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California Schools Could Save $750 Million by Outsourcing Janitorial, Transportation Services

My new column takes a look at the California budget deficit and why the state's school districts aren't able to save money by outsourcing non-instructional services:  

If California legislators are really serious about directing more scarce dollars to classrooms, they should help repeal California’s restrictive school outsourcing law.

In 2009, school districts across the nation are utilizing outsourcing to reduce costs. Troy Public Schools in Michigan is privatizing transportation services to save an estimated $2.5 million over the next three years. The Roanoke, Virginia, city school board voted to contract with a Pennsylvania-based bus company to provide transportation services at a cost reduction of approximately $250,000 annually.  In Columbus, Ohio, the school district is contracting out food operations to bring the indebted department back to solvency. In Leominster, Massachusetts, they are in the process of selecting a private company to take over the school lunch program.

Outsourcing non-instructional support services, such as transportation, food or janitorial and maintenance services, is a management tool used by school boards nationwide, because it allows them to sharpen their focus on providing core educational services while simultaneously right-sizing the academic bureaucracy. In Anchorage, Alaska, school board members recently voted to extend an outsourcing contract for custodians that saved the district $1.7 million a year. Board member Colleen Hamblen pointed out that "$1.7 million will buy us a lot of teachers in this budget, in any budget."

A 2008 survey of Michigan's 552 public school districts by the Mackinac Center for Public Policy found that 42 percent of the districts were contracting out food, janitorial and/or busing services. The research also identified one Michigan district that estimates a three-year savings of between $14.7 million to $21.5 million from privatizing all three services. A 2007 survey found that 78 percent of Michigan’s school districts contracting out services reported cost savings from privatization, and nearly 90 percent reported that they were satisfied with their privatization experience.

California could redirect a significant amount of resources to the classroom through outsourcing. According to the U.S. Department of Education, the National Center on Education Statistics, and the California Department of Education, California schools spend about 28 percent of their budgets on non-instructional services such as, operation and maintenance, transportation, and food service. This amounts to more than $15 billion each year spent on non-instructional school-site services.

School districts in other states have realized cost savings between 20 and 40 percent from outsourcing these services. If 25 percent of the more than $15 billion in California’s non-instructional services were outsourced at a savings of 20 percent, California would save approximately $750 million a year.

While privatizing non-instructional school services will not solve the state’s budget crisis, it would empower local school leaders with maximum flexibility to manage their budgets. Unfortunately, a state law cripples the ability of local school officials to target spending cuts to non-instructional services and away from teachers and other instructional programs. The outsourcing law forbids the private firms from paying workers less than district counterparts and prohibits laying off or demoting any school employees as a result of the private contract. Limiting costs and controlling personnel decisions are crucial aspects of most outsourcing efforts so the state law is a huge roadblock to saving money.

Full Column Here
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Lisa Snell is Director of Education

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Comments to "California Schools Could Save $750 Million by Outsourcing Janitorial, Transportation Services":

Stephen Harris | July 2, 2009, 5:36am | #

A good article. As chairman of the UK government PPP export advisory group I have visited over 50 countries in order to help them with their policy thinking on integrating private and public sectors in the area of service delivery.

I have talked with government officials in California and a number of other states but there is still some misunderstanding in the US over the way that these PPP contracts can work.

In addition to the very good points that you make in your article what we have found in the UK and in other jurisdictions that have used PPP type models for schools (such as the Netherlands and Germany)is that the role of school principals is to be educators but before the private sector looked after non-educational services they were spending up to 95% of their time as facilities managers. The tax-payer didn't pay them to be trained as educators so they could spend most of their time worried about whether catering, cleaning and maintenance was being done properly.

Secondly, the danger with pure outsourcing contracts is that without the sort of robust, performance-based regime that a PPP-type contract can give, the private sector, as critics point out, can too often deliver cheap, but also sub-standard, services.

If there is one thing that the authorities in the US haven't got their mind around properly yet in this area it is the fact that to get quality service delivery for the citizen the public sector needs to be better informed, advised and trained to negotiate outsourcing and PPP contracts.

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