Survey Reveals How Schools in Different States Compare in Privatizing Services

Pennsylvania leads the way among five states surveyed

Tuesday, Dec. 15, 2015

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Chantal Lovell
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MIDLAND, MICH. — Research suggests that privatizing noninstructional services can help schools improve services and keep more money in the classroom. Results from a massive survey of school districts in Michigan, Ohio, Texas, Georgia and Pennsylvania released today by the Mackinac Center for Public Policy show that districts in some states are taking advantage of this option far more than those in other states. Privatization rates for food, custodial or transportation services spanned from a low of 17 percent of districts in Ohio to a high of 75 percent of districts in Pennsylvania.

“We have long wondered where other states stack up in the school contracting realm, and this year decided to investigate it for ourselves,” said Michael LaFaive, director of fiscal policy for the Mackinac Center and co-author of the report. “On balance, the Great Lake State appears to be a leader in school service privatization, but other states have their strengths.”

The center surveyed 2,861 districts in the five states and only one district failed to respond. Pennsylvania led the five states in overall contracting. This was driven by the common practice of contracting out for transportation needs in Pennsylvania, where 66 percent of districts used private firms to provide such services in 2015. This is the highest contracting rate of any service in this five-state survey. The Keystone State also had the highest food service contracting rate, but only narrowly edged out second-place Michigan.

In Michigan, 71 percent of districts contract out for at least one of the three major noninstructional services. Michigan districts use more contractors for custodial services than districts in any other state, with 52 percent of districts reporting that they outsource this function to private companies. In contrast, only 9 percent of Pennsylvania districts contract custodial services.

Georgia, with 38 percent of its districts privatizing at least one noninstructional service, placed third among states in the survey. Georgia represented something of a contracting anomaly in that nearly all of its outsourcing was for custodial services. Only three districts use contractors for busing services and only four rely on contractors to provide food services.

“Districts in Georgia are not hostile to contracting out,” said James Hohman, assistant director of fiscal policy and co-author of the report. “But it is odd that there has been so little food and transportation contracting.”

Texas — the largest state in the survey with 1,025 districts — was fourth with an overall contracting rate of 23 percent. In 2015, 15 percent of Texas districts contracted out for food service, 10 percent did so for custodial work and 4 percent used private transportation firms.

Ohio’s overall contracting rate was the lowest of the five states at 17 percent. In 2015, 11 percent of the 614 districts in Ohio contracted out for food services, 4 percent for custodial services and 7 percent contracted out for busing services.

“Research shows that privatization — done right — can save money and improve services. States like Ohio that do not embrace competitive contracting are potentially leaving millions of dollars on the table that might best be spent in classroom,” said LaFaive. The full report can be found here: http://www.mackinac.org/archives/2015/s2015-06.pdf

Percentage of Districts Outsourcing by Service, 2015

districts outsourcing

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