Michigan’s School Aid fund increased once more this year, but many school administrators in the state continue to hunt for effective measures to reduce spending due to increased pension costs and phased-out stimulus money. Many options available for trimming costs, such as enacting pay-to-play for sports, are extremely unpopular for districts and may reduce the quality of education available to students. However, privatization of support services such as food, custodial and transportation services is a promising opportunity for many districts to save money without reducing educational opportunity. Over 60 percent of Michigan school districts have now contracted out at least one of these three services and have saved Michigan taxpayers millions in the process.

335 of the state’s 549 public school districts, or 61 percent, have now privatized one or more major support services. Sixty-six districts began a support-service contract within the past year. This growth continues a decade-long trend of increased contracting by Michigan schools, which the Mackinac Center has studied since 2001. Each of the three major support services saw a growth in privatization over the past year.

The vast majority of contracting districts — just over 90 percent — reported satisfaction with their vendors. Many districts report substantial financial savings as well. New contracting this year alone, including only those districts able to provide a concrete savings figure or projection, is expected to save Michigan school districts and taxpayers $12.8 million. By introducing competition into the market for these services, administrators can purchase services at a lower cost without compromising quality. Even in districts which decide not to privatize, the act of soliciting bids often produces savings in the form of concessions from school employee unions. Financial savings remains the single largest reason for contracting, though many districts also cite contractor and personnel expertise as contributing factors.

In addition to privatization, many districts have turned to service consolidation as a method for saving money. Service sharing ranges from simple employee sharing — like Grant Public Schools and Newaygo Public schools sharing a maintenance staff — to districts contracting with another to provide a service, like Mackinaw City Public Schools, which contracts with Cheboygan Area Schools to provide food service. Many other services, including business offices, technology support and special education are also shared, particularly through Intermediate School Districts.