EAST HARTFORD, CT — With the gym at East Hartford High School as the backdrop, Ray and Barbara Dalio joined Gov. Ned Lamont and First Lady Annie Lamont in announcing a $100 million contribution from Dalio Philanthropies to the state of Connecticut for at-risk youth who are showing signs of disengagement.
Lamont said the state will match that $100 million with its own $100 million commitment. The first $20 million installment for the project will come from this year’s projected $485 million budget surplus.
However, leveraging that money might be difficult because it will require legislative approval. Three-fifths of both chambers — that’s 91 out of 151 votes in the House and 22 of the 36 in the Senate — would need to approve the use of surplus funds for this purpose because it’s supposed to automatically be transferred to the Rainy Day Fund under the new budget rules.
Lamont could avoid the need for a three-fifths vote of the legislature by moving the surplus from 2019 to 2020 and then allocating it as part of his budget with a majority vote.
Once he decides on how he wants to leverage the money, Lamont said the state will set up an “independent not-for-profit entity” that will distribute the money to the school systems.
“We’re going to look at the best ideas that come from teachers across the state,” Lamont said.
The money wouldn’t be directed to any specific existing program, but the new partnership would maybe support and encourage microfinance and community entrepreneurship initiatives.
“For example, the partnership might explore funding entrepreneurs with small loans and early stage equity capital and providing non-financial supports such as mentorship and access to networks to help individuals start their own businesses in under-resourced communities so that they can create opportunities for their families and fellow citizens,” according to the press release.
What it funds is still largely undefined.
The Dalio Philanthropies $100 million and the $100 million state match also is expected to leverage another $100 million from “other philanthropists and business leaders.”
The youth they are targeting with the money are at risk of dropping out of high school or becoming disengaged. The annual fiscal impact of high school dropouts on the state budget is more than $900 million, according to the press release.
Mr. Dalio, who is the founder, co-chief investment officer and co-chairman of Bridgewater Associates, the world’s largest hedge fund, said “$300 million ain’t much money in relation to the challenge.”
Dalio said his focus and his wife’s focus is to get kids who might not graduate from high school “through high school and into jobs.”
He said he thinks it’s enough money to help begin tackling the issue.
Lamont said what the Dalios are doing is stepping up to the plate to help the state of Connecticut, which is facing a $3.8 billion budget deficit over the next two years.
“I said I need other people to step up and help me with this,” Lamont said.
He said it’s about “making sure each and every kid gets their best shot.”
Senate Republican Leader Len Fasano, R-North Haven, said Lamont did the right thing by opening up a conversation with a wealthy individual and Connecticut resident who wants to help the state, but there are a lot more questions than answers about how this would work.
He said Friday’s announcement felt “a little rushed.”
Similar efforts of philanthropy in other states have had mixed reviews.
Facebook Founder Mark Zuckerberg’s made a $100 million donation to Newark, New Jersey public schools in 2010 that was matched by another $100 million in private donations. The money went toward creating the Foundation for Newark’s Future, a group that set out to improve the city’s public schools.
The five-year experiment is now over and the results were mixed.
It’s unclear what safeguards there are for how Connecticut plans to handle the “independent not-for-profit” organization it sets up to handle the funding. No one knows yet who will be on the board of directors of the organization, but the governor’s office stressed the Dalio Foundation already has relationships developed in these communities. It’s likely that the state investment will also require appointments to the board.
Friday’s event was attended by several of Lamont’s commissioners and local elected officials from Bridgeport, Hartford, and New Haven along with officials from Connecticut’s two teacher unions.