public school districts contracted out in 2009 for at least one of the three
main support services — food, custodial or transportation — according to the
Mackinac Center for Public Policy's annual privatization survey. Some 246 of
the state's 551 districts, or 44.6 percent, contract with private
companies for one or more of those support services, up from 42.4 percent
a year ago. The Mackinac Center has surveyed Michigan school districts since
2001, when 31 percent of districts contracted out for one of the "big three"
The survey found that
20.1 percent of districts contract for custodial service. That is more than
double the 2005 total of 9.1 percent. Custodial service gained the most in
2009, with 16 additional districts contracting out for this service.
substantial amounts of money by contracting out for custodial services.
Richmond Public Schools expects to save $283,000, which is an effective
per-pupil funding increase of $150. Dewitt Public Schools expects to save
$255,591 this year, which is roughly equivalent to saving $86 per pupil, and
its contractor expects to add six more jobs to provide this service.
estimates from privatization are significant as the state Legislature and
governor have reduced the state aid foundation grant by nearly $300 per pupil.
There was a significant
increase in transportation contracting as well. There are now 38 districts that
have hired private contractors for regular transportation services, up from 32
districts last year. Benton Harbor Area Schools is privatizing the service and
estimates it could save $2 million over the next five years, an average of
$113 per pupil annually.
Districts are not
mandated to provide transportation services, and some districts have stopped
providing it completely to save on costs. River School in Berrien County is
one, while other districts, like Grosse Pointe Public Schools, have never
While the Mackinac
Center's 2008 survey showed a decrease in food service contracting, it
increased in 2009 with a net gain of one district. Contracting for personnel
and/or management in food services remains the most frequently used
money-saving option, with 29.4 percent of districts participating. Glenn,
Troy, Charlevoix, Sims, Okemos, Peck and Godwin Heights districts all began new
food service management agreements.
District officials also
commented on other ways they save on food services. Blissfield and Adrian
expect to save $18,000 each by sharing a food manager. While there are new
districts consolidating their food service programs, other districts have done
so for a while. Swan Valley and Saginaw have shared food service for over nine
The district that saved
the most from privatization this year was the Troy School District, which
contracted out for food, custodial and transportation services. Troy expects to
save $3.8 million in the first year alone, or $310 per pupil. The largest
savings come from custodial services, at $2.7 million. While custodial
contracting sometimes involves layoffs, Troy's contractor expects to hire the
equivalent of 22.5 more workers to serve the district. Troy also expects its
food service provider to run the program at a surplus of $414,625. Under last
year's in-house staff and management, the district spent $100,000 more than
revenues when indirect costs were considered. The district also privatized its
transportation services and expects to save $7.4 million over the next six
A small number of
districts brought services back in house this year. Two districts brought
custodial services in house and six brought back food services. No district
brought back transportation services, although Montabella Community Schools
decided to buy back buses from its contractor.
The Mackinac Center was
able to receive and confirm responses from every district in the state this
year, marking the third time that 100 percent of school districts cooperated
with the survey. Despite obstacles, especially opposition from unions afraid of
losing dues-paying members, privatization continues to increase in popularity
for school districts trying to save money.
A map of privatization in Michigan school districts is available in .pdf form by clicking the graphic below.
James Hohman is a fiscal policy analyst and Eric Imhoff, a senior
majoring in economics at Northwood University, is a research intern at the
Mackinac Center for Public Policy.