More Schools Save by Ditching Unionized Insurance, Busing, Food and Janitors

For nearly two decades the Mackinac Center has published evidence that demonstrates how school districts can control costs by switching to cost-effective health insurance plans and contracting out for noninstructional services. In the face of budget realities, a growing number of districts are doing both.

Currently, around 80 percent of Michigan school districts purchase health insurance from a subsidiary of the state’s largest teacher’s union called the Michigan Education Special Services Association. MESSA’s insurance coverages are both notoriously luxurious and extremely expensive.  Not surprisingly, the parent MEA union lobbies hard to get schools to buy policies from its subsidiary, in spite of MESSA’s rapidly rising premiums, which impose growing strains on school districts’ budgets.

But many districts are wising up and switching. Here are some that recently ditched MESSA and how much they saved, according to local press reports:

• Otsego Public Schools: $500,000 (The Plainwell Union Enterprise, Aug. 1, 2011)
• Ovid-Elsie Area Schools: $338,000 (The Owosso Argus Press, July 23, 2011)
• Whittemore-Prescott Area Schools: $330,000 (Ogemaw County Herald, Aug. 4, 2011)
• Laingsburg Community School District: $211,000 (The Owosso Argus Press, Aug. 4, 2011)
• North Branch Area Schools: $200,000 (The Lapeer County Press, June 26, 2011)
• Martin Public Schools: $100,000 (Allegan County News, July 28, 2011)
• Engadine Consolidated Schools: $56,000 (St. Ignace News, June 30, 2011)

More schools are also saving money by contracting out for noninstructional services. To be precise, a just completed Mackinac Center survey of every Michigan school district reveals that 54 percent now contract out for custodial, food or transportation services. Districts such as Oakridge, Woodhaven-Brownstown, Crestwood and Reeths-Puffer expect to save hundreds of thousands of dollars by contracting out one or more of these functions to qualified bidders.

Criticism of these fiscally responsible practices mostly comes from school employee unions, whose power and income are diminished by privatization. But by paying less for health insurance and noninstructional services, schools free up resources that can be devoted to their core mission of educating students.

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