Michigan Privatization Digest - August 31, 2007

Contents of this issue:

  • School privatization survey shows increase in contracting

  • More foster care privatization a possibility

  • Ottawa County extends contract for plowing

  • Williamston contracts for city planning positions

  • Village contracts for police services

  • School Privatization Primer Released

  • Lincoln holds off contracting

  • Napoleon schools contracts for custodians

  • Fraser contracts substitute teachers

  • Private custodial firm will provide services to Howell Schools

  • Petoskey expands food service contract

  • MEA sues to prevent teacher aide contracting

  • Hanover-Horton explores custodial contracting

  • East Lansing recontracts food

  • Marshall contracts for custodial service

  • Grand Rapids recall signatures deemed invalid

School privatization survey shows increase in contracting

MIDLAND — The Mackinac Center for Public Policy’s annual school privatization survey found that 40.2 percent of conventional public school districts in Michigan contract for one of the three major noninstructional support services. That is up from 37.8 in 2006. The largest increase in privatization came from custodial services — 16 districts signed contracts to provide these services.

Mid-sized districts were the most likely to privatize. More than half of the districts that educate between 2,000 and 4,000 pupils contract for food, custodial or transportation services.

Overall, 89.2 percent of districts that contract report being pleased with their experience. Just under 10 percent were unsure and less than 1 percent said they were not pleased.

Privatization of support services also offers savings to districts, with 79.2 percent reporting that contracting has saved the district money.

You can view the entire survey at www.mackinac.org/8881.

More foster care privatization a possibility

LANSING — The Department of Human Services appropriation bill includes an expansion of privately provided foster care. The bill was passed in the Senate and sent to the House appropriations committee.

Currently, when a child is placed in foster care, a Human Services field office determines whether to use a privately organized foster care service, like Lutheran Child and Family Services of Michigan, or one of the state’s registered foster families. Foster families face the same oversight requirements and regulation, regardless of whether they are affiliated with public or private agencies.

There are currently almost 19,000 children in foster care, of which only 36 percent go to licensed foster care establishments. Of those, almost 60 percent are supervised by private agencies, according to the Michigan Department of Human Services.

If adopted, the move is anticipated to save the state $19 million annually.

Ottawa County extends contract for plowing

OTTAWA COUNTY — Road commissioners for Ottawa County, which contains the cities of Grand Haven and Holland, voted to expand a contract to provide snow plowing services, The Grand Rapids Press reported.

The county spent more than $95,000 in private plowing services last year, which was only slightly less than the county’s in-house costs to provide the services. However, the county will not have to hire temporary workers in the winter who would be laid off in the summer, according to The Press.

The road commission had hired Countryside Snowplowing to plow 82 miles of county roads. The new contract extends the area covered to 192.5 miles, according to The Press.

The Grand Rapids Press, “County expands plans for private plowing” June 15, 2007

Williamston contracts for city planning positions

WILLIAMSTON — In order to take advantage of professional services, a small town outside of Lansing decided to contract for its community development and planning directors, according to the Williamston Enterprise. The city has agreed to hire McKenna Associates Inc. to provide the services.

Officials expect that the move will save money. Filling the positions directly would cost approximately $140,000. The contract calls for a base payment of $116,880 per year, the Enterprise reported.

“For us, it works out better because we could never afford an on-staff planner. They have so many resources they can tap into at their office for design and any type of ordinance from landscaping to cemeteries to ballparks and everything. It’s like having twenty people working for you, but you only pay for the one that’s here for the day,” township Supervisor Mickey Martin told the Enterprise.

If the city is dissatisfied with the contract, it can immediately terminate it, the Enterprise reported.

Williamston Enterprise, “City hires firm for planning, development,” July 1, 2007

Village contracts for police services

CLAYTON TOWNSHIP — Officials for the Village of Lennon, which is located partially in both Shiawassee and Genesee counties, are contemplating a bid by a neighboring township to provide police services to the village, according to the Swartz Creek News. Currently, the village has its own police force of four — one full-time officer and three part-time officers.

Clayton Township offered to provide the services for $67,000, but may add $4,000 to $5,000 in startup costs, according to the News. The contract will be for one-year as a trial period.

Currently, the village and townships will provide backup coverage of the other’s area and will patrol them, the News reported.

Swartz Creek News, “Clayton cops may patrol Lennon,” June 10, 2007

School Privatization Primer Released

MIDLAND — The Mackinac Center for Public Policy released “A School Privatization Primer for Michigan School Officials, Media, and Residents,” the third book in the Center’s Michigan School Management series.

The primer discusses the scope of privatization across the country, reviews the academic literature on school districts that contract and discusses the “request for proposals” process districts can use to solicit bids for food, custodial and transportation services.

The primer is posted on the Web at www.mackinac.org/8691.

Napoleon schools contracts for custodians

NAPOLEON — Napoleon Community Schools, a district of 1,600 pupils in southwestern Michigan, will use a private company to provide custodial services.

The move is expected to save the district $305,000 annually, according to The Jackson Citizen Patriot.

The district has an annual budget of $12.8 million, according to the Brooklyn Exponent.

Superintendent Jim Graham told The Patriot, “We have no choice. This happens to be one area that we can cut that does not affect our commitment to students.”

The Jackson Citizen Patriot, “District hires firm to replace workers,” May 30, 2007

Brooklyn Exponent, “Teaching positions dropped,” June 26, 2007

Lincoln holds off contracting

YPSILANTI — Lincoln Consolidated Schools was exploring contracting with a private vendor for custodial and maintenance services, and passed a budget that required $1.2 million in savings those areas.

However, due to a combination of lower than expected costs in operating the district’s buildings and grounds and late-hour union concessions, the district chose to keep the work in-house. The district signed a one-year collective bargaining agreement with its custodial union.

The district may look to contract for the 2009 fiscal year, depending on state school aid spending.

The Ann Arbor News, “Lincoln school district delays decision on privatization,” June 16, 2007

Fraser contracts substitute teachers

FRASER — As part of a plan to cut $718,000 from its budget, the school board at Fraser Public Schools is looking at contracting for substitute teacher services and other support faculty. The move is estimated to save the district $87,000, according to The Macomb Daily.

State law allows school districts to use the services of a private company to dispatch substitutes. This saves districts 17.74 percent of payroll by not having to provide for pension fund contributions for the substitutes. Since substitutes typically do not work full-time, it takes an extended period to become fully-vested in the school pension fund.

Most private companies offer 401(k) retirement accounts instead of the defined-benefit plan in school districts.

In addition to contracting for substitutes, Fraser may eliminate some teaching positions and reduce its support staff.

The Macomb Daily, “Fraser schools outlines cuts to trim budget by $718,000,” July 11, 2007

Private custodial firm will provide services to Howell Schools

HOWELL — Howell Public Schools is facing a $2.1 million deficit for its next fiscal year, according to The Livingston Press. As part of its plan to eliminate this deficit, the district contracted for its custodial services.

The move is expected to save the district $400,000 in the first year alone. The district’s custodial union offered concessions that would have saved $242,000, but the district went with the private vendor, according to The Detroit News.

The Livingston Press, “School officials to discuss cuts in budget tonight,” June 19, 2007

The Livingston Press, “Howell schools’ deficit could affect custodians first,” June 21, 2007

The Detroit News, “Howell school board lays off 38 custodians,” Aug. 14, 2007

Petoskey expands food service contract

PETOSKEY — Expecting to lose $52,000 in its food service program for the upcoming fiscal year, the Public Schools of Petoskey board voted to expand its food service contract to include labor, according to the Petoskey News-Review. Its provider had previously been providing for only the management of the district’s food services.

“They fully anticipate to hire 100 percent of their workers in the Emmet-Charlevoix area,” school business manager Kent Cartwright told the News-Review.

Under the new arrangement, revenues are expected to exceed costs by $150,000, according to school board member Jack Waldvogel.

Petoskey News-Review, “Privatizing Petoskey school food services will cost local jobs,” Aug. 6, 2007

MEA sues to prevent teacher aide contracting

HARRISON — The Michigan Education Association school employee union requested an injunction to stop the Harrison Community Schools from contracting its teachers aides, according to the Mt. Pleasant Morning Sun.

Currently, contracting for noninstructional services is a prohibited subject of bargaining for districts. The court ruling in this case may decide whether teachers aides are considered noninstructional employees.

Mount Pleasant Morning Sun, “Teacher’s aide change leads to suit,” Aug. 2, 2007

Hanover-Horton explores custodial contracting

HANOVER — The Hanover-Horton Schools is looking to save money by contracting its custodial services, according to The Jackson Citizen Patriot.

Without contracting, the district is expecting to pay $464,438 to clean and maintain its buildings. The lowest private bid came in at $295,525, which is 36 percent less than it would cost for school employees to provide the service, according to The Patriot.

The Jackson Citizen Patriot, “District considers privatizing custodial services to cut costs,” Aug. 3, 2007

East Lansing recontracts food

EAST LANSING — The East Lansing school district switched its food service provider from Aramark to Chartwells, according to the Lansing State Journal.

Contracting for food service is a regulated business, with a number of recommended nonprice factors included in the state’s prototype Request for Proposals. While Aramark provided the lowest bid for the service, other factors secured the recommendation to contract with Chartwells.

Lansing State Journal, “School board OKs new food service contract,” Aug. 5, 2007

Marshall contracts for custodial service

MARSHALL — The Marshall Public Schools board of education recently voted to contract its custodial services to Grand Rapids Building Services. The move is expected to save the district up to $1.1 million over the next three years, according to The Battle Creek Enquirer.

For $10 a week, an employee may buy an individual insurance plan through the company. Also, hourly rates from GRBS will only be a dollar less than what the district currently pays.

“It’s been tested in dozens of schools in dozens of states. It’s growing each year because it works,” board Treasurer Dan Stulberg told the Battle Creek Enquirer.

The Battle Creek Enquirer, “District outsources custodial services,” Aug. 14, 2007

Grand Rapids recall signatures deemed invalid

GRAND RAPIDS — Organizers turned in three signatures — all of which were declared invalid — in an attempt to recall a Grand Rapids Public Schools board member after he voted to privatize its transportation and substitute teacher services, according to The Grand Rapids Press.

The effort needed 15,960 signatures in order to force a recall vote of David Allen.

The Grand Rapids Press, “Recall effort garners just 3 signatures,” July 24, 2007.

Michigan Privatization Digest 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.

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