Executive Summary

Saving money without compromising services ought to be a chief concern of school administrators in the 1990s. To help channel more resources into instructional programs, school administrators are increasingly turning to the efficiencies of the private sector for services such as pupil transportation, facilities maintenance, and cafeteria operations.

Competitive contracting can provide public schools with the kind of expertise, flexibility, and cost efficiencies not always available with in-house service provision. Experience with contracting has been well-documented in the public schools where private contractors provide roughly 30 percent of bus service and 10 percent of custodial and maintenance services and operate at least 7 percent of school cafeterias.

Any savings in support services can be used to provide additional resources for the classroom. Properly designed and monitored, contracts between the public schools and private providers can help school administrators do more with less.

This report presents administrators with a step-by-step guide to the competitive-bidding process-from the make-or-buy analysis to the details of contract proposals. It also describes the scope of current service provision for food service, busing, and maintenance. Case studies explore the actual experiences of several school districts making use of support-service contracting.

For example, by contracting for maintenance and custodial management, the Union Public Schools in Tulsa, Oklahoma, trimmed $75,000 a year from their upkeep costs. Before private management, it took 10 district employees and 14 days to mow the school lawns. With better equipment and improved labor techniques introduced by the private company, the process now requires just eight people who complete the work in five days.

Across the nation, public-school administrators are putting the competitive efficiencies of the market to work. Doing so enables them to focus on their core responsibility: educating students.

In Michigan, doing more with less through competitive contracting is an imperative. The implementation of recent finance reforms means an end to the days of revenue increases at double the rate of inflation. Michigan public schools are entering an era of cost containment in which more efficient use of scarce resources and innovative strategies that involve the private sector will make or break budgets.

Already, examples abound of successful contracting out in Michigan schools. The Pontiac schools are saving $500,000 per year since the district sold its bus fleet in 1993 and contracted with a private firm to transport its students. The Mt. Clemens school district in Macomb County is contracting with the Edison Project for school management. Since Proposal A was approved by voters in March 1994, there has been a surge of contracting for support services.

Contracting successfully requires a high degree of care and study. Toward that end, this report should prove extremely useful to school officials everywhere in Michigan.