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OSINT - Publicly Available Sources January 07, 2026

California Child Care Investigation Report

Analyst: OPUS (Claude Opus 4.5) Project Milk Carton
California Child Care Investigation Report

California Child Care Investigation Report

CALIFORNIA CHILD CARE INVESTIGATION REPORT

Classification: UNCLASSIFIED // FOR OFFICIAL USE ONLY Date: January 7, 2026 Analyst: OPUS - Senior Intelligence Analyst Case Reference: PMC-CA-2026-001 Subject: California Taxpayer-Funded Child Care Facilities Investigation

EXECUTIVE SUMMARY

California operates the largest state-funded child care system in the United States, with over $2 billion in annual nonprofit sector revenue and 369 nonprofit day care organizations serving millions of families. This investigation analyzed major taxpayer-funded child care programs, nonprofit organizations receiving state funding, executive compensation structures, board member cross-pollination patterns, and identified significant red flags requiring further scrutiny.

Key Findings at a Glance

Metric Value
Nonprofit Day Care Organizations 369
Combined Annual Revenue $2+ billion
Largest Single Organization Revenue $489.3M (CCRC)
Total Employees in Sector 15,539+
Federal Funding Currently Frozen $10 billion (5 states including CA)
Known Fraud Cases Multi-million dollar scheme (San Diego, 2023)

PART 1: REGULATORY FRAMEWORK

California Department of Social Services (CDSS)

The California Department of Social Services (CDSS), through its Community Care Licensing Division (CCL), provides oversight and enforcement for licensed child care centers and family child care homes through 21 Regional Offices statewide.

Key Regulatory Changes (2020-2026)

Date Change Impact
July 1, 2021 Early Childhood Act of 2020 (SB 98) transferred programs from CDE to CDSS Consolidated child care oversight
July 2, 2024 SB 163 signed - streamlined contractor applications Reduced oversight barriers
2025-26 TK expansion to 4-year-olds by September 1 Significant funding shift
FY 2026-27 CFA to CEFA transition New application processes

Funding Sources

Federal: - Child Care and Development Fund (CCDF): $12.30 billion nationally (FFY 2025) - Temporary Assistance for Needy Families (TANF) - Social Services Block Grant

State: - California Alternative Payment Program (APP) - California State Preschool Program - General Child Care and Development (CCTR) - Resource and Referral Network funding

PART 2: MAJOR TAXPAYER-FUNDED ORGANIZATIONS

TOP 10 CALIFORNIA CHILD CARE NONPROFITS BY REVENUE

Rank Organization Revenue (FY 2024) Employees EIN
1 Child Care Resource Center (CCRC) $489.3M 1,276 95-3081695
2 Crystal Stairs, Inc. $365.3M 604 95-3510046
3 Children’s Council San Francisco $191.1M 156 94-2221305
4 Options for Learning $161.8M 969 95-3602641
5 Kidango $127.2M 742 94-2581686
6 Pathways LA $61.2M 90 95-3258661
7 CA Child Care R&R Network $8.0M N/A 94-2718807
8-10 Various regional providers $20-50M each Varies Various

TOTAL TOP 6 REVENUE: $1.395 BILLION

PART 3: IRS 990 FINANCIAL ANALYSIS

CHILD CARE RESOURCE CENTER (CCRC) - LARGEST PROVIDER

EIN: 95-3081695 Location: Chatsworth, CA (Headquarters) Service Area: 22,500 square miles (LA County + San Bernardino County) Families Served: 50,000/month

Financial Metric FY 2024
Total Revenue $489,300,000
Total Expenses ~$480,000,000
Net Assets ~$50,000,000
Revenue Growth (2003-2024) +450% ($89M → $489M)

Executive Compensation - CCRC

Position Name Compensation
President & CEO Dr. Michael Olenick ~$400,000
Other Top Executives Various $150,000-$300,000

Board of Directors - CCRC

Name Position External Affiliations
Adrian Stern Chair Clumeck Stern Schenkelberg & Getzoff (CPA)
Michelle Torres Vice Chair Warner Bros. (Sales Planning)
Joannie Aguayo Secretary Pepperdine University (Ed.D)
Shelia Jones Treasurer Premier America Credit Union (VP)
Connie Leyva Member Former CA State Senator, KVCR Executive Director
Dean A. Rocco Member Wilson Elser (Employment Litigation)
Robert H. Stellwagen Member Collins + Collins (General Counsel)
Anthony Pena Member Wells Fargo Commercial Banking (SVP)
Romalis Taylor Member Community Advocate, Former Mental Health Director

CRYSTAL STAIRS, INC. - SECOND LARGEST

EIN: 95-3510046 Location: Los Angeles, CA Founded: 1980 Service Focus: Child care services, research, and advocacy

Financial Metric FY 2024
Total Revenue $365,300,000
Total Expenses $360,900,000
Net Income $4,400,000
Total Assets $107,200,000
Total Liabilities $91,400,000

Revenue Composition

  • Contributions (Government): 99.9% ($364.9M)
  • Other Sources: 0.1%

Executive Compensation - Crystal Stairs

Position Name Total Compensation
CEO Jackie Majors $443,830
COO Kendall Hirai $277,396
CFO LyTanya Loughridge $257,673
CCO/General Counsel Lisa D. Morris $203,819
Sr. Director HR Sinthia Aruya $157,978

TOTAL TOP 5 EXECUTIVE COMPENSATION: $1,340,696

Board Leadership - Crystal Stairs

Position Name External Affiliation
Chair Heidi Roth Kilroy Realty Corporation (EVP/CAO)
Vice Chair/Treasurer John Coleman Technology Executive
Secretary Amber Finch Reed Smith LLP (Office Managing Partner)
Member Malgy Blue U.S. Bank (SVP)
Member Dr. Lenise Yarber The Children’s Dental Specialist (Owner)

KIDANGO - BAY AREA LEADER

EIN: 94-2581686 Location: Fremont, CA Founded: 1979 Children Served: 4,400+

Financial Metric FY 2024
Total Revenue $127,200,000
Total Expenses $109,500,000
Net Income $17,700,000
Total Assets $68,800,000

Executive Compensation - Kidango

Position Name Compensation
CEO Scott Moore $502,853
CFO Nereyra Houle $399,316
COO Noelle Payomo $315,335
Chief People Officer Andrea Garcia $316,478
VP Finance Ernesto Raul Sy An $269,575

TOTAL TOP 5 EXECUTIVE COMPENSATION: $1,803,557

Board Leadership - Kidango

Position Name
Chair Catherine Atkin
Vice Chair Erika Trageser
Treasurer Gerry McFaull
Secretary Susan Muenchow

OPTIONS FOR LEARNING

EIN: 95-3602641 Location: West Covina, CA Founded: 1981 Classrooms: 300+ at 75+ locations

Financial Metric FY 2024
Total Revenue $161,785,464
Total Expenses $151,896,390
Net Income $9,889,074
Total Assets $122,219,639

Executive Compensation - Options for Learning

Position Name Compensation
Former Deputy Chief Kelly O’Connell $430,567
CEO Paul F. Pulver $375,154
CFO & COO Dominic Alpuche $275,262
Chief Program Officer Tracy Lynch $205,586
VP Communications Leslie Anne Carmell $193,318

CHILDREN’S COUNCIL SAN FRANCISCO

EIN: 94-2221305 Location: San Francisco, CA Founded: 1973

Financial Metric FY 2024
Total Revenue $191,100,000
Total Expenses $187,500,000
Net Income $3,600,000
Total Assets $73,900,000

Board Leadership

Position Name
Chair Rehana Abbas
Vice Chair Deborah Sims
Secretary Amanda Renschler
Treasurer Marga Dusedau

PART 4: CROSS-POLLINATION ANALYSIS

KEY FINDING: Catherine Atkin Network

Catherine Atkin serves in leadership roles across multiple organizations:

Organization Position Status
Kidango Board Chair Current (since 2018)
Early Edge California Former President Past
Early Edge California Advisory Committee Chair Current
Early Learning Lab Executive Director Founded 2015
David and Lucile Packard Foundation Former Senior Advisor Past

CONCERN: Catherine Atkin’s simultaneous service on the Kidango board (which received $127M in FY 2024) while serving on the Early Edge California Advisory Committee (a lobbying organization that advocates for child care policy and funding) creates potential conflict of interest.

Political Connections Matrix

Executive Organization Political Connection
Scott Moore (Kidango CEO) Kidango Appointed by Gov. Schwarzenegger (2011) as ED of CA Early Learning Advisory Council
Scott Moore Kidango Appointed by Gov. Newsom to CA Early Childhood Policy Council (2019)
Dr. Michael Olenick (CCRC CEO) CCRC Chaired CA R&R Network (6 years), Child Care Aware of America (2 years)

California Early Childhood Policy Council Members with Nonprofit Connections

Member Nonprofit Connection Role
Mayra E. Alvarez The Children’s Partnership Council Member
Kim Pattillo Brownson The Ballmer Group Council Member
Cheryl Polk Safe and Sound Council Member
Karla Pleitez Howell First 5 Los Angeles Council Member
Robin Layton Educational Enrichment Systems Senate Appointee
Laura (Kay) Ruhstaller Family Resource and Referral Center Senate Appointee

Advocacy Organization Analysis

EveryChild California

  • EIN: 93-1187319
  • Founded: 1943
  • Function: Lobbying and advocacy for publicly funded early care programs
  • Key Staff: Nina Buthee (Executive Director), Valerie Denero (Director of Policy)
  • Activities: Testifies at CDSS/CDE budget hearings, shapes legislation

Early Edge California

  • Status: Project of New Venture Fund (501(c)(3))
  • Executive Director: Patricia Lozano
  • Function: Policy advocacy and lobbying
  • Achievements: 5 bills signed by Gov. Newsom
  • Advisory Board includes: Catherine Atkin (Kidango Board Chair)

RED FLAG: Early Edge California is a project of the New Venture Fund, a fiscal sponsor that has faced criticism for lack of transparency. The same individuals serve on both service provider boards and advocacy organization boards, creating a self-reinforcing policy ecosystem.

PART 5: RED FLAG ANALYSIS

CRITICAL RED FLAGS

1. FEDERAL FUNDING FREEZE (ACTIVE)

Date: January 6, 2026 Action: HHS froze $10 billion in child care/family assistance funds to 5 states including California Stated Reason: “Serious concerns about widespread fraud and misuse of taxpayer dollars” California Impact: - $7.3 billion TANF funding affected - $2.4 billion child care subsidies affected - $800 million social services affected

California Response: CDSS states they have received “no formal notice” and “no information indicating any freeze, pause, or suspension.”

2. DOCUMENTED FRAUD CASE

Case: San Diego Childcare Benefits Fraud Ring Date Charged: May 2, 2023 Defendants: 4 San Diego residents Amount: Multi-million dollars Agency: U.S. Attorney’s Office, Southern District of California Status: Criminal charges filed

3. EXECUTIVE COMPENSATION CONCERNS

Organization CEO Compensation Revenue CEO Pay as % Revenue
Kidango $502,853 $127.2M 0.40%
Crystal Stairs $443,830 $365.3M 0.12%
Options for Learning $375,154 $161.8M 0.23%
CCRC ~$400,000 $489.3M 0.08%

Observation: Kidango CEO compensation is highest in absolute terms despite being the 5th largest organization by revenue.

4. REVENUE CONCENTRATION RISK

All major organizations receive 95-99%+ of revenue from government contributions:

Organization Gov’t Revenue %
Crystal Stairs 99.9%
Pathways LA 98.9%
Options for Learning 98.1%
Kidango 94.7%

CONCERN: This creates complete dependency on government funding and potential vulnerability to political pressure.

5. GOVERNANCE OVERLAP PATTERNS

Pattern Identified: Multiple individuals serve simultaneously on: 1. Child care service provider boards (receiving government funds) 2. Advocacy organization boards (lobbying for policy/funding) 3. State advisory councils (advising on policy)

Example Chain:

Catherine Atkin
├── Kidango Board Chair (receives $127M)
├── Early Edge CA Advisory (lobbies for funding)
└── Early Learning Lab (policy development)
         │
         └── Scott Moore (Kidango CEO)
             └── CA Early Childhood Policy Council (advises on policy)

This creates a closed loop where the same individuals: - Receive taxpayer funds - Lobby for more funds - Advise the state on how to distribute funds

MODERATE RED FLAGS

6. Rapid Revenue Growth Without Proportional Oversight Increase

Organization 2020 Revenue 2024 Revenue Growth
Children’s Council SF $109.9M $191.1M +74%
Kidango $60.3M $127.2M +111%
Crystal Stairs ~$250M $365.3M +46%

Question: Has oversight and audit capacity scaled proportionally?

7. Former Government Officials in Nonprofit Leadership

Executive Current Role Former Government Role
Connie Leyva CCRC Board Former CA State Senator
Scott Moore Kidango CEO ED, CA Early Learning Advisory Council
Dr. Michael Olenick CCRC CEO Chief, LA County DCFS Emancipation Services

8. Resource & Referral Network Structure

The California Child Care R&R Network (58 agencies, one per county) creates a distributed system that is: - Difficult to audit comprehensively - Subject to varying local oversight standards - Potentially susceptible to regional fraud patterns

PART 6: RECOMMENDATIONS

IMMEDIATE ACTIONS

  1. FOIA Request to HHS
    • Request specific fraud allegations against California
    • Obtain any audit reports or investigation documents
    • Timeline: Submit within 7 days
  2. IRS 990 Deep Dive
    • Pull complete Schedule J (executive compensation) for all top 10 organizations
    • Analyze related party transactions
    • Review Schedule O narrative explanations
  3. Board Member Background Checks
    • Run comprehensive OSINT on all board members serving multiple organizations
    • Check for undisclosed business relationships
    • Verify conflict of interest disclosures

MEDIUM-TERM INVESTIGATION PRIORITIES

  1. Follow the Money Trail
    • Map subcontractor relationships between major nonprofits
    • Identify shared vendors/service providers
    • Analyze interorganizational fund flows
  2. Political Donation Analysis
    • Cross-reference board members with CAL-ACCESS database
    • Check for donations to legislators on relevant committees
    • Document any pay-to-play patterns
  3. Whistleblower Outreach
    • Contact former employees of major organizations
    • Check for any qui tam lawsuits filed
    • Review labor board complaints

LONG-TERM REFORMS NEEDED

  1. Structural Governance Changes
    • Require independent board members with no cross-organization service
    • Mandate cooling-off periods for government employees entering nonprofit leadership
    • Strengthen conflict of interest disclosure requirements
  2. Enhanced Oversight
    • Increase audit frequency for organizations >$100M revenue
    • Require real-time attendance verification systems
    • Implement fraud hotline with whistleblower protections

APPENDIX A: KEY CONTACTS

Regulatory Agencies

Agency Contact Purpose
CDSS Child Care Licensing 1-844-538-8766 License verification
HHS OIG Fraud Hotline 1-800-HHS-TIPS Fraud reporting
CA State Auditor auditor@auditor.ca.gov Audit requests

Key Organizations Investigated

Organization Address Phone
CCRC 20001 Prairie St, Chatsworth, CA (818) 717-1000
Crystal Stairs 5110 W Goldleaf Cir, Los Angeles, CA (323) 299-8998
Kidango 39155 Liberty St, Fremont, CA (510) 429-4101
Options for Learning 2934 E Garvey Ave S, West Covina, CA (626) 856-5900

APPENDIX B: DATA SOURCES

  1. ProPublica Nonprofit Explorer - IRS 990 Data
  2. GuideStar/Candid - Nonprofit Profiles
  3. California Secretary of State - CAL-ACCESS
  4. CDSS Public Records
  5. HHS Office of Inspector General
  6. California Health and Human Services Agency
  7. OpenSecrets - Federal Lobbying Data
  8. News Sources: ABC7, PBS, EdSource, CalMatters

APPENDIX C: EXECUTIVE SUMMARY TABLE

California Child Care Nonprofit Landscape

Metric Value
Total Organizations 369 nonprofit day care centers
Total Sector Revenue $2+ billion annually
Total Employees 15,539+
Largest Organization CCRC ($489.3M revenue)
Highest Paid CEO Scott Moore, Kidango ($502,853)
Federal Funds at Risk $10.5 billion (includes other programs)
Known Fraud Cases 1 major case (San Diego, 2023)
Cross-Pollination Level HIGH - Multiple shared board members
Political Connection Level HIGH - Multiple gubernatorial appointees
Oversight Concern Level ELEVATED

Report Classification: UNCLASSIFIED // FOR OFFICIAL USE ONLY Distribution: Project Milk Carton, Congressional Investigators, Authorized Personnel Next Review Date: February 7, 2026

Generated by OPUS - Project Milk Carton Intelligence Division Report ID: PMC-CA-2026-001

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Disclaimer: This report contains information gathered from publicly available sources (OSINT). All findings should be independently verified. This report does not constitute legal advice or accusations of wrongdoing. Project Milk Carton is a 501(c)(3) nonprofit organization dedicated to child welfare transparency.