Legislators learned Monday what conditions come with the $100 million contribution hedge fund giant Ray Dalio’s philanthropic foundation is making to Connecticut’s underprivileged school children.
Foundation representatives overseeing how that money — and a matching $100 million in taxpayer money — are spent would be exempt from key ethics and disclosure rules.
The provision was included in the new two-year state budget Gov. Ned Lamont negotiated with his fellow Democrats in the House and Senate majorities. The House approved it late Monday and the Senate was expected to adopt it Tuesday.
“These corporate board-holders are going to go up to the balcony and sprinkle down dollars on, I guess, the peasants of Connecticut, and we’re supposed to be happy about that?” said Deputy House Minority Leader Vincent J. Candelora, R-North Branford.
Lamont spokesman Rob Blanchard responded that “the Dalio Foundation has partnered with the state for a historic investment that will support, encourage, and mentor our young people so they can achieve their greatest potential.”
“These corporate board-holders are going to go up to the balcony and sprinkle down dollars on, I guess, the peasants of Connecticut, and we’re supposed to be happy about that?”
Deputy House Minority Leader Vincent J. Candelora, R-North Branford
The new budget creates a nonprofit corporation, the Partnership For Connecticut Inc., that will oversee expenditure of this $200 million over the next five years, and possibly another $100 million the panel will attempt to raise from other private donors.
The corporation’s oversight board includes five state officials: the governor, the House speaker, Senate president pro tem, and the House and Senate minority leaders.
Lamont would appoint three other members and the Dalio Foundation would name four.
The 13th member, the corporation president, would be hired by the board.
But the bill states “no member of the board of directors or any officer or employee of the corporation shall be (1) a state employee or public official” as defined in the Code of Ethics or the statute restricting state contractors from making political contributions.
It also states “The corporation shall not be construed to be a department, institution, public agency, public instrumentality or political subdivision of the state, or to perform any governmental function.”
Candelora charged this effectively exempts the corporation from the Freedom of Information Act, the ethics code, or the state’s contracting standards.
“Since when are tax dollars not subject to complete transparency?” he asked during a break in the debate. “The governor has created a diversion of taxpayer revenues into a corporation that can spend money in the shadows. … I would be shocked if any legislative leader would honor this cloak of secrecy.”
Lamont spokeswoman Maribel La Luz noted there would be regular public reports on the partnerships expenditures, fundraising efforts and the success of its initiatives.
But the language did raise some concerns among Democratic lawmakers as well.
Rep. Jeff Currey, D-East Hartford, who serves on the Education Committee, said he is concerned there was no requirement that people with expertise in education be included on the initial 13-member board overseeing the partnership.
“If the focus of this is around education then why are none of the initial appointments specified to say they must be in the education field?” Currey said. “Nothing precludes any of those leaders from appointing people in the education world but if this truly education-focused why would they not want to have them on the board immediately?”
“I can 100 percent assure you that the governor is going to select board members who have experience in public education, social-emotional behavioral supports, family involvement, and student engagement, among other things,” La Luz responded.
She added that would be done “not only because that criteria is required by legislation but also because that is the optimal approach to ensure that disconnected youth are positioned for success.”
Rep. Toni Walker, D-New Haven, co-chairwoman of the Appropriation Committee said, she wants to revisit the disclosure issue.
”I look forward to having more conversations about this,” Walker said. “I never want to turn away money that’s going to go to education, that’s going to improve the lives of the special urban communities. I think we do need to figure out how it’s going to be structured and what are going to be the transparency measures that are necessary for the citizens of Connecticut to be in support of it.”
The Dalio Foundation declined to comment Monday night.
Dalio’s wife, Barbara, who leads the Dalio Foundation, joined her husband and Lamont in announcing the partnership back on April 5 before hundreds of students and teachers at East Hartford High School.
“I love public education. I’m always humbled and inspired by everything you do,” she said.
Ray Dalio heads the world’s largest hedge fund, the Westport-based Bridgewater Associates. He said he grew up in a “lower-middle class” household and was fortunate “to have parents and teachers who cared for me.” Forbes reports his net worth at about $18.4 billion.