|Knowledge Universe reaches $1.6 billion in revenue|
For-profit child care has come a long way since the 1980s when KinderCare, then a pioneering company, was derided for making profits off kids and branded with the tagline “Kentucky Fried Children.” In its early days, KinderCare quality “was at various levels,” says Roger Neugebauer, publisher of the Child Care Information Exchange, a management magazine for childcare providers. Not today, says Neugebauer, “KinderCare has great staff training and a drive to make their centers the best in the community.”
A cooking class at KinderCare in Cedar Hills teaches children the importance of health food. From left: Lukas, Malaika, Jillian and Jake prepare garden kabobs for lunch.
Will Parnell, a professor of early childhood education at Portland State University, says KinderCare isn’t typically considered one of the city’s top-ranked practitioners, a category often reserved for well-funded employers or university-sponsored centers such as PSU’s Helen Gordon Center or Nike’s Joe Paterno child development center. But “maybe we could” include KinderCare in those ranks, Parnell says. He noted that many of KinderCare’s centers are certified by the National Association for the Education for Young Children. That’s “a tough thing to accomplish,” he says. The company “is really diving into child development and best practices.”
Knowledge Universe’s CCLC division operates precisely the kind of employer-sponsored centers Parnell lauds, including facilities for Stanford University, and in Portland, Fred Meyer and Oregon Health & Science University. The latter features a state-of-the-art indoor playground connected to the outside by sliding doors, smart-board technology and like all CCLC centers, an eco-healthy certification from the Oregon Environmental Council.
With its focus on technology, sustainability and foreign language (KinderCare even offers an anti-obesity enrichment program, Active Adventures) Knowledge Universe is positioning itself as a solution to the myriad woes facing U.S education. The company lobbies state and national governments to strengthen child care standards and last year joined Change the Equation, a collaboration between the White House and CEOs of 100 companies to cultivate widespread literacy in science, math and technology. “We strongly support setting quality expectations,” Thornton says. “It’s not just for us —but for states and industry.”
But if what’s good for Knowledge Universe is good for the country, KU has its challenges — namely, while corporate operations may be seamless, the market they are operating in is anything but. Unlike K-12 programs, child care providers are a mixed group, ranging from grandmothers, churches and small family providers to independent nonprofit and for-profit day care centers. And while Knowledge Universe may be a big fish it’s swimming in an even bigger ocean. Consider, for example, that after KinderCare, Learning Care Group, based in Michigan, is the country’s second-largest provider, with 1,136 sites. Massachusetts-based Bright Horizons, the third-largest, operates 730. In total, the big three comprise only 3% of the market.
In an already fragmented market, public schools are also starting to provide preschool programs, a move that has “inhibited growth” of for-profits in recent years, Neugebauer says. Between 2005 and 2009, state funding for prekindergarten increased from $2.9 billion to $5.2 billion, and pre-K is now the fastest-growing sector in public education, according to a 2009 report by the Pew Center for the States.
The recession has also left its mark on private-sector providers. Although Knowledge Universe went through a period of major acquisitions mid decade, company growth has remained flat over the past few years, Thornton says.
As the child care sector becomes more competitive, companies such as KinderCare, which used to serve only fee-paying parents, now aim to serve a broader demographic, Neugebauer says. “It’s a survival strategy,” he says. In Oregon, for example, most Knowledge Universe centers enroll families participating in the Employment Related Day Care program, a state child care subsidy. KinderCare also partners with the Mt. Hood Community College Head Start program to operate a classroom for low-income kids. “If you walked in the door, there would be no way for you to know,” says Thornton. “It’s about quality education and the socioeconomic piece should be irrelevant.”
Most policy experts agree that such collaborations provide more kids with high-quality child care options. But these public private partnerships are also “very different” from the public K-12 education model, says Steve Barnett, co-director for the National Institute for Early Education Research. Despite the growth of charter and online schools, K-12 districts rarely subcontract core services to the private sector. And in the K-12 arena, corporate resumes are not always met with enthusiasm. Witness the outcry over New York Mayor Michael Bloomberg’s recent appointment of Catherine Black, a corporate executive with no education or public sector background, as chancellor of New York City schools.
A former chief financial officer of Albertsons, a grocery story chain, Thornton does not have a background in education, nor does CEO for global operations Peter Maslen, the former president of Starbucks Coffee International. Other members of the executive team, such as Yalow, do have a background in early childhood pedagogy and research. Nevertheless, the company’s financial management roots date back to its controversial founder Milken, who served two years in federal prison for illegal trading and other market manipulations in the early 1990s. Since then he has focused on charitable and educational endeavors, among them the Milken Family Foundation, known for its annual public educator awards.
Today Milken is chairman of Knowledge Universe, but he has no day-to-day responsibilities, Thornton says. “He’s absolutely passionate about education,” she says.