Survey: School Outsourcing Grows

School districts face the same cost pressures as companies in the private sector in trying to deliver a quality product at the best price. One method used by firms in both the public and private sectors to achieve greater efficiency is the outsourcing of ancillary business operations. Michigan schools are contracting out more nonessential work than ever before, according to the Mackinac Center for Public Policy's 3rd biennial school privatization survey.

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	School districts around the state of Michigan are finding that outsourcing services such as janitorial, busing and food operations helps schools meet their budgets and direct more dollars into the classroom.

This year the Mackinac Center successfully interviewed a representative from every one of Michigan's 552 school districts to determine how many of them use outside vendors for three primary noninstructional services: food, janitorial and busing. The number of districts that contract out rose from 34.0 percent in 2003 to 35.5 percent currently. Today, 196 of the state's school districts outsource at least one of these three functions.

By far the most popular area of school privatization is in 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 services 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.

The survey also asked respondents about whether outside vendors had saved the district money, if the district was satisfied with its contracting experience, and what barriers (if any) existed to thwart privatization. Almost 80 percent of the districts reported savings through privatization, though some had difficulty quantifying precisely how much had been saved.

Only eight districts reported no savings, but this number should be interpreted carefully. Over the years some districts have reported to us 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 of educating kids.

The most significant barrier to privatization, according to 25 percent of those respondents willing to answer this question, was employee and union opposition. This opposition should not surprise even the most casual observer. Members pay hefty dues to unions that fight the type of competitive bidding that has saved many districts money while improving services. The Michigan Education Association has long opposed contracting out, even though it has in the past contracted for various support services at its own headquarters — and in some cases with non-union firms.

On July 11 Kent City schools became the most recent district in the state to privatize its food service program. Another addition to the Center survey is the Avondale school district in Auburn Hills. Timothy Loock, assistant superintendent for business services reports that contracting with Chartwells, a popular food service company, has meant that "We are better off and the students are better off." According to Loock, the district went from paying a $100,000 subsidy to the food program to posting a profit of up to $25,000 after Chartwells took over. He also added that Chartwells gave them a better quality food product and more selections.

Notably, food service for the entire Iron Mountain school district in Dickinson County is provided by the 144-student Dickinson Area Catholic School. The public school district is reportedly happy with their services, though not surprisingly they can't get meat on Friday during Lent.

While the purpose of this survey was to specifically investigate contracts that districts held for basic noninstructional services, we found that many districts are using competitive contracting in other areas. For example, the Birmingham Public Schools maintains a comprehensive list of more than 60 services for which it utilizes outside contractors. The district is saving more than $50,000 annually by outsourcing 80 percent of its lawn mowing needs from April through November.

Done correctly, privatization can and does save money and often improves the quality of services for school districts willing to adopt this cutting-edge management technique. Best of all, the savings realized can be invested in efforts that more directly impact the classroom experience of our children.

Michael D. LaFaive is director of fiscal policy, and Daniel J. Smith is a research assistant, both with the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich.

Penny saved is a penny earned
Effort to conserve energy reportedly cuts power bill by $6.1 million
By Emily Richmond < emily@vegas.com >
Las Vegas Sun
October 13, 2005

By turning off lights, powering down computers and not fiddling with thermostats, Clark County's schools saved $6.1 million in energy costs for the 2004-05 fiscal year, district officials said Wednesday.

That's a jump of $2.25 million in savings over the last fiscal year.

Dale Scott, energy conservation manager for the district, said the improvement is due in part to his office expanding his roster of inspectors from one to five.

"We told our bosses if they let us hire the extra guys we would guarantee them a savings of $7 million by the 2005-06 fiscal year," Scott said. "We're right on track to meet that goal."

The inspectors visit schools overnight and in the early morning hours, looking for signs of wasteful consumption. After completing a checklist, which includes noting thermostat settings and visiting individual classrooms, the inspector leaves a report card for the staff.

Some principals are taking the program "very seriously" and use the report cards to motivate students and staff, Scott said.

"I wish all the principals were like that but more and more are getting on board all the time," Scott said.

Now in its fourth year, the district's conservation program hands out rebate checks to campuses that cut their power bills by at least 10 percent over the prior fiscal year. This year's checks, ranging from $250 to $5,000, totaled $318,500.

Of the 212 schools that met the minimum 10 percent requirement, Goldfarb Elementary School's usage reduction was the steepest at 39.9 percent. The Summerlin school will receive $1,000 to use for educational supplies.

Palo Verde High School led the district's secondary school campuses at 27.7 percent and will receive $5,000. Two other high schools, Las Vegas and Desert Pines, will also receive $5,000 checks for reducing energy use by 19.4 and 27.7 percent, respectively. (Although the high schools' reductions were less than Goldfarb's, their checks were bigger because the rebates were based not only on the energy cutbacks, but also the schools' enrollment.)

David Pearce, assistant principal for facilities at Palo Verde, credited the students, faculty and staff with the campus' reduced energy usage.

"We've been successful because our school community has been willing to buy into the plan," Pearce said.

The school's parking lot lights are now on timers and the staff turns off air conditioning in areas of the building that are not in use.

In addition to rebate checks going to individual schools, each of the district's five regions will receive $10,000 for having at least 80 percent of their campuses meet the 10 percent reduction benchmark.

Along with its power bill, the district saved $1 million in natural gas costs and $400,000 in water costs for the 2004-05 fiscal year. The district hopes to reduce its water usage even further by installing synthetic turf for athletic fields and using little or no grass in landscaping.

Emily Richmond covers education for the Sun. She can be reached at (702) 259-8829 or emily@lasvegassun.com.

City schools cut waste, saving more than $1M
By Robyn Meadows
Lancaster New Era
Published: Oct 13, 2005 1:28 PM EST

LANCASTER COUNTY, PA - The School District of Lancaster has saved more than $1 million in the last year, making a significant dent in its $3.4 million deficit, school officials said today.

District finance director Curt Baker could not provide a specific number on the savings this morning, but promised to deliver a final figure at this afternoon's finance committee meeting.

Baker says the savings happened because officials have eliminated waste and improved business practices.

Saving money means the district is inching closer toward financing its 10-year, $100 million capital improvement plan to renovate every school.

“I think we are coming out from under our deficit, and I feel very good about our future,” said Patrick Snyder, board member and finance committee chairman.

And the savings bring good news to residents who faced an 8 percent tax increase this year.

“We are whittling in every area that we can possibly whittle because I don't think this town can sustain anymore tax increases,” Superintendent Rita Bishop said.

Some of the changes from the business office has made and will make to save money include:

· A reorganized business office, bringing in new, “highly skilled” staff members.

· An up-to-date accounting and payroll system, eliminating manual time cards.

· Consolidated vendor contracts.

For example, instead of 20 contracts for copier services, the district now has one. That saved $50,000.

· A purchase order review.

“The district has received clean audits (in the past) because the paperwork was all there,” Baker said. But no one was checking if the item being ordered was really needed.

For example, someone once ordered rainbow-colored chickens for a classroom project.

In the past, “there has been spending on items that certainly would raise one's eyebrows,” Baker said.

· Refinanced bonds, saving $300,000 in 2004-05, and another $300,000 this year.

· A cutback in wasteful spending, leaving reserve funds from 2004-05 untouched and saving $250,000.

· An aggressive tax collection, bringing in more revenue.

School officials, both elected and administrative, said they are also working toward earning back trust.

“That's number one on my job description,” Baker said. “Number two has been to examine every corner and eliminate unnecessary spending.”

Rooting out wasteful spending and neglectful business practices has been a painful transformation.

There is still a sour feeling in the memories of the community and even district staff.

Past local, state and federal investigations revealed years of neglectful spending practices in the district.

Former Superintendent Ricardo Curry (now known as Burns) is serving two years in federal prison for hiring friends and relatives as consultants, who did little or no work, and for receiving kickbacks, according to court documents.

The district's new administration says it has worked long hours to change years of bad habits. But they admit there is still work to do.

“There are no books involving our dollars that we aren't proud to show you,” Bishop said.

She added, “You can follow the money now.”

WONDER LAND
By DANIEL HENNINGER  

How One School
Found a Way
To Spell Success
October 14, 2005; Page A10

LITTLE ROCK, Ark. -- Little Rock is a state capital famous to the nation for the mysteries of its politics and the compulsions of its politicians. By insisting 50 years ago on the continued segregation of Central High School, Gov. Orval Faubus ensured among other things that the handsome, still-functioning Central High would stand today as a national shrine maintained by the National Park Service. Yet another national shrine to political tumult that one may visit in Little Rock is the William J. Clinton Presidential Library and Museum. I came to visit the Meadowcliff Elementary School . Perhaps in time someone will put a plaque in front of it too.

About 80% of Meadowcliff's students in the K-to-5 school are black, the rest Hispanic or white. It sits in a neighborhood of neat, very modest homes. About 92% of the students are definable as living at or below the poverty level, a phrase its principal Karen Carter abhors: "I don't like that term because most of our parents work at one or two jobs." This refusal to bend to stereotypes likely explains what happened last year at Meadowcliff.

The school's scores on the Stanford achievement rose by an average 17% over the course of one year. They took the Stanford test in September and again in May. Against the national norm, the school's 246 full-year students rose to the 35th percentile from the 25th. For math in the second grade and higher, 177 students rose to the 32nd percentile from the 14th. This is phenomenal. What happened in nine months?

Meadowcliff has two of the elements well established as necessary to a school's success -- a strong, gifted principal and a motivated teaching staff. Both are difficult to find in urban school systems. Last year this Little Rock public school added a third element -- individual teacher bonuses, sometimes known as "pay for performance."

Paying teachers on merit is one of the most popular ideas in education. It is also arguably the most opposed idea in public education, anathema to the unions and their supporters. Meadowcliff's bonus program arrived through a back door.

Karen Carter, the school's principal, felt that her teachers' efforts were producing progress at Meadowcliff, especially with a new reading program she'd instituted. But she needed a more precise test to measure individual student progress; she also wanted a way to reward her teachers for their effort. She went to the Public Education Foundation of Little Rock. The Foundation had no money for her, and the Little Rock system's budget was a non-starter. So the Foundation produced a private, anonymous donor, which made union approval unnecessary.

Together this small group worked out the program's details. The Stanford test results would be the basis for the bonuses. For each student in a teacher's charge whose Stanford score rose up to 4% over the year, the teacher got $100; 5% to 9% -- $200; 10% to 14% -- $300; and more than 15% -- $400. This straight-line pay-for-performance formula awarded teachers objectively in a way that squares with popular notions of fairness and skirts fears of subjective judgment. In most merit-based lines of work, say baseball, it's called getting paid for "putting numbers on the board."

Still, it required a leap of faith. "I will tell you the truth," said Karen Carter, "we thought one student would improve more than 15%." The tests and financial incentives, however, turned out to be a powerful combination. The August test gave the teachers a detailed analysis of individual student strengths and weaknesses. From this, they tailored instruction for each student. It paid off on every level.

Twelve teachers received performance bonuses ranging from $1,800 to $8,600. The rest of the school's staff also shared in the bonus pool. That included the cafeteria ladies, who started eating with the students rather than in a nearby lounge, and the custodian, who the students saw taking books out of Carter's Corner, the "library" outside the principal's office. Total cost: $134,800. The tests cost about $10,000.

The Meadowcliff bonus program is now in its second year, amid more phenomena rarely witnessed in "school reform." Last year's bonuses were paid for by an anonymous donor; this year the school board voted to put the pay for performance bonuses on the district's budget. The Little Rock teachers union thereupon insisted that Meadowcliff's teachers vote for a contract waiver; 100% voted for the waiver. Another grade school, with private funding, will now try the Meadowcliff model.

The Meadowcliff program has the support of both Little Rock 's superintendent, Roy Brooks, and Arkansas ' director of education, Ken James. Superintendent Brooks, who was recruited from the reform movement in Florida , has cut some 100 administrative positions from the central bureaucracy and rerouted the $3.8 million savings back to the schools.

At his offices in the capitol building, Director James calls himself an"advocate of pay for performance" for a couple of reasons. Financial incentives of some sort are needed, he says, to stop math and science teachers from jumping ship to industry. And school districts like Little Rock's have to innovate fast because jobs and population are migrating internally, mostly into northwestern Arkansas . The Springdale district alone, he says, near Fayetteville and Bentonville, "hired 180 new teachers this year." Little Rock has to find a way to hold its best teachers. The teachers I saw at Meadowcliff Elementary seemed pretty happy to be there.

"School reform" is one of the greatest of the great white whales of American politics. It's by now virtually a mythical beast, chased by specialists, commissions, think tanks, governors. Gov. Bill and Hillary Clinton were famous Arkansas school reformers. With No Child Left Behind, President Bush has flung the reform fishing net
over the whole country. The biggest urban school systems -- New York , Chicago, L.A. -- get most of the ink. But maybe the solutions are going to be found in places like Little Rock, where talented people can fly beneath the radar long enough to give good ideas a chance to prove themselves.