Clare schools Superintendent Thomas Moline and his
colleagues on the Clare Board of Education have been working to close a
projected operating deficit of about $500,000 for the next fiscal year. But
unlike many school districts struggling with budget deficits throughout
Michigan, Clare has its priorities in order.
While other districts have laid off teachers — the lifeblood of the education
system — without first assessing the savings and benefits to be realized through
outsourcing non-educational services, Clare has outsourced its food service
operations to Chartwells, Inc., of Ada. And the district is giving serious
thought to seeking competitive bids for providing health insurance to district
employees, instead of accepting the extremely expensive coverage offered school
employees through their union. These moves are designed to keep teachers
teaching in Clare.
Moline has been superintendent for only two years. Shortly
after beginning work he discovered that the wages and benefits of non-teaching
staff were unusually generous and expensive relative to nearby school
districts. He also recognized that his district was going to be facing a
serious cash deficit that would have to be addressed. Moline decided early to
make every effort he could to protect educational quality by keeping teachers in
the classroom. This decision led him to the idea of privatizing school food
Clare schools already had a working relationship with
Chartwells — it had contracted with the company for a food service supervisor
for 18 years. Moline contacted Chartwells in March of this year and asked what
the company could do for the district if it ran the program from top to bottom.
Moline was pleased with Chartwells’ plan for savings — but he wanted to be sure
he was getting the best service for the taxpayers’ money. He opened an official
bidding process but found no competitors who could beat Chartwells’ bid.
On April 21, 2003 Moline took the Chartwells offer to his
school board for debate and approval. On May 5 the Board was scheduled to take
public comments on the proposal and vote to approve or refuse the Chartwells
The hearing was not pleasant. Some school district
employees vehemently objected. So contentious was this opposition that the
Board voted to delay its vote on the matter until May 19 to reconsider. But
despite continued opposition to the proposal by union activists, the contract
Chartwells is expected to save the district $180,000 in its
first year on the job, which is enough to save as many as four teachers’ jobs.
Chartwells will not only make and serve food, but also take over personnel
duties, including background checks on food service employees.
According to the 5-year contract, the price of lunches will
not go up. Indeed, Chartwells says it will make its profit by increasing
student lunch participation. Chartwells will offer five meals to choose from
each day, as opposed to the single one previously offered by the district
staff. And if Chartwells increases student participation in the lunch program
from the current 30 percent to 70 percent, as it expects to do, the district
will be allowed to keep $50,000 of the additional revenues generated, for total
savings of $230,000. This is enough revenue to cut the Clare district’s current
operating budget deficit nearly in half.
The ability of Chartwells to operate less expensively isn’t
hard to understand. It has advantages that the district does not have, such as
the ability to pay wages and benefits more in line with private sector.
Moline is also debating whether or not to contract out for
health-care benefits. Currently, the district health benefits package is
provided the Michigan Education Special Services Association (MESSA), which is
subsidiary of the Michigan Education Association, the school employees union.
In July, Moline contacted Gregory Bailey of Bailey
Insurance in Royal Oak to discuss alternatives to MESSA. Bailey has two decades
in the health insurance business and has experience competing with MESSA in
other school districts. On July 28 Bailey presented options to the traditional
MESSA benefits package to Moline, the Clare Board of Education, and members of
the public. Bailey showed he could provide an alternative to MESSA that offers
superior benefits and save the district a minimum $165,000 annually – enough to
save another three or four more teachers’ jobs. The final decision on whether
or not to competitively contract MESSA benefits has not yet been made.
If every district in Michigan would do the same it could
save schools more than $90 million per year, which could go a long way toward
solving budget problems without laying off teachers.
Tough times can call for tough decisions. Superintendent
Moline and his school board have made difficult calls against strenuous
opposition. As a result, Clare parents can take some comfort in the fact that
their children’s teachers will remain in the classroom, rather than in an
unemployment line, and that an anticipated half-million-dollar deficit has been
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Michael LaFaive is senior managing editor of
Michigan Privatization Report and director of fiscal policy for the Mackinac
Center for Public Policy.