Contract Out School Services Before Laying Off Teachers

Of 71 MI School Districts Responding to a 2001 Survey...

The Dearborn school district intends to lay off 12 percent of its teachers to help close an anticipated $4 million to $7 million budget deficit. As reported in April, this amounts to 160 teachers who will lose their jobs — teachers who won’t be there for the 17,000 children in Dearborn classrooms after summer break.

This drastic step, which takes effect June 30 and is expected to save the district $6 million, was unanimously supported by Dearborn’s Board of Education. Similar layoffs reportedly are scheduled or being contemplated in Livonia, Plymouth-Canton, Utica, Taylor and other Michigan school districts.

Any decision to lay off teachers begs the question of whether every cost-saving alternative was explored before choosing the one that arguably hits children the hardest.

The Mackinac Center for Public Policy has long encouraged school districts to consider the savings that can be gained by contracting with private companies for food, transportation, custodial and other non-instructional services such as technology and security.

Districts that do it right — write tight contracts, seek competitive bids, and closely monitor the performance of the contractor — almost invariably find they are paying significantly less money for higher quality service. In a non-comprehensive 2001 Mackinac Center survey, over 80 percent of responding school districts reported saving money through outsourcing. The money saved can be put back where it belongs: in the classroom, keeping good teachers instead of laying them off.

Bob Cipriano, director of business services for Dearborn Public Schools, said a private company provides the district’s security services. But the district has not privatized food, custodial or bus service. Cipriano said the district looked into privatizing custodial services four or five years ago, but decided against it. He said he is not sure it has ever considered privatizing bus service.

Cipriano emphatically contended that his district’s food service “is run like a business,” “is making a profit,” and “is not a drain on the school budget.” In fact, a number of Michigan schools are taking this route: As a last-ditch effort to resist increasing pressure to contract out, they are actually trying to run their own services in ways that no longer lose money hand over fist.

Thus, the mere prospect of privatization is imposing economic discipline where before there was none, spurring school districts to run their services more efficiently.

The fact that this argues in favor of privatization seems lost on the editors of the April issue of the Michigan Education Association’s monthly magazine, which is devoted exclusively to “fighting privatization.” Calling school districts that privatize “fool-hearty [sic]” and the companies that provide the services “privateers,” the magazine showcases instances in which private companies have been fired for not delivering lower costs, or higher quality, or both.

Ironically, the union’s argument supports privatization. The whole reason privatization is an issue is because schools want to be able to get rid of services that cost too much, do a poor job, or both. It’s extremely difficult, nearly impossible, to fire unionized school employees. Schools can much more easily fire a private company that doesn’t live up to its contract.

The fact that poor-performing private companies have been fired — a point the MEA makes very clear — doesn’t prove that privatization doesn’t work. It proves that it does.

It’s not as if MEA officials don’t know the benefits of outsourcing. Not long ago the union itself employed private (even non-union) companies — not its own unionized employees — to provide food, security, custodial and mail service at its East Lansing headquarters.

So, why not privatize, if it can enable districts like Dearborn to retain its teachers? After all, private contractors often hire the same bus drivers, custodians and cooks who were formerly school employees. But the union might lose these workers as dues-paying members in the process. Apparently, the union — facing a $10 million deficit this year — is willing to sacrifice a few teachers to ward off potentially bigger losses as privatization gains momentum. Does this display a primary concern for children and teachers?

Schools boards that put teachers and kids first have a powerful law on their side. Michigan law prevents the MEA from making privatization a bone of contention in contract negotiations. This leaves school districts free to save money for teacher salaries through privatization of non-instructional services.

They should do so, before laying off a single teacher.


(Michael D. LaFaive is fiscal policy analyst and Robert P. Hunter is director of labor policy for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. More information on privatization, education and labor issues is available at Permission to reprint in whole or in part is hereby granted, provided the authors and their affiliations are cited.)


As a way to deal with tight budgets, many Michigan school districts are laying off teachers before fully exploring the savings and benefits of outsourcing food, transportation, janitorial and other non-instructional services. Before letting go of a single teacher, district managers should give privatization a try.

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