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Contents of this issue:
Traverse City to sell power utility
Bay City to rebid bridge contract
Birmingham schools privatizes three main support services
Comstock Park schools privatizes custodial job
Reed City schools investigates food and custodial privatization
Holly schools look to contract out
Northville looks to contract out big three noninstructional services
Pinckney schools weighing privatization
Niles schools contract out transportation
Southfield contracts out custodial and transportation services
TRAVERSE CITY — Traverse City Light & Power, a city-owned utility, may be purchased by Cherryland Electric Cooperative, according to The Leelanau Enterprise.
TCL&P currently has a stake in a number of power-generating facilities and owns the transmission and distribution lines. It is also responsible for billing customers.
In a memo, Cherryland stated a number of benefits of purchasing TCL&P, including the elimination of some duplicative distribution lines — there are a couple areas where one company’s lines run across the street from the other’s — increased customer base, and also a distribution of Cherryland profits to Traverse City residents.
City officials believe a sale could lead to lower city property taxes, perhaps by as much as half, according to The Enterprise.
"I’d like to cut taxes for downtown businesses, and my next door neighbor, too," Mayor Michael Estes told The Enterprise.
Reference:
"Cherryland makes bid to purchase T-C utility," Leelanau Enterprise, April
14, 2008
BAY CITY — Bay City commissioners recently voted to solicit bids to operate its two drawbridges, according to The Bay City Times. Commissioners attempted to do so in 2007, but the action was vetoed by the mayor.
The move had been expected to save the city $193,000 in the first year alone, according to The Times.
Reference:
"Staff directed to revisit bridge privatization issue," The Bay City Times,
March 19, 2008
BIRMINGHAM — As part of a plan to eliminate a projected deficit of $3.2 million for the next school year, Birmingham Public Schools voted to contract out the district’s custodial and transportation services, according to The Oakland Press. The move is expected to save the district $2.7 million.
In order to balance its books, the district explored cutting 26 full-time equivalent positions. With contracting, however, the district will add 15 positions, according to the Birmingham-Bloomfield Eagle.
The district selected Durham School Services to provide transportation services and GCA Services Group to provide custodial services, as reported in The Oakland Press. According to the Mackinac Center’s 2007 school privatization survey, Birmingham is the first school district that has contracted with GCA.
The district already has experience in contracting out support services. Its food service is currently being managed by Sodexho. If the contracts are signed, Birmingham will join just five other school districts in the state that contract out for food, custodial and transportation services.
References:
"BPS to privatize school services to save nearly $3 million,"
Birmingham-Bloomfield Eagle, April 2, 2008
"School support workers going private," The Oakland Press, April 3, 2008
PLAINFIELD TOWNSHIP — The Comstock Park board of education voted to hire a private company to clean its Greenridge Elementary School, one of the district’s six schools. The district awarded a contract to Grand Rapids Building Services.
After the retirement of a custodian in January, the district used GRBS on a short-term basis to clean the building, according to The Press. However, the district decided to have a formal bidding process to award a one-year contract for the school.
Other districts around the state mix their custodial services between contractors and district employees as well. Six other districts contract out custodial services for a single building, according to the Mackinac Center’s 2007 school privatization survey.
By the district’s analysis, it would cost $50,823 for district employees to clean the school for the next year. Savings offered by the five bidders ranged between 6 percent and 32 percent, according to The Press. The district spent $8 million on support service activities in its 2006-2007 fiscal year, according to its most recent financial report.
Reference:
"Comstock Park: School custodian job goes private," The Grand Rapids Press,
March 25, 2008
REED CITY — With a projected budget deficit of $750,000 for next year, Reed City schools is investigating food and custodial service contracting.
The school board approved a request for proposals in February, and will decide at the board’s May or June meeting, according to The Cadillac News.
Reference:
"Reed City schools may privatize some jobs," Cadillac News, March 22, 2008
HOLLY — Holly schools is facing a projected deficit of $225,000 for its next fiscal year and the district is looking at food service contracting to fill the gap, according to The Flint Journal. The move is expected to save $60,000.
It currently contracts with Chartwells to manage its food service program, but it is looking to rebid its contract to include labor as well as management. Since 2004, cafeteria employees who end their employment were replaced with employees from Chartwells, according to an editorial from Superintendent Kent Barnes in the Tri-County Times.
Food service programs are prohibited from contributing to a school’s general fund — a district cannot use lunch money to pay for teachers — but it must subsidize its food service programs if they run at a deficit. Holly’s food services ran at a $58,823 deficit for the 2006-2007 fiscal year, according to its financial reports.
The district also plans on contracting out its social work services, which could save an additional $161,000, according to the editorial.
References:
"Holly School District looks to privatize food service to address $225,000
deficit," The Flint Journal, April 14, 2008
"Guest Viewpoint," Tri-County Times, April 6, 2008.
NORTHVILLE — The Northville board of education is reviewing bids from custodial and transportation companies. The district could save between $400,000 and $1 million in custodial services alone, according to The Detroit News. The district is also looking at contracting for food services. The cost to provide the three services is around $7 million, The News reported.
The district sent out its request for proposals in September and is currently reviewing the bids, according to the Detroit Free Press.
References:
"Northville schools assess privatization," The Detroit News, April 17, 2008
"Talk of outsourcing heats up Northville school board meeting," Detroit Free
Press, April 16, 2008
PINCKNEY — Pinckney Community Schools is considering contracting for custodial services as a way to help eliminate a $1.9 million deficit for the next fiscal year, according to The Livingston Daily Press & Argus. Switching to a private provider could provide savings up to $430,000, the Press & Argus reported.
In a cost savings effort, the district has already closed Hamburg Elementary School, saving $350,000 annually.
The district has told its custodial union that it must offer concessions by June 30 or it will proceed with privatization, according to the Press & Argus.
References:
"PRIVATIZATION: Contracting custodial services in Pinckney might be right
move," Livingston Daily Press & Argus, March 18, 2008
"Custodians fighting for jobs," The Livingston Daily Press & Argus Press, March
10, 2008
NILES — The Niles Community Schools board of education voted to privatize its transportation services to First Student. The district had been facing a deficit of between $750,000 and $1 million, according to the Niles Daily Star.
First Student will also invest $1 million in the district’s bus fleet.
"It will help us reduce our operating costs and free up funds for use in core educational activities," Scott Tyler, president of the Niles school board, told the Daily Star.
Reference:
"Niles votes to privatize busing," The Niles Daily Star, March 4, 2008
SOUTHFIELD — Southfield schools decided to contract out its custodial and transportation services and rejected last-minute concessions offered by its service unions, according to the Detroit Free Press. The move is expected to save the district $21.5 million over three years.
A consultant hired by the district recommended Durham School Services to provide transportation and GCA Services Group to provide custodial services, according to The Oakland Press.
For the 2006-2007 fiscal year, the district spent $14 million on operations and maintenance and $7 million on transportation. It had a positive balance on its food service fund, according to its financial reports.
References:
"Southfield school board moves towards privatization," The Oakland Press,
April 10, 2008
"Southfield schools to privatize bus, cafeteria services," Detroit Free Press,
April 23, 2008
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.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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