NCPA - National Center for Policy Analysis


May 13, 2005

Spurred by budget pressures and no additional funding for 2005, Michigan's public universities have created a new program for contracting out many of their services, resulting in huge cost savings.

For example:

  • Western Michigan University contracted out its custodial services and saved the university $1.5 million annually.
  • Ferris State University?s vending services went from losses of $85,000 per year to profits of $85,000 per year after the university partnered with a private company.
  • A survey by the Mackinac Center for Public Policy reveals that the most commonly outsourced services are sanitation (90 percent), bookstore operations (80 percent), vending operations (70 percent) and legal services (70 percent).

Furthermore, the Higher Education Purchasing Consortium was formed by the schools in 2003 to allow them to gain leverage when negotiating with firms. All 15 of Michigan?s public universities participate in the program, but they have the option of contracting out only the services they choose.

Three universities in the consortium have negotiated a deal with Consumers Energy that will save them about $730,000 in electricity costs.

Source: Laura J. Davis, "Privatization Brings Big Savings to Michigan's State Universities," Heartland Institute, April 2005.


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