Contracting Survey 2015: A Five State Report

Remarks by Michael LaFaive to the National School Bus Transportation Association

Click here to find the full results from our 2015 school privatization survey.

Thank you, Ronna, for that kind introduction. It is great to be back this year, and I’m excited to present insights and data from the Mackinac Center’s expanded survey research on competitive contracting by public schools.

Those who have heard me before know that much of this research involves contacting individual school districts one-by-one to get information about their own competitive bidding, if any. It often makes us feel like herders of cats who are high on catnip — or elected cats who are high on a lack of close scrutiny and accountability

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For the uninitiated, I work for a research institute that has devoted 25 years, a lot of money and countless hours to educate government and school officials about the value of contracting out for noncore services. Our work has generated two school-specific studies, one of them a “how to” privatization book, plus hundreds of articles, blog posts, news releases and interviews — and 13 annual surveys of competitive contracting in Michigan schools.

In these surveys we contact every one of Michigan’s 500-plus school districts about whether they contract out for such things as busing, janitorial or food service contracts. We began this work in 2001, and since 2003 have successfully gotten responses from at least 90 percent of the state’s 543 local districts.

(I won’t name one notorious holdout that after many years did start coughing up some data, but it starts with “D” and rhymes with “etroit.”) Our surveys are typically conducted from May through August of each year.

We believe the process has had a noteworthy and positive impact on the willingness of school officials to consider the contracting option.

Consider school transportation contracting rates. In 2003, just 3.9 percent of Michigan districts were contracting out for bus service. That figure has grown to 24 percent through the end of our 2014 survey.

No doubt “mugged by reality” explains much of the expansion, but the cleansing effects of sunshine are also well documented. It didn’t hurt for district leaders to know that a well-known champion of sound school management practices was looking over their shoulders.

On the positive side, having the Mackinac Center provide data that supports the soundness of competitive contracting in schools helped those policymakers who had summoned the political will do the right thing.

With this in mind, the Mackinac Center decided earlier this year to expand our survey. In 2015 we added Texas, Georgia, Ohio and Pennsylvania to our school privatization survey.

These states represent a good cross section to measure contemporary school bus contracting experiences across the country, and are ones in which the NSTA has an obvious interest. Some states, like Pennsylvania, already have a robust school bus contracting culture. Georgia, by contrast, is almost bereft of school bus contracts, despite the fact that districts there do not appear opposed to contracting in principle.

By contacting every school district in these four states, we hope to learn which districts are contracting out, their average size by pupil population, which companies are providing the service, and any other useful morsels that can be gleaned from interviews.

Our findings will initially be published in several discrete parts, and then as a single study. To better educate policymakers about the benefits of competitive contracting, we have developed a dynamic, five-state marketing plan. This is designed to provide thousands of school decision-makers the information they need to best serve their students, communities and taxpayers.

This year’s survey work began earlier than usual because of the large increase in the number of school districts to contact. In every district we began with the reliable and old-fashioned way — we called them on the phone. This was complicated by different time zones and our own “learning in progress” on state-specific privatization and open records laws. In April, I personally started calling school districts in Texas while simultaneously interviewing research assistant candidates.

Here is an exclusive sneak-peak at what we have discovered:

TEXAS

As of July 17, we have successfully contacted every school district once in the state and interviewed 975 district officials, or 95 percent of the total, about whether they contract out for basic non-instructional services.

Of this total, 38 districts, or 3.9 percent, report contracting out for some type of transportation services. One of these districts has apparently opened RFPs but has not yet assigned a winning contract.

Although this contracting rate is low, here’s some hopeful history and context: In 2003, competitive contracting for Michigan bus services also stood at 3.9 percent of districts. Last year that figure was 24 percent. Obviously there is room for growth in Texas and there are sound ways to bring that about.

The top three private school bus vendors in Texas, by the numbers of contracts, maintain 30 contracts between them.

Intergovernmental contracts also exist, such as in Dallas County. A public “Dallas County Schools” agency contracts to provide bus service to 11 county districts. These contracts are not part of our totals.

One district, the Abbot Independent Schools, has made itself a problem child by failing to respond to many requests for information under the state’s open records law. At our request the Texas Attorney General has weighed in and made it clear the district must either provide the data, or explain why they think the law does not require them to do so. The district’s response is due to the AG before the end of this week. The AG’s office has sent a letter to the district warning that it has civil enforcement authority and may use it.

(Author’s Note: Abbot has subsequently complied with the Mackinac Center’s request for data. As of September 8, only two Texas school districts have not responded to our survey.)

At least six other unresponsive Texas districts are (were) in violation of the state’s public information request law, but we’re still playing the good cop and aren’t yet ready to bust them with the AG.

PENNSYLVANIA

We have successfully contacted and interviewed 319 of 500 districts, or 64 percent of the total. Of those surveyed, 202 — a remarkable 63 percent — contract out school bus transportation to some degree.

It’s hard to tell just how many companies are doing this work because services are so fragmented. Of the 87 districts with busing contracts, I counted 16 that report using more than one vendor. One of those, the Wallenpaupack Area School District, appears to contract individually with 18 different drivers. The district reported the names of those drivers rather than the name of a company.

It is worth noting that the York City School District, York Suburban School District, and Stroudsburg Area School District are all very enthusiastic and satisfied. They seemed to go out of their way to note how much they really like their contractors. If you are one of them, congratulations.

GEORGIA

Georgia presented an interesting case study for our research. We have contacted and successfully interviewed people from 166 of 177 districts in the state, or almost 94 percent. (We always begin with a polite phone call, with multiple attempts if necessary.) Of the 166 districts that have responded, just two report contracting out for bus service.

Interestingly, only two Georgia school districts also report contracting out for food services, which might suggest hostility to competitive contracting with for-profit vendors. Yet this conclusion is belied by 57 Georgia school districts, or almost 36 percent of those surveyed, that report contracting out for janitorial services.

This huge difference in contracting preferences is surprising, and we continue to ask school officials if they have any idea why it exists. I have no explanation yet, but a willingness to contract out for custodial services may well carry over to other services, including busing.

OHIO

There are 614 school districts in Ohio, and we have successfully interviewed 612 of them, or 99.6 percent. Of these, 40 — 6.6 percent — report contracting out for busing.

MICHIGAN

This is familiar ground for the Mackinac Center’s privatization survey work — a generation of paid research assistants have grown up on it. So far we have successfully contacted 477 of Michigan’s 543 districts, or almost 88 percent. Of those, 123, or 25.8 percent, contract out for busing services.

The Gibraltar and Farwell districts report that they are considering a “contracting option” but have not yet told us for what or where they are in the bidding process. They have not yet contracted out for transportation.

It may interest you to know that between last year’s and this year’s survey, school districts in Michigan’s Upper Peninsula have complained that it is too hard to find a contractor willing to work with them.

These include the Detour, Newberry-Tahquamenon, and Norway-Vulcan districts. Ironwood expressed the same concern, and added that the private companies up there had too many demands for the district. I have two words for any company interested in this business: Snow tires.

This year’s research assistant champion, the young man who has made the most Michigan calls, noticed a theme in some responses that may be of interest to this group. In several Michigan districts, interviewees volunteered that they were looking to contract out in response to the Affordable Care Act, aka. Obamacare.

For example, Michigan’s Cass City Public Schools considered privatization a viable option because they wanted to shift responsibility for ACA mandates onto private contractors.

A 2014 survey commissioned by the Association of School Business Officials found that close to half the districts in the country were concerned about the impact of the ACA.

The rural Elkton-Pigeon-Bay Port Laker school district in Michigan told our researcher they were forced to lay off teachers in order to avoid health care mandate costs. The Mackinac Center has long held that no teacher should be laid off until schools have at least investigated competitive contracting for the three major non-instructional services: janitorial, food service, and transportation.

Those who were here last year may recall my report that cost pressures related to Michigan’s one-state recession in the previous decade helped drive interest in privatization. The ACA may now be imposing similar cost pressure on all school districts nationwide.

The Mackinac Center has always been not just a think tank, but a “think and do” tank, because we recognize the limited usefulness of wonky white-papers if no one reads them. Our job isn’t just to be good scholars, but relevant ones too. That’s why we place a heavy emphasis on effective marketing plans and getting our findings before the public and policymakers. Even Nobel Prize-worthy scholarship has little value if no one knows about it.

We measure outreach effectiveness in many ways, including the extent to which our work changes the climate of public opinion surrounding relevant public policy issues. With competitive contracting, our outreach efforts begin with placing high-quality information in the hands of decision makers, but our work does not end there.

On this expanded privatization project, we aim to get the word out in all states in which we have surveyed.

For example, in mid-August we hope to place an op-ed reporting our findings in at least one major newspaper in each survey state, along with recommendations. This plan takes advantage of the usual round of “back-to-school” stories that begin around that time, and has been very effective in Michigan.

Depending on the state, the op-ed may suggest new or amended legislation to facilitate wise and thoughtful contracting opportunities.

But that’s not all we will be doing. For example, let me share a glimpse at what we’re planning in Texas.

After the op-ed is published, we will issue a news release with links to other privatization-related data, including the online version of any published op-eds. We will send it to:

  • 2,224 Texas school board members, or about 32 percent of the total;
  • Many private email addresses;
  • (Related) Most or all 1,026 school district headquarters;
  • Up to 1,000 editorial writers and reporters;
  • 180 state legislators;
  • Austin-based political-insider newsletters;
  • 50 State Policy Network member organizations;
  • Taxpayer organizations;
  • Government employees’ unions (Texas AFT, for instance)
  • The Reason Foundation

Later, we will pursue another round associated with the formal release of the full and final report, and opportunities that may arise in the form of debates, speeches and committee testimony. It goes without saying — but I’ll say it anyway — we will also be aggressively pursuing radio and TV interview opportunities.

I included the Reason Foundation on that list because it has long been a nationwide leader in public sector privatization efforts. They are very aware of this survey and will be happy to get their hands on this new data.

Reason has done a great deal of survey work itself, and has published several education-specific “how-to” manuals on competitive contracting. They will use our data in their own work, from blogs to reports and testimony before state legislatures.

Among free market think tanks, the Mackinac Center has been a leader at developing social media marketing campaigns, and we intend to use one to help roll out of these latest findings. The benefits of Facebook and other platform are numerous, the most obvious being the ability to focus the effort on key target audiences, including center-right voters who have an interest in education reform — that is, the bosses of the policymakers who make the final actual decisions.

We also refine our social media targeting by age group. To cite a specific example, for one effort we targeted individuals in a particular Michigan county who are in the influential 25-55 age group and have an interest in education.

We also are big on Alpha-Beta testing to refine the message and determine which formulations get the most response. So for example, we might send 200 email announcements with a particular subject line to one group of school board members, while 200 others get the same idea but with different wording or emphasis. Whichever version is opened and read the most determines the message that goes out to a couple thousand other recipients.

Expanding these efforts into multiple states is a challenge, complicated by wanting to inject articles and news releases into the cycle of back-to-school news coverage that begins in mid-August.

This difficulty is aggravated by those school districts that may force us to file lawsuits forcing them to produce the public records they are already required by law to make available. While I prefer to report based on 100-percent response rates, data from 90 percent of school districts provides enough substance that we can still get the message out at a time of year when many minds are focused on school and school-finance issues.

The final planned event (not including taking advantage of additional opportunities that may arise) will be when we release the full and final report on this year’s privatization surveys. This provides another bite at the message-dissemination apple with updates on figures reported in the first round of news releases, including data obtained after we have compelled reluctant districts to disclose what they are doing (or not doing).

The final report also provides opportunities to narrow-in on critical related topics. For example, the public might be interested to learn what’s in Michigan’s Public Act 112, which prohibits unions and school districts from bargaining over whether the district should privatize non-instructional services. Most citizens probably agree with us that these decisions should be made by the school board members they elect, uninfluenced by union “logrolling” tactics at the collective bargaining table.

We believe that this law, passed in 1994, was partly responsible for the jump in competitive contracting we’ve seen in Michigan schools, and similar versions could have the same effect in other states, too.

Michigan has to be considered a competitive contracting success story, both for the rapid growth of the reform and the tens of millions of taxpayer dollars it has saved. So the final report will open with this success story, fleshed out by in-depth survey information going back more than a dozen years.

This report will be followed by state-specific chapters describing and providing data from the other states covered by this year’s survey.

We’ll conclude with a chapter reviewing the practical tips we have developed for public school officials interested in contracting with private vendors. There may also be an appendix listing available vendors by state.

The report will be available online at the Mackinac Center’s website, with a limited number of printed copies. I suspect a good quantity of these will go to NSTA and its members.

As the process unfolds, I and my colleague James Hohman will be available when and where it is feasible to speak to groups and reporters about the general issue and the specific survey findings.

The Mackinac Center for Public Policy exists to improve the quality of life for all citizens by promoting sound solutions to state and local policy questions. I would like to end where I began, by explaining how this project serves that mission.

First, knowledge is power. We have found that the information we gather on school outsourcing is powerful. At a minimum, it allows us to educate school leaders about the successes (and sometimes the failures) of their colleagues in other places.

Second, the survey results serve as an annual news hook for discussing the net positive benefits of sound contracting practices. The data we produce provides insights that are often controversial, raising the salience of these issues for policymakers, media and the public. That’s a good thing, because pressure is often needed to rouse sleepy, go-along-to-get-along school board members to put the people who elected them ahead of the system they run.

We’ve gone to great lengths in pursuit of this objective. For example, I started my career by staking out the headquarters of the Michigan’s largest teachers union to expose their hypocritical use of nonunion janitorial contractors — while they were lobbying against school districts adopting the same money-saving service.

It is my hope that the public relations and educational work we do with this survey will inspire more districts to embrace competitive contracting, save money and let contractors handle headaches currently managed by public school officials.

Finally, contracting can help get more resources into the classroom without reaching more deeply into taxpayer pockets. As a free-market research organization, the Mackinac Center recommends policies that have the effect of letting citizens keep more of what they earn. We do so because every extra penny that makes government bigger by necessity makes people smaller. We want people to keep more of what they earn, and school contracting helps realize that goal.

Thank you for your time and attention.

The full results from our 2015 school privatization survey that includes data from Georgia, Michigan, Ohio, Pennsylvania and Texas can be found here.


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