Back to school: Private equity profits from Michigan education spending

Back to school: New report explores who profits from Michigan’s education system

Private equity controls at least 160 childcare centers in Michigan, receives millions through K-12 outsourcing contracts, and is positioned to benefit from new education funding streams.

Detroit, MI — As Michigan students head back to school following the enactment of a new education budget, a new report from the Private Equity Stakeholder Project (PESP) finds private equity firms have established a significant presence across the state’s education system. The report finds private equity firms control at least 160 childcare centers in Michigan, receive millions of dollars through K-12 outsourcing contracts, and are positioned to benefit from new education funding streams.

The report comes as Governor Gretchen Whitmer recently signed Michigan’s new education budget and schools prepare for a new academic year. Debate continues over school funding, declining enrollment, and the future of school choice and childcare programs. Against that backdrop, the research explores private equity’s growing role across childcare, K-12 outsourcing, and voucher-related programs, as well as who ultimately benefits from public education spending.

“As students head back to school, Wall Street is making money at nearly every stage of their education,” said Azani Creeks, PESP. “Families are thinking about their children’s future. Our research shows private equity firms have found business opportunities in childcare, transportation, special education staffing, and other services schools rely on every day. The public deserves to know where their education dollars are going.”

Among the report’s findings:

• Private equity firms control at least 160 childcare centers across Michigan, including many of the country’s largest childcare chains.
• As enrollment declines and districts close schools, private equity-backed companies continue receiving contracts to provide services including special education staffing, transportation, food service, healthcare, and other critical functions.
• Detroit Public Schools is set to spend more than $22.5 million during the 2025-26 school year on contracts with four private equity- and venture capital-backed special education staffing companies, illustrating how investor-backed firms have become part of delivering core school services.
• The report examines how the new federal school voucher tax credit could create additional business opportunities for private equity-backed childcare, transportation, and after-school service providers already operating in Michigan.

The report also highlights examples of legal and governance issues involving some investor-backed education contractors. In 2024, Stepping Stones agreed to a $4.25 million settlement of a class action lawsuit alleging widespread wage and hour violations. Additionally, the report examines Soliant Healthcare’s ties to Trump administration officials as the administration has moved to reduce the federal role in education and oversight of services for students with disabilities.

The Michigan report builds on PESP’s previous research examining private equity’s role in public education nationwide, including K-12 outsourcing, special education staffing, and education technology. In Los Angeles, PESP found the school district had committed $723 million across 119 contracts with 93 vendors for work that could be performed by district employees. That research found outsourcing can cost districts more than hiring in-house staff while contributing to higher turnover and reduced accountability. The new Michigan report documents many of the same investor-backed business models expanding in another state’s education system.

The full report is available here: pestakeholder.org/reports/pe-in-michigan-education