Saving money proved to be the most likely reason a district outsources services. The needs of the district to relieve itself of certain management duties was a close second. Ten district officials insisted that their reason for privatization fit neither into a "savings" nor "management" category, but felt that outsourcing services remained an absolutely necessary action. Two district officials told MPR that their districts had been outsourcing for so long that no one new the initial reason for turning to a private company for business services.
Michigan Privatization Report's survey of school district superintendents and business managers has yielded a bonanza of information. Of the more than 500 Michigan school districts contacted between May and August of 2001, 228 have to date detailed their outsourcing experiences to MPR. Only a few districts refused to participate in our survey.
Survey results indicate that 31 percent of responding districts outsource one or more of three primary non-instructional services: food, busing, and janitorial services. An impressive 26.3 percent of responding districts outsource either management of their food program or the entire program itself. Janitorial services are contracted for in 6.1 percent of the responding districts and busing accounted for 5.7 percent. Only the Detroit Public Schools reported outsourcing all three services to some degree. Detroit officials also volunteered that the district was outsourcing for maintenance of buildings and grounds as well as information technology services.
According to American School & University magazine's popular annual survey of privatization and contracting in American schools, 23.3 percent of districts across the nation outsource for food services, which is 3 percent less than in Michigan. But districts in other states tend to contract out more for other important areas of non-instructional services, such as janitorial and busing. Nationwide, 15 percent and 30 percent of school districts contracted for these functions, respectively.
According to American School & University, nationwide, "districts with enrollments of more than 2,500 are more likely than small institutions to privatize services." In Michigan, the opposite is true. Of those school districts outsourcing food, janitorial, or busing services, a whopping 67 percent have fewer than 2,500 enrolled students. This is an extraordinary figure given the natural inclination of successful companies to seek out large districts in order to take advantage of economies of scale. Michigan Privatization Report has long heard complaints from superintendents in small districts about the difficulty of finding vendors to service their non-instructional needs. (For more on outsourcing in small districts, see "Economies of School," on page 4.)
There is plenty of anecdotal evidence suggesting that small districts are quite capable of outsourcing services. The experiences of our staff, and new contacts made through this survey, suggest that small districts can and do outsource for non-instructional services. For instance, Arvon and Marenisco school districts in the Upper Peninsula have a combined 120 enrolled students, yet they manage to outsource busing and janitorial and food services, respectively. While Arvon has not outsourced food services yet, it is the district's intention to do so. These districts prove that finding vendors to service small institutions is far from impossible.
Arvon is an interesting privatization case-in-point. It has only 10 registered students for the 2001-2002 school year. Last year, Arvon operated on a $260,000 annual budget, 38 percent of which was being eaten up by food, transportation, and janitorial services. In an attempt to get more money into the classroom last year the board proposed a "School Excellence Plan" for contracting out these services. The resulting savings would have been used to fund a new $20,000 science, music, art, foreign language, and technology program. Unfortunately, the privatization hurdle faced by this tiny district was not economies of scale, but the Michigan Education Association (MEA).
The Michigan Education Association is the state's largest union of janitors, cooks, bus drivers, and teachers. In 1993 the MEA made it plain where it stands on the issue of privatization in an internal document known as "Parameters." It unequivocally opposes "any privatization of public school functions." True to its word, the MEA fought hard to defeat Arvon's attempt to outsource services. "The union did everything it could to prevent us from going through with the School Excellence Plan," said Mary Rogala, board president. This opposition is ironic given the fact that the MEA has contracted out at its own headquarters in East Lansing for food, janitorial, mail, and security services-and in three cases with nonunion labor.
The Arvon board approved the plan despite opposition from the MEA. Unfortunately, one member then called a special meeting to rescind his yes vote following a series of threats against his person and his business. The member subsequently resigned from the board. Since then a special election has been held to fill the vacancy left by his resignation, and the MEA-backed candidate lost. This led Arvon to address outsourcing again-and they have, quite successfully.
Privatization of school support functions can and is being done across Michigan in every size school district, as our survey suggests.
Michael LaFaive is managing editor of Michigan Privatization Report.