operating agreement; and 16 (iv) any out of state operations and corporate affiliates of an affil- 17 iate as defined in subparagraph (i), (ii) or (iii) of this paragraph, 18 including significant equity investors, real estate investment trusts, 19 and management services organizations. 20 (b) "Beneficial owner" shall mean any individual who, directly or 21 indirectly, either (i) exercises substantial control over a reporting 22 company, or (ii) owns or controls at least twenty-five percent of the 23 ownership interests of such reporting company. 24 (c) "Capital distribution" shall mean: 25 (i) a cash or share dividend; 26 (ii) a share repurchase; 27 (iii) a share redemption; 28 (iv) a share buyback; EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD16134-01-6A. 11613 2 1 (v) a payment of interest or fee on a share of stock; and 2 (vi) any other transaction similar to a transaction described in 3 subparagraph (i), (ii), (iii), (iv), or (v) of this paragraph. 4 (d) "Change of control" shall mean an arrangement in which any other 5 person or entity acquires direct or indirect control over the operations 6 of a child care provider in whole or in substantial part. For purposes 7 of this definition, "arrangement" shall include any agreement, associ- 8 ation, partnership, joint venture, management services agreement, 9 professional services agreement, staffing agreement, or other scheme 10 that results in a change in governance or control of a child care 11 provider. 12 (e) "Child care facility" shall mean any place or program operated as 13 a business or service on a regular or continuous basis, whether for 14 compensation or not, whose primary function is the protection, care and 15 supervision of children under thirteen years of age outside the child's 16 home for a period of fewer than twenty-four hours a day by a person 17 other than the parent, step-parent, guardian, or relative within the 18 third degree of consanguinity of the parents or step-parents of the 19 child. 20 (f) "Child care provider" or "provider" shall mean a person or entity 21 licensed, registered or otherwise authorized by the office to provide 22 child care services in this state, including but not limited to family 23 day care homes, group family day care homes, and child day care centers. 24 (g) "Child care services" shall mean the developmentally appropriate 25 care and supervision of children under thirteen years of age for fewer 26 than twenty-four hours a day by a child care provider. 27 (h) "Control" including the terms "controlling", "controlled by" and 28 "under common control with" shall mean the direct or indirect power to 29 direct or cause the direction, management or policies of a person, enti- 30 ty or organization through ownership, contractual agreement, or other 31 relationship/arrangement. A person or entity that directly or benefi- 32 cially owns ten percent or more equity interest, or the equivalent ther- 33 eof, of another person or entity shall be deemed to control the person 34 or entity owned. 35 (i) "Employee" shall mean an individual who performs services for and 36 under the control and direction of an employer for wages or other remun- 37 eration, including former employees, or natural persons employed as 38 independent contractors to carry out work in furtherance of an employ- 39 er's business enterprise who are not themselves employers. 40 (j) "Employer" shall mean any person, firm, partnership, institution, 41 corporation, or association that employs one or more employees. 42 (k) "Licensee" shall mean a person or entity that the office approves 43 to receive assistance for child care services pursuant to the New York 44 state child care assistance program and a provider rate agreement. 45 (l) "Material change transaction" shall mean the occurrence of any of 46 the following events during a single transaction or in a series of 47 related transactions that affects competition or access in one or more 48 geographic regions of the state involving a child care provider within 49 the state: 50 (i) a corporate merger including one or more child care providers; 51 (ii) an acquisition of one or more child care providers. For the 52 purposes of this definition, "acquisition" shall include the direct or 53 indirect purchase in any manner, including but not limited to lease, 54 transfer, exchange, options, receipt of a conveyance, creation of a 55 joint venture, or any other manner of purchase such as by a private 56 equity group, hedge fund, publicly traded company, real estate invest-A. 11613 3 1 ment trust, or any subsidiaries thereof, of a material amount of the 2 assets or operations of a child care provider as defined in regulations 3 established by the office pursuant to the state administrative procedure 4 act; 5 (iii) any affiliation, arrangement, or contract that results in a 6 change of control of a child care provider; 7 (iv) the formation of a partnership, joint venture, or parent organ- 8 ization; 9 (v) a sale, purchase, lease, affiliation, or transfer of control of a 10 board of directors or other governing body of a child care provider; 11 (vi) a real estate sale or lease agreement involving a material amount 12 of assets of a child care provider; or 13 (vii) the closure of a child care facility or the closure, discontin- 14 uance, or significant reduction of any essential child care service by a 15 child care provider. 16 (m) "Net operating profit" shall mean the profit from a child care 17 provider's core business activities, calculated as such provider's gross 18 revenue minus operating expenses, taxes, interest, depreciation and 19 amortization. 20 (n) "Office" shall mean the office of children and family services. 21 (o) "Ownership or investment interest" shall mean any of the follow- 22 ing: 23 (i) direct or indirect possession of equity in the capital, stock, or 24 profiting totaling more than five percent of an entity; 25 (ii) interest held by an investor or group of investors who engages in 26 the raising of capital or returning of capital and who invests, devel- 27 ops, or disposes of specified assets; or 28 (iii) interest held by a pool of funds by investors, including a pool 29 of funds managed or controlled by private limited partnerships, if such 30 investors or the management of such pool or private limited partnership 31 employ investment strategies of any kind to earn a return on such pool 32 of funds. 33 (p) "Principal" shall mean: 34 (i) the president, vice president, secretary, treasurer, manager, or 35 similar officers of a corporation, nonprofit corporation, cooperative or 36 worker cooperative corporation; 37 (ii) a director of a corporation, nonprofit, cooperative or worker 38 cooperative corporation; 39 (iii) a member of a member-managed limited liability company; 40 (iv) a manager of a manager-managed limited liability company; or 41 (v) a partner of a partnership or a general partner of a limited part- 42 nership. 43 (q) "Private equity fund" shall mean a publicly traded or non-publicly 44 traded company that collects capital investments from individuals or 45 entities and purchases a direct or indirect ownership share or control- 46 ling interest of a child care provider. 47 (r) "Significant equity investor" or "significant equity investment" 48 shall mean: 49 (i) any private equity fund with a direct or indirect ownership or 50 investment interest in a child care provider; 51 (ii) an investor, group of investors, or other entity that directly or 52 indirectly possesses equity in five percent or more of the capital, 53 stock, or profits of a child care provider; and 54 (iii) any private equity fund, investor, group of investors or other 55 entity with a direct or indirect controlling interest in a child care 56 provider or that operates the business or substantially all of the prop-A. 11613 4 1 erty of a child care provider under a lease, management, or operating 2 agreement. 3 (s) "Ultimate parent" shall mean an entity that is at the top of a 4 corporate or organizational hierarchy, is not controlled by any other 5 entity or person, and exercises control, directly or indirectly, over 6 all other entities in its chain of command. 7 2. (a) Every child care provider shall report to the office, in a form 8 and manner to be determined by the office, the following information: 9 (i) the legal name of such provider; 10 (ii) the business address of such provider; 11 (iii) an email address for the director or other person designated to 12 receive communications from the office; 13 (iv) business identification numbers of such provider, as applicable, 14 including either: 15 (A) taxpayer identification number; or 16 (B) employer identification number; 17 (v) name and contact information for a representative of such provid- 18 er; 19 (vi) the name and business address of the owner of such provider; 20 (vii) whether a significant equity investor holds an ownership inter- 21 est in such provider; 22 (viii) the locations of such provider's operations; 23 (ix) such provider's total licensed capacity, which shall be the maxi- 24 mum number of children that can be cared for at any given time. Such 25 provider's capacity shall be specified by group size based on the age of 26 children to be served by such provider; 27 (x) such provider's tuition and fee arrangement for child care 28 services, detailed by the age of the child and type of enrollment; and 29 (xi) whether such provider participates in the New York state child 30 care assistance program through means which shall include, but shall not 31 be limited to, accepting vouchers for payments through the selection by 32 an eligible family and through payment or reimbursement for a slot or 33 slots for which such provider contracts directly with the office. 34 (b) The information outlined in paragraph (a) of this subdivision 35 shall be reported at least annually and within two days of the consum- 36 mation of a material change transaction involving the provider. 37 (c) Child care providers located in public school buildings currently 38 used for elementary, middle or secondary public education programs and 39 approved and operated by the department of education shall be exempt 40 from the requirements of paragraph (a) of this subdivision. 41 (d) Notwithstanding the requirements set forth in paragraph (a) of 42 this subdivision, at the time of filing of the report required under 43 such paragraph (a), a child care provider that participates in or aims 44 to participate in the New York state child care assistance program in 45 the ensuing year, accepts public funding under a program financed by the 46 state to improve the compensation of the child care workforce, or 47 receives publicly-supported financing for the construction, renovation 48 or other capital improvement of a child care facility shall report to 49 the office, in a form and manner to be defined by the office, the 50 following additional information: 51 (i) the schedule of copayments and any additional fees charged to 52 families, including but not limited to families for whom the child care 53 provider accepts vouchers for payments and families for which such 54 provider receives payment or reimbursement for a slot or slots for which 55 such provider contracts directly with the office;A. 11613 5 1 (ii) a schedule of the wages, salary, employee benefits and any other 2 compensation provided to employees of such provider at the time of 3 filing of the report; 4 (iii) an accounting, on a template to be developed by the office, of 5 such provider's net operating profit for the previous calendar year, 6 including a report detailing any and all management, monitoring, and 7 franchise fees that such provider incurred; and 8 (iv) an analysis of staff turnover for the previous calendar year, 9 detailed by position and tenure. 10 (e) A child care provider subject to the requirements set forth in 11 paragraph (d) of this subdivision that includes a significant equity 12 investor shall additionally report, in a form and manner to be defined 13 by the office, the following information: 14 (i) the total funds received from the office, including the amount of 15 loans, grants or other benefits received in the previous calendar year; 16 (ii) the use of the proceeds identified in subparagraph (i) of this 17 paragraph; 18 (iii) any loans forgiven or discharged; 19 (iv) such provider's debt to asset ratio at the time of filing of the 20 report required under this paragraph; 21 (v) the compensation provided to a principal in the previous calendar 22 year; 23 (vi) the pay ratio between the chief executive officer and the median 24 pay of employees; 25 (vii) the beneficial owner or owners of such provider; 26 (viii) any acquisitions or closures of child care programs and related 27 services in the state by such provider's ultimate parent in the past 28 year; 29 (ix) the workforce demographics of such provider; and 30 (x) for child care providers operating under a franchise model or 31 management or monitoring agreement, any changes to such agreements that 32 affect: 33 (A) ownership or control of such provider; 34 (B) financial arrangements, including fee structures or revenue-shar- 35 ing models; 36 (C) operational standards, policies, or practices dictated by such 37 agreement; or 38 (D) terms impacting workforce policies, including staffing levels, 39 wages, or benefits. 40 3. (a) A child care provider that participates in the New York state 41 child care assistance program, accepts public funding under a program 42 financed by the state to improve the compensation of the child care 43 workforce, or receives publicly-supported financing for the 44 construction, renovation, or other capital improvement of a child care 45 facility shall be required to: 46 (i) expend all funds to support the provision of child care services 47 at such child care facility that serves the family for whom the office 48 has provided a voucher or for which the provider receives payment or 49 reimbursement for a slot or slots under a contract or grant with the 50 office; 51 (ii) adopt a position of neutrality and commit to non-interference in 52 the event there is an attempt by a labor organization to organize work- 53 ers; 54 (iii) participate in the New York state child care assistance program, 55 either by executing a contract or grant with the office or by acceptingA. 11613 6 1 a voucher or certificate for the provision of services to subsidy-eligi- 2 ble children; 3 (iv) adopt policies that provide for reasonable work hours and reli- 4 able work schedules; and 5 (v) where the office uses a cost model to establish reimbursement 6 rates for the New York state child care assistance program, maximize the 7 productivity and effectiveness of their workers by investing in train- 8 ing, safe workplaces, fair compensation, and reasonable health and 9 retirement benefits. 10 (b) A child care provider that participates in the New York state 11 child care assistance program, accepts public funding under a program 12 financed by the state to improve the compensation of the child care 13 workforce, or receives publicly-supported financing for the 14 construction, renovation or other capital improvement of a child care 15 facility shall be prohibited from using public funds to: 16 (i) provide any incentive compensation, bonus, or severance payment to 17 principals, senior executives, any of the next twenty most highly 18 compensated employees, consultants of the provider, and department or 19 division managers of the provider; 20 (ii) cover management or franchise costs or fees, or otherwise direct 21 funds to a parent company or other affiliate; 22 (iii) make a capital distribution; or 23 (iv) provide compensation to senior executives, any of the next twenty 24 most highly compensated employees, consultants of the provider, and 25 department or division managers of the provider in excess of an indirect 26 cost rate agreement to be determined by the office. 27 (c) (i) A child care provider with significant equity investment that 28 participates in the New York state child care assistance program, 29 accepts public funding under a program financed by the state to improve 30 the compensation of the child care workforce, or receives publicly-sup- 31 ported financing for the construction, renovation or other capital 32 improvement of a child care facility shall be prohibited from: 33 (A) initiating or executing program closings or staff layoffs within 34 twenty-four months of the original receipt of funds; or 35 (B) purchasing or otherwise securing an equity investment in another 36 child care provider within the state for a period of twelve months from 37 the original receipt of funds. 38 (ii) For the purposes of this paragraph, the original receipt of funds 39 shall be defined as the first receipt of public funds after completion 40 of the acquisition of the child care provider. 41 (d) Nothing in this subdivision shall be construed to supersede any 42 terms and conditions imposed by statutory authority for the New York 43 state child care assistance program or otherwise specified in any 44 contract for assistance executed between the child care provider and the 45 office. 46 (e) Any controlling private fund, any holder of an active interest in 47 a controlling private fund, or any affiliate of a child care provider 48 that aids, abets, facilitates, supports, or instructs a provider's 49 violation of paragraph (a) or (b) of this subdivision shall be jointly 50 and severally liable under this paragraph for any transfer made or obli- 51 gation incurred, including for reasonable attorneys' fees and costs 52 awarded to a plaintiff pursuant to this section. 53 4. (a) A child care provider subject to the provisions set forth in 54 subdivision three of this section shall self-certify its compliance with 55 the requirements and restrictions in a form and manner to be determined 56 by the office, provided that:A. 11613 7 1 (i) such self-certification shall include submission of such provid- 2 er's audited financial statement for the time period covered by such 3 certification; 4 (ii) the office shall establish procedures for electronic submission 5 of such certification and any accompanying materials; and 6 (iii) the office shall provide technical and other assistance to meet 7 reporting requirements to any child care provider for which twenty 8 percent or more of the child care slots maintained by such provider are 9 supported by the New York state child care assistance program. Such 10 assistance shall include but not be limited to financial assistance, 11 software or templates for recordkeeping, and training related to meeting 12 reporting requirements. 13 (b) Notwithstanding the reporting requirements triggered by a material 14 change transaction pursuant to paragraph (b) of subdivision two of this 15 section, any child care provider with five or more employees shall 16 provide the office with notice sixty days prior to the merger, consol- 17 idation, or closure of any child care facility. 18 (c) If the office is made aware of a failure on the part of a child 19 care provider to comply with the requirements of paragraph (a) of subdi- 20 vision three of this section or of a violation by a child care provider 21 of the prohibitions set forth in paragraph (b) of subdivision three of 22 this section, the office shall undertake enforcement action to compel 23 compliance. Such action may include, but is not limited to: 24 (i) meetings or telephone conversations between a child care provider 25 and the office to discuss corrective action plans; 26 (ii) issuance of a written report which includes corrective action 27 plans or requests that the child care provider submit a corrective 28 action plan to the office; 29 (iii) notice of the intention to initiate enforcement through the 30 recoupment of funds, imposition of a fine, or the limitation, suspen- 31 sion, termination, revocation, or denial of a child care license or 32 registration; 33 (iv) holding of a hearing to determine if a child care provider has 34 failed to comply with the applicable law and regulation which resulted 35 in request for repayment of public funds, the assessment of fines, 36 suspension, limitation, revocation, or denial of the license or regis- 37 tration; 38 (v) issuance of a determination, after a hearing, that civil penalties 39 should be imposed; 40 (vi) determinations to deny, reject, revoke, terminate, suspend or 41 limit a license or registration; 42 (vii) issuance of orders to cease and desist operation of child care 43 services; 44 (viii) requests to the attorney general to seek injunctive relief 45 against a licensee or registrant for repeated violations of the statute 46 or regulation; 47 (ix) requests to the attorney general to take such action as is neces- 48 sary to collect civil penalties, or to bring about compliance with any 49 outstanding hearing decision or order; and 50 (x) publication of the names and addresses of child care licensees or 51 registrants whose licenses, registrations or applications for licensure 52 or registration have been rejected, denied, limited, suspended, termi- 53 nated or revoked, or against whom a fine has been assessed after an 54 administrative hearing for a violation of the provisions set forth in 55 subdivision three of this section.A. 11613 8 1 5. (a) On no less than an annual basis, the office shall publish a 2 report of aggregated data detailing the capacity of the state's child 3 care industry by program type and ownership arrangement. Information in 4 such report shall be disaggregated by age of child, geographic location, 5 and based on the child care provider's receipt of public funding under 6 the New York state child care assistance program. Nothing in this subdi- 7 vision shall be construed to prevent the office from including this 8 information in any other regularly published report relating to the 9 child care industry, so long as the information is updated no less than 10 annually. 11 (b) The office shall issue a report tracking violations of the 12 requirements set forth in subdivision three of this section disaggre- 13 gated by program type and ownership arrangement. As information is 14 aggregated at the conclusion of any investigation, the office shall 15 update the report automatically on no less than a monthly basis. 16 (c) The state shall create a publicly accessible database of non-pro- 17 prietary information collected pursuant to the registration requirements 18 set forth in paragraph (a), subparagraphs (i) and (iv) of paragraph (d), 19 and subparagraphs (i), (ii), (v), (vi) and (vii) of paragraph (e) of 20 subdivision two of this section. The information contained in such data- 21 base shall be made available in an open format and published as 22 machine-readable data. 23 § 2. Severability clause. If any clause, sentence, paragraph, subdivi- 24 sion, section or part of this act shall be adjudged by any court of 25 competent jurisdiction to be invalid, such judgment shall not affect, 26 impair, or invalidate the remainder thereof, but shall be confined in 27 its operation to the clause, sentence, paragraph, subdivision, section 28 or part thereof directly involved in the controversy in which such judg- 29 ment shall have been rendered. It is hereby declared to be the intent of 30 the legislature that this act would have been enacted even if such 31 invalid provisions had not been included herein. 32 § 3. This act shall take effect on the ninetieth day after it shall 33 have become a law.
