As layoffs loom, 86% of LAUSD digital instruction contracts went to private equity-backed companies

A new report from the Private Equity Stakeholder Project (PESP) reveals that hundreds of millions of dollars of Los Angeles Unified School District (LAUSD) contract commitments for external services were directed to private equity or venture capital-backed companies from January 2022 to June 2025. During that time, LAUSD approved roughly $10 billion in contracts with outside vendors, $2 billion of which went to tech companies. 

Despite projecting a deficit in the coming years and sending potential lay off notices to nearly 700 employees, LAUSD has continued to increase spending on outside contracts. Using data obtained by United Teachers Los Angeles (UTLA), the report reveals that $255 million of the $297 million in new digital instruction contract commitments went to private equity or venture capital-backed companies, representing at least 86% of those commitments. Of these companies, nearly 70% have been paid more than the original contract commitment amount. 

In the education sector, private equity firms have invested in hundreds of companies that contract with school districts to provide tools and services that were previously managed in-house. As schools struggle to manage services amidst staffing crises and cuts to education funding, private equity firms see an opportunity to profit. This shift raises concerns that public education dollars are being diverted to private investors rather than supporting classrooms, staffing, and student services.

LAUSD reflects a broader national trend identified in PESP research. School districts across the country are increasingly outsourcing core services to private equity-backed companies, often at higher cost and with less accountability. A recent California case study found a district more than doubled spending on contractors while students received fewer services and the district paid millions more than if it had hired staff directly.

The publication of the report comes ahead of a potential April 14 strike by UTLA, SEIU Local 99, and Associated Administrators of Los Angeles, unions which collectively represent tens of thousands of teachers, service workers, and other education professionals in the region. Higher wages and improved working conditions, including the right to bargain over subcontracting and the use of technology, have been key priorities for the unions as they bargain a new contract with LAUSD.

Other key findings of the report include: 

• Embattled LAUSD Superintendent Alberto Carvalho has extensive connections with sales executives at companies that have won contracts with the district. Since Carvalho started in 2022, LAUSD has approved $10 billion in contracts with outside vendors.
• Total contract spending from the general fund has grown $443 million since coming down from the pandemic high in FY 2022. This year, the district is on track to spend $1.5 billion on services and other operating expenses (contracting), which is $401 million over their budget.
• 72% ($1.6 billion) of all currently active technology contracts were authorized after Carvalho requested and was granted emergency authority to obtain no-bid contracts.
• Despite declining enrollment due to immigration sweeps in the county, LAUSD has signed contracts with venture capital and private equity firms that own tools used by the Department of Homeland Security and Immigration and Customs Enforcement.
• Several LAUSD contractors are owned by the same venture capital or private equity firm operating under different names. The ultimate beneficiaries of LAUSD contractors are billionaire executives of these firms.

“LAUSD is committing to send hundreds of millions of public education dollars to private equity-backed companies while school staff struggle to get by. That raises serious questions about priorities,” said Sam Garin, a spokesperson for PESP. “When school districts embrace outsourcing and privatization, the ultimate winners are private equity billionaires. Students, teachers, and other education professionals deserve better than private equity profiteering.”