Privatization of K-12 School Support Services

It's amazing what a little desperation can do. On the eve of its recent demise, with its back against the wall, Detroit's old school board gritted its teeth and finally proposed something that could work wonders for the struggling district: privatization of school support services.

Detroit's new reform school board should now take up this idea in earnest. Privatizationrelying on the innovative and competitive private sector to provide services within the government-run K-12 schoolsrepresents enormous potential for saving money, improving quality, and putting Mayor Archer's school takeover effort on the path to success.

Privatization is achieving huge successes in districts across the nation, even if it has yet to come to Detroit in a big way.

The new board has already taken some positive steps. Recently, the district issued contracts worth $4 million for private transportation services for special-needs students. Traditionally, most special needs students were moved by private taxi-cab. This August, private companies such as Laidlaw will carry the lion's share of special-needs students. That's a good start, but more work needs to be done.

According to district records obtained by MPR using the Freedom of Information Act, the Detroit Public Schools spent more than $43 million providing transportation services for the city's students in 1998, up $4.5 millionor 10%from the previous school year. If the district were able to shave just 10% from its transportation bill, the $4 million in savings could be shifted to other concerns, such as school repair.

Privatization is achieving huge successes in districts across the nation, even if it has yet to come to Detroit in a big way. According to a 1997 survey by American School & University magazine, more than 40% of the nation's school districts are contracting out for bus transportation and more than 21% are contracting out for food service. Philadelphia's school district saved over $29 million in just two years by relying on privatized transportation, food service, custodial, and other functions.

After Chicago Mayor Richard Daley took over the Windy City's beleaguered school district in 1994, he appointed a crack management team that eliminated a huge budget deficit largely by contracting with private companies. In three years, the Chicago Public Schools saved $20 million by privatizing busing alone. The savings enabled more money to be directed into after-school and summer-school programs for struggling students.

Examples of privatization success stories abound in Michigan, too. The Pontiac School District in Oakland County made statewide headlines in 1993 when it sold its buses and hired Ryder Student Transportation Services to transport its 4,000 students to and from school. Designed to net the district savings of about $500,000 annually, the Pontiac plan spurred other school bus privatizations across the state.

To handle its busing, the Climax-Scotts School District in Kalamazoo County hired Cincinnati-based Laidlaw Transit Corporation in 1996. "We've never been happier," says the district's business manager Lou Wade. "Drivers get more in-service training and the company helps educate our students about bus safety too."

School lunches, anyone? Today, about a quarter of Michigan's 555 traditional and 139 charter school districts contract with private firms to feed their students. Chartwells (formerly Canteen), Aramark, and Sodexho-Marriott are three of the largest contractors. Brian Jones, director of business services for the Willow Run Community Schools in Ypsilanti, reports that since Monroe-based Aramark took over the district's food program, "The service is vastly improved. The quality of the food and the choices for students are better. Students tend to eat in the school more now because of Aramark, which helped us to cut down on the problem of students leaving school for lunch."

Rick Simpson of Caledonia-based Chartwells says that because all of his firm's food-service contracts in Michigan are for one year at a time, "We are on perpetual probation; we have to serve good food every day or we won't be there any more."

Some Michigan districts aren't just contracting out for servicesthey're turning over whole schools. The New York City-based Edison Project now manages 10 public schools in Washtenaw, Macomb, Genesee, Calhoun, Wayne, and Ingham Counties. Firms such as Sylvan Learning Systems and Bloomfield Hills-based Reading and Language Arts Center, are also providing private instructional services at a number of schools.

National Heritage Academies, a private education management organization based in Grand Rapids, is operating 25 charter schools. All of the schools in turn contract out for support services such as food and custodial work. This gives the schools the opportunity to focus on their core missioneducating children.

In the past, school employee union opposition presented a powerful obstacle to privatization. But in 1994, the Michigan legislature made major changes in collective bargaining law that took privatization of school-support services off the list of mandatory topics for bargaining. This makes it easier for cost-conscious school districts to privatize and harder for unions to insulate themselves from competition.

Detroit's reform school board should now follow the lead of scores of other Michigan districts that have privatized to save millions of dollars and improve quality by injecting a healthy dose of competition into the provision of school services.