Michigan schools are facing a financial uphill battle. The economy is
stagnant, they have received limited state aid, their costs are increasing, and, as a result of Proposal A in 1994, they do not have the ability to acquire
additional revenue via local millages. Therefore, schools are increasingly
looking for cost-saving measures which would least impact instructional services to students – their primary mission. As a result, many school districts are investigating the potential savings to be generated by outsourcing non-instructional services. This is an extremely difficult decision to make. It impacts jobs within the community; it raises questions by parents concerned with student safety, and some even attempt to paint a picture of loss of control, increased costs and even corruption.
The Berrien County Intermediate School District has had extensive experience
with sub-contracting. Food service has been privatized for many years;
transportation for programs at Lighthouse Education Center (formerly North
Lincoln School) had been outsourced for more than 20 years, and on July 1, 2005, the ISD contracted with Laidlaw Education Services to provide transportation for all of the district’s programs. The decision was not an easy one. The board asked many questions about student safety, the quality of service offered by private contractors and the cost savings which could be achieved. In the end, because of exhaustive scrutiny and because of our history and experience with outsourcing, the decision was made – and it has proven to be the correct one.
There will be a savings of $1 million per year for five years with no reduction
in student safety.
Following is what we have learned over the past two decades.
Safety. Without exception, the safety of our students is our primary
concern. In fact, private contractors, because of their size, are able to
provide more extensive and ongoing training than schools. State requirements for qualifications for school bus drivers are the same whether they are employed by a private contractor or a public school. Vehicles are newer and better maintained as a result of bulk purchasing power and extensive and well-trained
mechanics. You simply do not become a multi-million dollar student
transportation corporation with a poor safety record!
Personnel background checks. Michigan law requires all transportation
personnel (publicly or privately employed) to undergo criminal background
checks, fingerprinting and random drug testing. The responsibility falls on the
school whether these personnel are employed by the school or by a private
company, which is under contract with the school. There are no exceptions!
Certainly anyone can research a database and find some private corporation
employee somewhere who was at fault in an accident or was convicted of some
crime. But the same is true of public school employees.
Personnel experience and turnover. There are those who claim that when a
private company assumes the transportation responsibilities of the district, the drivers are new and students/parents are not familiar with them. They also say that they "turn over" at a high rate. It has been our experience that this
simply is not true. When the ISD outsourced its transportation to Laidlaw in
2005-06, it employed 32 transportation staff. Of those, six had been with the
ISD for 15 years or more. Of the remaining 26 employees, the average longevity
with the ISD was only 2.8 years. In addition, the ISD required that any
contractor offer ISD staff the first opportunity of employment and, in fact,
more than 80 percent signed on with Laidlaw. This meant that more often than
not, parents and students saw the same drivers and attendants that they saw
prior to outsourcing.
Local Control. If a district chooses to privatize its services, some
claim they give up control. The opposite is actually true. The contractor works
for the district! On a day-to-day basis, the contractor does have control over
routes, discipline of students and personnel – but only to the extent allowed by the district. If a driver is negligent or fails to follow appropriate
procedures, the corporation may impose the necessary disciplinary procedures. In the more severe cases, where student safety may be in jeopardy, it may result in termination. As public school employees, discipline often resulted in
time-consuming and costly labor procedures which may include grievances,
arbitrations, unfair labor practice charges, wrongful discharge suits, etc.
Cost. One widely disseminated document states that contract drivers
receive low wages – specifically: "Employees (of private contractors) are paid
at near minimum wage." When Laidlaw hired our drivers in July 2005, the minimum
wage was $5.15 per hour. Our employees who signed on with Laidlaw received
$15.05 per hour – almost three times the minimum wage. It is true that they did
not continue to receive retirement benefits (currently at almost 18 percent of
salary), nor did they receive the same health benefits (for the ISD, that was
almost $13,000 per year). Obviously, the major savings ($1 million per year)
were a result of the district saving retirement and health costs. However, they
were all offered jobs at the same hourly rate ($15.05 per hour) they had as ISD
Having explained these concerns, this remains an extremely difficult decision
for any district to make. Hopefully, school districts share a deep concern when
it comes to staff and their employment. However, we cannot let our focus be
diverted from our mission of providing quality instructional programs for our
students. With limited resources we must remain fiscally responsible and make
the tough calls when they are needed. This is not about "corruption,"
"profiteering," "high turnover," etc. Rather, it is about finding the financial
resources necessary to educate our students without compromising their safety.
Jim Palm is the assistant superintendent of the Berrien County
Intermediate School District.
The decision to privatize district services is a tough decision. Within our own district, we have privatized food service management and have moved some of our services to the ISD for more centralized services and district savings without seeing anything less than outstanding service from the employees. Good article and helpful information.
- Cathy Wilhm, school board member, Grand Ledge Public Schools
I agree with Mr. Palm’s idea that it is best for public schools to outsource activities to the private sector. By outsourcing, money is saved and more money is available for the schools to use for students in Michigan.
- Luke William White, home-educated student, Midland, Mich.
After working on a charter school board for over three years, I can say with confidence that privatization is the way to go. There is a mind-set that seems common to public employees, as well as employees of large companies, where the employee seems to feel they are owed something just for being there. Smaller, private companies offer closer oversight and consequently they job gets done better, and usually for less money.
- David Wejrandt, reader, Roseville, Mich.