Do Schools Really Need More Money?

East Lansing High School was forced to cut nine full-time teaching staff to stay within its budget. Privatizing janitorial duties could have kept those teachers in the classroom.

Editor's Note: Lansing school officials will save $6.1 million by eliminating roughly 50 general and 10 special-education instructors from the 1997-98 budget.

Such cuts could be avoided or reduced if the district privatized public school support functions including janitorial services.

The following commentary was first published in September 1993. Percent and dollarf igures have not been changed to reflect inflation or other changes in the outsourcing landscape.


In the debate over education finance reform in Michigan, saving money deserves as much attention as collecting money. If public schools were more careful about what they spend for support services, they would have more resources available for actual education.

Custodial services, transportation, and food services comprise the lion's share of noninstructional expenses in Michigan public schools, but rarely do school boards or administrators bother to "shop around" for the lowest-cost providers of those activities. For most school districts, it is business as usual: Spend more than necessary to get the job done with their own workforce, never ascertain what the actual costs are or compare them with private sector service firms, and complain about never having enough money for the classroom.

For example, a 1993 Mackinac Center survey of seven school districts in the Lansing area found that annual costs for custodial services were as much as five times higher than those paid by private companies.

The East Lansing school district annually pays about $2.34 per square foot to clean its 11 buildings, whereas the retailer Sears pays about 85 cents per square foot for its 20 stores in the area. The East Lansing schools have 742,000 square feet of building space and an annual custodial budget of $1,735,000. If they paid the same rate as Sears, the savings would translate into more than a million dollars. That could purchase 30,000 new textbooks, 500 new computers, or 20 new teachers.

The large Lansing school district, with a custodial budget of $4,296,060 for its 53 buildings, had the lowest costs per square foot among public schools in the area. But at $1.13, that is still considerably higher than Sears and nearly 2-1/2 times the costs incurred by the Meijer stores, which is 47 cents. Even the Accident Fund, when it was a state-run workers compensation insurer, cleaned 10 floors and 175,000 square feet at its Lansing headquarters for just 48 cents per square foot.

One obvious solution to high costs for school support services is for schools to contract these services out to competitive private firms, a form of "privatization." Fred Richardson, the superintendent [now retired - Ed.] for the public schools in St. Joseph, Michigan, put it well when he told the Clare Sentinel in June 1993, "It probably would not hurt education to divorce from the nonacademic dimensions, and concentrate on funding the teaching of boys and girls."

The Reason Foundation in Los Angeles reports that the number of privatized cafeterias in public schools across America more than doubled between 1987 and 1991—from four percent to ten percent. The nation's largest food service company manages food programs in more than two dozen Michigan school districts. From Benton Harbor to Dowagiac to River Rouge, schools that have had the foresight to privatize report better service, better quality, higher sales, and substantial cost savings in their food programs.

When it comes to bus transportation, Michigan schools have lagged way behind national trends. In 1993, fewer than 5% of Michigan school children were riding to school on buses owned and operated by private firms. Nationally, 35% of school children did. In Massachusetts, the figure was a surprising 95%.

Michigan schools that have yet to consider the privatization option for their noninstructional functions should scrutinize their costs and take a close look at what a small but growing number of schools around the state are accomplishing with effective public-private partnerships. And their examination should not end with support services. Even instructional programs are being successfully contracted out in states like Illinois, Florida, Arizona and Massachusetts.

Asking school officials to contain costs with innovative strategies like privatization is not asking too much. It's what private business people do all the time because they know they'll go broke if they don't. For the sake of both the children and the taxpayers, isn't it time we demand that public schools manage their costs like entrepreneurs instead of bureaucrats?

Editor's Note: If you would like more information on outsourcing noninstructional school support services, contact the Mackinac Center for Public Policy at (989) 631-0900. Two studies, Doing More with Less and Making Schools Work are available for $5.00 each, post paid, or at no charge to educators.