Authors’ Note: This essay was originally published in September. Since concluding the survey in August seven other districts have contracted for support services, and others, such as Bullock Creek and Midland Public Schools, are currently considering doing so. The numbers cited in the article do not reflect these new initiatives. To review a partial list of privatization efforts that occurred after the completion of the 2006 summer survey see “Around the State.”
With more and more public education dollars
going toward employee retirement and benefit plans, many Michigan school
districts are turning to privatization as a way to secure more funds for their
core mission. By privatizing noninstructional services — janitorial, food and
busing — districts can more easily balance budgets without laying off teachers
or eliminating programs. As of August, 37.8 percent of school districts surveyed
by the Mackinac Center for Public Policy contracted out at least one of these
Over the summer, the Mackinac Center contacted all 552 school districts
listed in the Michigan Education Directory, which has published school district
data since 1936. Only one district, Detroit, did not respond to the Center’s
inquiries during the survey period. The White Pine school district in the Upper
Peninsula was excluded from the survey because its schools have closed. Each
district that reported contracting out for one or more of the three services was
contacted at least twice to ensure accurate reporting.
The total number of districts that contract out for at least one service —
208 of 550 surveyed — rose from 35.7 percent in 2005 to 37.8 percent. Only five
districts brought a contracted service back in house since completion of last
Food service outsourcing is something of a perennial favorite among school
districts seeking to hire private vendors. Across the Great Lake State, 158
school districts (28.7 percent of districts surveyed) contract for some type of
food service. This total is unchanged from last year. Some districts contract
for management of their existing program and district staff, while others remove
themselves from the service altogether by allowing a private firm to provide
everything from employees to menu design.
For the second year in a row, there was significant growth in custodial
privatization, increasing from a revised 50 districts in 2005 to 63 this year, a
percentage increase of 26 percent. The savings school districts can achieve with
competitive contracting is substantial. Officials at Muskegon Reeths-Puffer
expect to save about $480,000 a year with private custodians over the life of
the contract. That works out to about $114 per student. In Auburn Hills, a new
contract may save the Avondale School District up to $490,000 — $128 per student
— in fiscal 2007. In Jackson, a new custodial contract is expected to save $1.3
million annually, or about $193 per student.
With savings of this magnitude, it is not surprising that superintendents are
investigating privatization. It is hard to imagine any district turning down an
extra $100 to $200 per-student in state funding were it offered. Why then are
competitive contractors providing these services in only 37 percent of Michigan
school districts? Center researchers have been given answers ranging from fears
of increased costs to union opposition.
One school official, who asked to remain anonymous, said "The contracts
certainly make us more efficient and provide a level of expertise that (the
district) could not otherwise expect. We are currently satisfied with both of
our contractors. In my opinion the largest barrier to privatization is the
highly effective MEA (Michigan Education Association) campaign against
contracting. I think that good arguments can be made for contracting and that
efficiencies can be achieved, but it is a hard sell against the MEA public
relations machine." The school district he works for contracts out for food and
The number of school districts that secured competitive contracts for
transportation services this year grew to 24, an addition of three new contracts
to the survey. This was a significant turnaround; between 2003 and 2005 district
contracting for busing had fallen by three.
The reality is school privatization is here to stay. By adopting
privatization to some degree — and at greater percentage rates than ever before
— school officials are showing a "revealed preference" for a particular
management technique. In other words, privatization appears to save money and/or
improve services more often than not. Otherwise, why would officials be willing
to endure the special-interest opposition that inevitably accompanies it?
Officials who choose the privatization route are apparently doing so because
it provides an expected real benefit.
Ben Stafford is a research assistant with the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Michael D. LaFaive is director of the Morey Fiscal Policy Initiative.