Around the State

Contents of this issue:

  • Privatization on the Table in Lakeview (Montcalm County)

  • Lakewood District (Ionia County) Debates Privatization

  • Muskegon: Rare Privatization Triple in Play

  • Six West Michigan Districts May Combine Privatization Forces

  • Three Washtenaw County School Districts in Privatization Talks

  • Substitute Teachers Outsourced?

    Stay Engaged

    Receive our weekly emails!

  • Custodial Privatization May Come to Hartland

  • Hamtramck May Privatize Fire Department

  • Ice Arena Privatization Draws Threat of Recall/$4 Million Bid Rejected

  • Detroit Mayor Alludes to Privatization of City Services

  • Detroit City Zoo Gets "NonProfitized"

  • Arenac County Jail Contracts with State for Food Services

  • UPDATE: Owosso Township Recall Effort

  • UPDATE: South Haven Marina Privatization

Privatization on the Table in Lakeview (Montcalm County)

LAKEVIEW — Lakeview Community Schools in Montcalm County recently considered privatizing non-essential services as one way of grappling with an expected $1.2 million budget deficit for the fiscal 2007 school year.

Greenville’s Daily News reported in its Feb. 10 edition that the district is struggling due to a 6.9 percent drop in student enrollment and the resulting decline in state aid.

Dixie Pope, business manager for the district, told Michigan Privatization Report that as of Mar. 30 the school board had not decided whether to pursue privatization or precisely how the board would close its deficit.

Lakewood District (Ionia County) Debates Privatization

GRAND RAPIDS — Ionia County’s Lakewood School District held a meeting Mar. 13 to hear comments on a proposal to privatize custodial services, according to Grand Rapids-based WOOD-TV. Custodial service is a rapidly growing area of non-instructional privatization in the state of Michigan. Upwards of 100 people showed up at a school board meeting to express opposition to the proposal. As of late March no decision had been made on whether to adopt the privatization approach.

Muskegon: Rare Privatization Triple in Play

MUSKEGON — The Reeths-Puffer school district in Muskegon is giving serious consideration to outsourcing all three of its major non-instructional school services: busing (see story directly below), food, and custodial service. The changes are intended to help balance the district’s 2007 fiscal year budget.

On Feb. 14 the Muskegon Chronicle reported that Superintendent Steve Cousins confirmed that all three services were potential candidates for privatization. The hope is that savings from competitive contracting could help reduce a $830,000 deficit faced by the district. The district currently employs a total of 92 bus drivers, custodians and cafeteria staff.

In a Mar.15 letter from the Reeths-Puffer Board of Education to the local community, the board detailed tough fiscal problems the district is facing and stated that it was considering outsourcing custodial and transportation services to save money. The letter also contained a table of financial data showing the current hourly rate in salary and benefits for district custodians ($31.52); what the union wanted ($31.83); the board’s offer ($26.77); and what the district would pay if the work were contracted out ($16.42). The letter stated the board was trying to avoid having to cut student programs and that outsourcing was a viable option to save money and avoid program cuts.

"Very few districts in the state have private contractors working in all three of the major noninstructional service areas," said Michael LaFaive, senior editor of Michigan Privatization Report. LaFaive is the co-author of a 2005 survey which found that only two of Michigan’s school districts contract for busing, cafeteria and custodial services at the same time. As of early April no decision had been made about whether or not to privatize, but one is likely by the middle of the month.

Six West Michigan Districts May Combine Privatization Forces

GRAND RAPIDS — In a move long recommended by Michigan Privatization Report, six Muskegon area school districts are beginning efforts to save money by jointly contracting out for services, according to WOOD-TV. Doing so would likely save additional money due to improved economies of scale.

The six districts (Fruitport, Oakridge, Reeths-Puffer, Holten, Muskegon Heights, and Whitehall) are looking to privatize their busing services as a group. Several of Kent County’s districts have combined their special education busing and are happy with their contracted services.

Three Washtenaw County School Districts in Privatization Talks

WASHTENAW COUNTY — According to a Mar. 10 article in the Ann Arbor News, school buses from three different Washtenaw County districts may be operated by a single private company in the next school year. The districts — Lincoln, Willow Run, and Ypsilanti — are in discussions to consolidate their transportation operations. A "Request for Proposal" would be issued once an agreement is reached.

All three school districts face significant budget shortfalls—as much as $4 million in Willow Run — for the 2006-2007 school year. According to the Ann Arbor News article, Ypsilanti maintains about 60 transportation-related employees. Officials in the Lincoln and Willow Run districts told Michigan Privatization Report that they have approximately 81 and 30 such employees, respectively. Many of the employees could be hired by whichever contractor wins the job.

"We’ve seen this time and again," said Michael LaFaive, senior editor of the Michigan Privatization Report. "Contractors need talent and they often look to hire the very people that were previously employed by the district."

Substitute Teachers Outsourced?

GRAND RAPIDS — School administrators in Kent and Ottawa counties are exploring the idea of contracting with a private company for substitute teachers, according to the Grand Rapids Press.

The Kent Intermediate School District approved a deal with a Caledonia-based firm to handle substitute teacher recruitment, training, and placement. Three other West Michigan counties may join forces and contract with a single provider of such services. Districts within the three counties could opt in if they so chose. Savings resulting from use of the new approach could range from $100,000 to $235,000 annually, depending on the size of the district.

The Grand Rapids Press also noted that unions are nervous that this could lead to privatization in other areas of school support services, such as secretaries.

Secretarial and other administrative work has long been the "undiscovered country" of school privatization, but as budgets continue to tighten, districts find themselves more willing to try new management practices.

Custodial Privatization May Come to Hartland

HOWELL — Hartland Consolidated Schools’ Board of Education is giving serious consideration to a proposal to privatize janitorial services, hoping to save at least $500,000 annually in the process.

Officials in Hartland have issued a "Request for Proposal," asking private firms to bid on the service, and as of Mar. 30 have received and reviewed four offers. No formal decision on the matter is expected until at least the April board meeting.

The board is also considering a host of other cuts to close a projected $1.5 million fiscal 2007 deficit.

Hamtramck May Privatize Fire Department

DETROIT — In an attempt to save more than $1 million annually, the city of Hamtramck may privatize its fire department, according to a Mar. 3 Detroit News article. City manager Don Crawford is working to prepare a "Request for Proposal" that will be reviewed by the City Council. According to the News, Hamtramck employs 25 firefighters and their union would likely take the city to court over any decision to privatize, arguing the city has a contract with firefighters.

While private fire departments are relatively common in the Southwest United States, the Michigan Professional Firefighters Union reports that no city in Michigan maintains a private fire department under contract. Many units of government, however, maintain largely private, volunteer forces that usually operate at a very low cost. The city of Troy has nearly 81,000 residents according to the 2000 Census and is 34 square miles in size. It employs only 14 professional firefighters (another 180 are volunteers). By contrast, Hamtramck is 2.1 square miles in size and the city maintains a complement of 25 full-time firefighters to protect the city’s 22,900 people.

For more on the subject of fire department privatization, please see Privatization Could Rescue Detroit Fire Service, published by the Mackinac Center for Public Policy.

Ice Arena Privatization Draws Threat of Recall/$4 Million Bid Rejected

GEORGETOWN TWP. — The West Michigan Community of Georgetown Township mailed out 150 requests to bid on ownership of the township’s ice arena, according to a Mar. 2 article in the Grand Rapids Press. The move drew howls of protest from arena enthusiasts, 60 of whom showed up at a township board meeting. Township Supervisor Bill Holland was "seeking a minimum offer of $4 million." Local resident Mark Nanninga, told the Grand Rapids Press that there may be an "army" of people seeking recall petitions if the rink is sold.

As it turned out, a recall wasn’t necessary. Despite receiving one bid for $4 million, the township chose to reject the offer on the grounds that certain specifications of the bid had not been met.

Detroit Mayor Alludes to Privatization of City Services

DETROIT — Mayor Kwame Kilpatrick surprised many observers recently by delivering a "State of the City" speech with allusions to competitive contracting. Consider an excerpt from his remarks as reprinted in the Detroit Free Press:

"Is trash collection a core service? Again, I believe the answer is, 'Yes.' Does city government need to provide that core service? Frankly, at this moment I don’t know. I don’t know that it requires that workers be on the city payroll to insure that trash is picked up on time every week."

The mayor went on to promise that the city would investigate how best to provide services to citizens in its police, fire, recreation and public works departments, among other areas. He asked rhetorically, "Does it cost the city more to provide that service than it would cost omeone else to do it for us?"

In 2000 the Mackinac Center for Public Policy published an entire edition of Michigan Privatization Report covering Detroit-specific fiscal policy and privatization-related topics. To view the issue online, click here.

Detroit City Zoo Gets "NonProfitized"

DETROIT — The Detroit City Council has voted to hand over operation of the city zoo to the private, non-profit Detroit Zoological Institute. The Institute is the arm of the zoo that does independent fundraising. A key component of the official transfer is a $4 million subsidy from the state of Michigan to facilitate the transaction. As of Mar. 30 the Michigan legislature had not voted to approve state resources to cement the latest deal.

An anti-privatization ordinance in the city of Detroit may have to be changed to successfully transfer any city-run agency to private management.

Arenac County Jail Contracts with State for Food Services

ARENAC COUNTY — The Arenac County Board of Commissioners has outsourced provision of food services in the county jail by contracting with the state’s Department of Corrections.

The three-year contract allows the jail to send county corrections officers to the local state prison three times a day to pick up meals and bring them to inmates in the county jail. The contract is expected to save $50,000 annually, according to the Arenac County Independent.

UPDATE: Owosso Township Recall Effort

OWOSSO TOWNSHIP — Husband and wife public servants Richard and Judy Gute survived a Feb. 28 recall effort in Owosso Township. Long under fire for competitively contracting with a private firm to provide emergency ambulance services, the duo overcame what appeared to be a highly organized and concerted effort to remove them.

The Flint Journal reported in a Feb. 19 article that the Gutes were standing their ground and prepared to overcome the opposition "with truth and facts." The Journal article also noted that three other township trustees voted to contract with Mobile Medical Response of Saginaw, but were not targets of the recall.

Michigan Privatization Report first covered the recall effort in January of 2006.

UPDATE: South Haven Marina Privatization

SOUTH HAVEN — In a January edition of Michigan Privatization Report’s "Around the State," it was noted that the city of South Haven was investigating outsourcing the management of its marina.

In a February meeting, the city decided to keep management of the marina in-house. The decision was largely based on the city’s belief that operating the marina "with city employees will generate the greatest return on investment at this time." According to city council meeting minutes, there were three proposals by private entities to run the marina, although one was dismissed for lack of detail.

Around the State is a service of the Michigan Privatization Report, a twice-yearly publication of the Mackinac Center for Public Policy with a circulation of more than 22,000. The Mackinac Center for Public Policy is an independent, non-profit research institute located in Midland, Michigan.