• 61 percent of districts (335 out of 549) contract out for at least one of their food, custodial or transportation services.
  • 126 districts contract out for at least two major support services.
  • Districts contracted out 85 total services.
  • 11 districts brought a service back in-house.

Statewide savings on the new support-service contracts, counting only those districts providing dollar-figure savings information, are estimated at $12.8 million.

A total of 66 districts privatized at least one service within the past year. Some districts began contracting out for multiple services, including the West Bloomfield School District, which elected to privatize both its custodial workers and its transportation service. The district expects to save over $5 million over the coming three years due to the move. The Saginaw City School District contracted out all three major support services this past year, intending to receive better expertise from the contractors while providing savings to the district. The district reported satisfaction with all three contracted services.

Graphic 1: Outsourcing by Michigan School Districts

Graphic 1: Outsourcing by Michigan School Districts - click to enlarge

Some districts, especially those hiring staff through an employee leasing agency or gradually privatizing employees through attrition, chose to report savings as a percentage of money saved per contracted employee rather than as a total dollar figure. This is typically because the terms of employment are largely the same except for retirement benefits. All school employees are members of the Michigan Public School Employees’ Retirement System, which currently cost employers 21 percent to 25 percent of an employee’s payroll, depending on when they were hired and which benefits the employee chose. Retirement benefits in the private sector are not as expensive, though often still expressed as a percentage of payroll. 

In other districts, no concrete savings figures could be obtained. However, 72 of the 85 new contracts this year reported savings, and no districts reported losses, even when figures were unavailable. On several of the 14 contracts which did not produce savings, districts stated that transitional costs, such as unemployment payouts, were negating this year’s savings, but that they expect decreased operating costs in the long run.

Overall satisfaction with support-service contracting remained quite high, with districts reporting satisfaction on over 90 percent of contracts. Many of the remaining contracts had not been implemented long enough to allow for a proper evaluation and the districts declined to express an opinion.