Out of Control Policy Blog

Privatization of School Support Services Continues to Expand in Michigan

Our friends at the Michigan-based Mackinac Center for Public Policy have released the 2009 edition of their privatization survey of Michigan school districts—available here—which finds that the outsourcing of non-instructional school support services continues to rise:

More Michigan public school districts contracted out in 2009 for at least one of the three main support services — food, custodial or transportation — according to the Mackinac Center for Public Policy's annual privatization survey. Some 246 of the state's 551 districts, or 44.6 percent, contract with private companies for one or more of those support services, up from 42.4 percent a year ago. The Mackinac Center has surveyed Michigan school districts since 2001, when 31 percent of districts contracted out for one of the "big three" noninstructional services.

The survey found that 20.1 percent of districts contract for custodial service. That is more than double the 2005 total of 9.1 percent. Custodial service gained the most in 2009, with 16 additional districts contracting out for this service.

Districts saved substantial amounts of money by contracting out for custodial services. Richmond Public Schools expects to save $823,545, which is an effective per-pupil funding increase of $435. Dewitt Public Schools expects to save $255,591 this year, which is roughly equivalent to saving $86 per pupil, and its contractor expects to add six more jobs to provide this service. [...]

There was a significant increase in transportation contracting as well. There are now 38 districts that have hired private contractors for regular transportation services, up from 32 districts last year. Benton Harbor Area Schools is privatizing the service and estimates it could save $2 million over the next five years, an average of $113 per pupil annually. [...]

While the Mackinac Center's 2008 survey showed a decrease in food service contracting, it increased in 2009 with a net gain of one district. Contracting for personnel and/or management in food services remains the most frequently used money-saving option with 29.4 percent of districts participating. Glenn, Troy, Charlevoix, Sims, Okemos, Peck and Godwin Heights districts all began new food service management agreements.

And be sure to check out this noteworthy case study:

The district that saved the most from privatization this year was the Troy School District, which contracted out for food, custodial and transportation services. Troy expects to save $3.8 million in the first year alone, or $310 per pupil. The largest savings come from custodial services, at $2.7 million. While custodial contracting sometimes involves layoffs, Troy's contractor expects to hire the equivalent of 22.5 more workers to serve the district. Troy also expects its food service provider to run the program at a surplus of $414,625. Under last year's in-house staff and management, the district spent $100,000 more than revenues when indirect costs were considered. The district also privatized its transportation services and expects to save $7.4 million over the next six years.

Other school districts should be watching Michigan closely and moving in these directions. As I wrote here this past April, privatization can be a powerful tool to help "right-size" school districts, keep them focused on their core mission of educating children and free up dollars from bureaucratic overhead to drive them into the classroom where they belong.

Leonard Gilroy is Director of Government Reform


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