Head Start Gets $10M to Stay Open From Texas Billionaires

Oct. 8, 2013 — -- While the government shutdown has left federal employees without jobs and Americans with a cut in services, a controversial couple has donated $10 million to allow more than 7,000 at-risk children to return to their Head Start classrooms.

John Arnold, a billionaire former hedge fund manager, and his wife Laura, donated $10 million to provide assistance to Head Start and Early Head Start programs that were forced to close due to the government shutdown. The funds came from a personal donation and not from their Laura and John Arnold Foundation, which supports a range of causes including criminal justice, education and pension reform.

Arnold, 39, is based in Houston and is worth an estimated $2.8 billion, according to Forbes. He made his early fortune as an energy trader with Enron. In May 2012, Arnold surprised his hedge fund peers when he was retired at age 38.

"Like everyone else, we are disappointed in the stalemate that has led to the federal government's shutdown," said the Arnolds in a statement.

The couple described themselves as Democrats "without strong political leanings" in an interview with the Chronicle of Philanthropy back in 2011.

At the end of the first week of the shutdown, seven Head Start programs in six states were closed, leaving 7,195 children from low-income families without access to federally funded educational program, according to the National Head Start Association.

"Our representatives' inability to resolve their differences has caused severe disruptions in the lives of many low-income Americans," the Arnolds said. "We believe that it is especially unfair that young children from underprivileged communities and working families pay the price for the legislature's collective failures. In an effort to address this injustice, we will help keep the doors open at Head Start programs across the country this month. We sincerely hope that our government gets back to work in short order, as private dollars cannot in the long term replace government commitments."

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More than 11,000 additional children risk losing access to Head Start services if the shutdown continues through October, said Sally Aman, a spokeswoman for the National Head Start Association.

The House voted today to restore Head Start funding, but the president has said he won't sign bills that address the refunding of the government in a peicemeal fashion.

If the government does not reopen by Nov. 1, additional Head Start programs serving more than 86,000 children in 41 states and one U.S. territory may lose access to funding.

Aman said the donation was "phenomenal," but cautioned that private donations cannot sustain Head Start.

"I do think it's important that we recognize and celebrate this tremendous gift that the Arnolds extended to 7,000 of the poorest kids in our country, but it's awfully important to remember that private donations cannot sustain this valuable early learning opportunity that has proven to be successful from getting poorest kids in our country from 0 to 5 ready for our educational system. We need our government to get our fiscal house in order and make sure these kids are taken care of."

Stacy Palmer, editor of the Chronicle of Philanthropy, said the Arnolds "clearly are interested in influencing public policy, as are many philanthropists."

But not all the couple's donations have elicited praise from the public. Among their causes is the highly-divisive topic of pension reform.

From their personal funds and not of their foundation, the couple gave between $100,000 and $500,000 to Engage Rhode Island, a group that supported Rhode Island state treasurer Gina Raimondo. Raimondo and other state officials have been accused by Rolling Stone's Matt Taibbi and other pension groups of reducing pension benefits and investing assets in riskier hedge funds.

The foundation's explanation of its principles of pension reform explains that pension plans "should adequately inform policymakers of the plan's downside risk, and policymakers must have a workable plan to manage that risk."