With Michigan's public school districts facing a decline in per-pupil funding, more districts are contracting out for at least one of the three major school support services — food, custodial and transportation — than ever before. This year's survey of school districts found that 44.6 percent of all Michigan school districts contract out for at least one of these services, a 5.6 percent increase over 2008. This year, new contracts alone are expected to save $6.9 million.

Since 2001, the Mackinac Center has surveyed public school districts in Michigan about their use of contractors in providing support services. Each year, more districts contract out to save money and improve services.

Contracting out is especially pertinent as districts face ongoing revenue crunches. As state-based tax revenue has declined in Michigan's receding economy, school revenue correspondingly declined. Consequently, based on average revenue of approximately $13,000 per pupil, most schools face a 3 to 4 percent reduction in revenue in 2009-10 and prospects of a larger reduction in 2010-11.

Contracting out and managing a district's contractors has never been more important, and the Mackinac Center continues to provide the most detailed and comprehensive information about the use of support service contractors in the state.

Of course, districts have always used outside companies to provide goods and services, from constructing buildings to buying pencils to servicing copiers. But many districts did not use contractors to provide school support services until Public Act 112 of 1994 made contracting for these services a prohibited subject of bargaining. Before that, a union could negotiate a clause preventing a district from exploring contracting out non-core services, meaning the district would continue to employ workers covered by collective bargaining agreements that carried ever-increasing legacy costs.

While a number of districts had privatized some services before 1994, PA 112 allowed more flexibility for districts to begin soliciting bids for services and to gain additional leverage at union negotiating tables.

But the extent to which Michigan public school districts contracted out was unquantified. In 2001, the Mackinac Center began tracking districts that contracted out, first biennially and later annually. Seven surveys have been completed: in 2001 and 2003, and every year from 2005 to 2009.