Michigan school districts face tough choices  allocating their resources to provide students with an education. Despite increased spending in Michigan schools, school boards regularly have to find ways to trim expenses, and sometimes that means lowering employment benefits, eliminating positions and other moves that few school board members enjoy. However, new results from the Mackinac Center for Public Policy’s Michigan School Privatization Survey indicate that more than half of Michigan’s school districts are improving services while spending less by turning to privatization of food, custodial and transportation services.

Out of the 550 public school districts in the state, 295,  or 53.6 percent, have privatized at least one of these three major noninstructional services. This represents a 9.1 percent increase in contracting over 2010. There were 44 districts that newly privatized at least one major noninstructional service since the Mackinac Center’s 2010 survey.

The single largest motivation for privatization is financial savings. New contracts from the past year alone are expected to save Michigan taxpayers roughly $7.87 million annually. A 92.9 percent majority of contracting districts report satisfaction with the private-sector services they have received.

Currently, Lansing offers financial incentives to contract services. Gov. Rick Snyder’s “best practices” initiative offers an additional $100 per pupil in funding to any district that meets four out of five criteria, one of which is the solicitation of competitive, private-sector bids for support services (see Section 22f of Public Act 62 of 2011). Furthermore, Rep. Dave Agema, R-Grandville, has proposed House Bill 4306, which would mandate a competitive bidding process for most district support services. Note that neither piece of legislation requires privatization of services; each simply requires school boards to solicit competitive bids and thereby investigate whether cost savings are available.

Privatization is not the only factor that is changing how school districts do business. There has been a growing effort to consolidate services among districts and intermediate school districts; hence, this year’s survey includes data on service-sharing. Rather than contracting with a private company, some districts choose to work cooperatively with other districts to obtain support services at a lower cost. Few districts actually use service-sharing to provide all of their food, custodial or transportation services, but services such as business, technology and special education are frequently done collaboratively between districts or shared via ISDs.

The Mackinac Center has conducted its school privatization survey since 2001 and continues to document a steady rise in the number of districts contracting noninstructional services to save Michigan tax dollars.