NCPA - National Center for Policy Analysis


December 21, 2005

Many school districts are beginning to outsource ancillary business operations; in particular, Michigan schools are contracting out more nonessential work, says Michael LaFaive and Daniel Smith of the Mackinac Center for Public Policy.

A study of Michigan's 552 school districts attempted to determine how many of them used outside vendors for three primary non-instructional services: food, janitorial and busing. In 2003, about 34 percent of districts contracted out, today, 35.5 percent do and 196 of the districts outsource at least one of the three functions, says LaFaive and Smith:

  • The most popular area of privatization is food services; 156 Michigan school districts (over 28 percent) contract out with a private company for some type of food service delivery.
  • While janitorial outsourcing occurs much less frequently than in the food service arena, there is a growing interest in it; janitorial services are now outsourced in 8.7 percent of districts, up from 6.6 percent just two years ago.

Moreover, almost 80 percent of the districts reported savings through privatization, though some had difficulty quantifying precisely how much had been saved, says LaFaive and Smith:

  • Only eight districts reported no savings.
  • Over the years some districts have reported that they didn't care about saving money as much as they were seeking to get out of a particular business -- such as busing -- so they could concentrate on their mission to educate kids.
  • According to 25 percent, the most significant barrier to privatization is employee and union opposition.

Furthermore, privatization can, and does, save money and often improves the quality of services for school districts willing to adopt this cutting-edge management technique, says LaFaive and Smith.

Source: Michael D. LaFaive and Daniel J. Smith, "Survey: School Outsourcing Grows, " Michigan Privatization Report, Fall 2005.

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