Privatizing the Lap of Luxury

Oldsmobile sedan
The 1990 Oldsmobile sedan, shown here, was purchased by the district for $21,259 and is one of two cars dedicated for use by the general superintendent of the Detroit Public Schools.

The Detroit Public Schools has been in distress for years—financially and otherwise. It has been plagued by deficits. Some vendors have not been paid for services rendered, while others have received more than the amounts authorized by school officials. Financial record keeping is lax, and upwards of $60 million in voter-approved bond money may have been diverted to salaries and other unauthorized expenditures. Despite these difficulties, the current and past superintendents have had access to a district-financed car and driver.

Servant or CEO?

In the 1970s, the Michigan Legislature voted to punish districts who provide chauffeur-driven limousines for school board members and employees. The reasoning was as clear then as it is today: Public schools exist to educate children, not to provide a pampered lifestyle for school employees at the public’s expense.

The fine for providing district employees with their own car and driver was a state school aid deduction equal to whatever amount the offending district had spent providing the transportation service. A 1997 article in The Detroit News placed that amount at about $60,000. But the district has and continues to skirt the ban on luxurious transportation—because the costly deduction exists so far as only a threat.

Why is the fine just a threat? According to state records obtained by Michigan Privatization Report, the last time the Detroit Public Schools reported chauffeur expenses was in fiscal year 1993-94. In each year since, the Detroit school district has claimed that it spent "0" on chauffeur services, even though it has actually spent thousands.

According to Lynn Metty, legal counsel for the Detroit Public Schools, David Snead, the former general superintendent, had persuaded state officials to accept that his driver was not a "chauffeur," but a "security officer." This matter of semantics has so far allowed the district to avoid the nearly $60,000 penalty—even despite the continued use of this "security officer" service by interim Superintendent Eddie Green.

Technically, the district owns two automobiles for chauffeuring purposes: a 1992 Buick Park Avenue and a 1990 Oldsmobile sedan. The Oldsmobile cost the district $21,259 and the Park Avenue cost $23,017. The cars were purchased outright, and no monthly loan payments were necessary. According to the district’s records, a third car, a Lincoln, was leased to the district at $350 per month. The lease was paid in full and in advance in 1994 by Mr. Nathan Conyers, the owner of Riverside Ford, the company that leased the car to the district. Despite the "free" lease, district records show an expenditure of $5,877 for repairs prior to returning the car to Riverside Ford. In an unexplained twist, the service fleet roster of the district shows the cost of the car at $20,000, as if it were owned by the district.

Keeping the cars in service has not been cheap: Insurance costs the district $3,194 per year, and maintenance costs for the three cars from July, 1996 through June, 1997, was $9,384. The superintendent’s driver receives a salary of $118 per day. Assuming a five-day work week (240-day work year), the district pays $28,492 per year for the chauffeur’s salary. This figure does not include any health insurance and other non-cash benefits, which may be substantial.

According to Metty, the amount of school aid that would have been deducted from the Detroit Public Schools system due to the violation reflects only the cost of the chauffeur, not lease payments, repair, or gasoline. If the superintendent’s driver receives a wage of $118 daily ($28,492 annually) it suggests that the rest of the $59,900 claimed by the district as chauffeur expenses during the 1993-94 school year is the cost of fringe benefits.

According to state records obtained by Michigan Privatization Report, the last time the Detroit Public Schools reported chauffeur expenses was in fiscal year 1993-94. In each year since, the Detroit school district has claimed that it spent "0" on chauffeur services, even though it has actually spent thousands.

While chief executive officers of companies with payrolls exceeding $1 billion often enjoy the luxury of a corporate car and driver, the general superintendent does not work for such a company. He is instead a politically appointed servant directed to oversee the education of children and as such, has a responsibility to manage public monies wisely and efficiently.

Contracting Out

Assume for the sake of argument that the general superintendent of the Detroit Public Schools does need a full-time car and driver, eight hours per day, five days per week. Competitive contracting could improve the superintendent’s transportation service while cutting costs to the district.

MPR conducted a telephone survey of limousine companies in and around Detroit and found that several firms rent sedans newer than the one currently used by the Detroit school district, complete with driver, for about $35 per hour per day. Additionally, every company contacted offered an even lower rate for a one-year agreement. Assuming a conservative estimate of $33 per hour per day and an 8-hour day and 240-day work year, the cost of outsourcing the superintendent’s limousine service is $264 per day or $63,360 annually.

What is the district’s current total cost of operating its own chauffeur service in-house, with two cars at the superintendent’s disposal? Spreading out the one-time payments for the two cars over 240 work days for each year since their purchase results in a per-working-day expense of $23.54. Insurance is $8.76 per day (in 1996 dollars) and repairs, based on 1996-97 maintenance figures cost $14.60 per day. Adding each of these to the daily rate of $249.58 (which includes estimated non-cash benefits) paid to the district chauffeur yields a total of $287.48 in daily operational costs, or $68,995.20 per year.

By contracting out with a private firm the Detroit Public Schools could save over $5,600 annually. In addition, limousine companies usually factor daily gasoline usage into their cost structure. The total cost of operating a chauffeur service in-house excludes the cost of gasoline because, MPR is told, the Detroit Board of Education simply doesn’t keep those records. The savings also do not include the amount the district would receive by selling its current two-car fleet. Lastly, a private vendor would be providing a much newer, more luxurious and safer vehicle in which the superintendent could ride.

The Detroit Public Schools could redirect thousands of dollars back to the classroom while improving the quality of its officials’ transportation just by outsourcing this one perquisite of the Detroit general superintendent.