Outsourced Services in Michigan Public School Districts
A 2003 survey by the Mackinac Center found that more than one-third of Michigan’s public school districts contract with private firms for at least one nonteaching service. Percentages are calculated for the 517 school districts that responded to the survey (there are 555 public school districts in Michigan).

Is it wrong for a private company to earn a profit when it does business with a public school? Gov. Jennifer Granholm, the Michigan Education Association, Superintendent of Public Instruction Tom Watkins and many critics of charter schools seem to think so. Their concern, however, is more than a little misplaced.

Charter schools are public schools and receive per-pupil state aid just like conventional public schools. Michigan’s 216 charters have enrolled more than 70,000 students, who have often come from other public schools that did not educate them well. Charters have greater freedom to manage, hire and fire, maintain discipline and determine curricula — all good reasons why most have waiting lists of parents who want their children to attend them. But critics are making an issue of the fact that private, for-profit management companies sometimes are hired to manage charter schools. One former state representative recently told an audience, “I don’t believe it’s appropriate for somebody to make a profit off of public education.”

Maybe what’s needed in the public schools is more profit, not less. Think about it: Where is the crisis in public education these days? Is it in the availability of desks, food or computers, or in other areas provided by the for-profit private sector? The crisis concerns the classroom — the part delivered by government, regulated by legislatures and supervised by district bureaucracies.

If we follow the anti-profit premise to its logical conclusion, we would have to pass laws requiring public schools to hire only government construction companies to build new buildings (fortunately, the government usually doesn’t run construction companies). Desks, chalk and pencils would have to be purchased from government- owned desk, chalk and pencil factories (fortunately, the government usually doesn’t run those either, except in places like Cuba and North Korea). At lunch time, students would have to eat food that was grown on state-run collective farms and sold in government grocery stores.

Or alternatively, we could pass laws that tell public schools it’s alright to buy these things from private companies, but only those that lose money instead of earn it in the form we call “profit.” But it’s hard to imagine school districts could find suppliers who would provide a good or a service at a loss. Not even the Michigan Education Association does that. In addition to the tens of millions of dollars it extracts in compulsory dues from its union members every year, the MEA-founded nonprofit health insurance association MESSA rakes in hundreds of millions more from taxpayers.

In fact, the MEA is not so much against profit as it is simply against somebody other than the MEA making any. In the MEA’s flagship publication, MEA President Luigi Battaglieri stated, “Private companies don’t care about our students or our communities. They are in the business for the money. They aim to turn a profit and that’s not in the best interest of public education.” But the headline for the cover story in the very same MEA publication read, “Adrian food service staff fight privatization by turning big profits for district.”

And perhaps Mr. Battaglieri is unaware that the profits that private companies earn allow them and their employees to pay the taxes that keep him in business.

The fact is that public schools have always relied on profit-making firms for just about everything. Maybe what’s needed in the public schools is more profit, not less. Think about it: Where is the crisis in public education these days? Is it in the quality or availability of desks, food or computers, or in other areas provided by the for-profit private sector? Do we have a national crisis in paper and pencils? The crisis that concerns Americans from coast to coast is not in these things. It’s in what happens in the classroom, the part that is delivered by government, regulated by legislatures and supervised by district bureaucracies — the part that could benefit from the same choice, accountability and dynamism that make our relatively free, profit-driven economy the envy of the world.

A good number of politicians and bureaucrats don’t like profit, and that’s nothing new. They’ve been bad-mouthing and taxing it since the sun first came up in the east. For some, it’s self-serving rhetoric. On the part of others, it represents neither deep thought nor study, but simply knee-jerk bias.

Schools and school districts should consider all their options fully and objectively — including provision of goods and services by their own employees, by volunteers, by nonprofits and for-profit firms. To waste time and money spreading myths and misconceptions serves no one, least of all children.

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Lawrence W. Reed is president of the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.

Summary

Some have decried the role of profit-making management companies in Michigan’s charter schools, but ignored that profit-making companies regularly provide services to conventional public schools. Ironically, private firms provide better services to public schools than government does and even pay taxes that support public education.

Main Text Word Count: 684

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