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In January, the financially troubled Detroit Public Schools district announced a rigorous, focused plan to cut unnecessary costs from its support services in order to re-channel more funds into schools—and privatization is part of the program.
The plan, named "Education First," aims to trim the fat from 15 non-educational district support services including accounting, benefits administration, busing, custodial services, the employee assistance program, food service, information technology, grounds maintenance, payroll, personnel records, personnel recruitment, risk management, security, single bank checking accounts for schools, and vending machines.
Teams of principals and administrators were assembled for the project and each team was assigned to one of the 15 services being evaluated. The teams were told to decide whether the services should be left alone, restructured, or completely privatized. To date, three of the teams have formally recommended privatization, and requests for proposals from private companies subsequently have been issued. Several other teams are currently mulling over privatization for other services as well.
The first of the three services to be privatized is information technology. This service includes maintaining business applications such as student information, financial data, and payroll and personnel processing as well as technical infrastructure including computer installation, maintenance, and access in Detroit schools. The district estimates a cost savings of between 10 percent and 20 percent as a result of privatization.
The second service to be privatized is food services. Former interim schools CEO David Adamany, who stepped down June 30, openly criticized the district's inefficient food service department, citing late or inadequate food preparation. He also questioned why 70 percent of students were eligible for the free lunch program, yet only 45 percent of high school students enroll.
"That costs us $14 million to $15 million in . . . [federal] educational funding each year," Adamany told The Detroit News.
The third privatized service will be grounds maintenance. Detroit's more than 267 schools have long been noted for their shoddy upkeep and appearance. The district hopes that a more efficient private company will be able to deliver better maintenance service for a lower cost. A request for proposals was sent out to potential contractors on June 12, and four companies submitted bids by the cutoff date of June 27. At press time, no decision had been reached.
Although the district's privatization efforts could affect the jobs of 1,350 district employees, the Education First program has been remarkably free from political wrangling. Employee union leaders, for instance, were told flat-out that the decision to privatize the district's information technology was "non-negotiable."
"We have said all along that where services could be improved at a better cost in order to put more money in the schools, we would move in that direction," Adamany said.
Contracted vendors will be encouraged to hire district employees, but will not be required to do so, and there has been a specific effort to avoid nepotism in the granting of contracts in areas where privatization has been adopted.
The no-nonsense orientation of Education First was adopted because of the dire need of the district to shape up its operations in the wake of increased competition in the educational marketplace. Charter school and other school-choice laws have led over the past several years to an exodus of 15,000 kids from the struggling Detroit school system and a resulting loss of nearly $100 million in state funds.
The willingness of Detroit Public Schools to contract out services to more cost-effective private firms may herald a stronger and more desirable school system for Detroit students in the future. Education First represents a decision by the district to focus on what it does best instead of trying to run secondary support services that it is not necessarily equipped to run.
Or, in the words of Thomas Diggs, the district's chief information officer, "Our core competence is education. It's not food service. It's not transportation. It's not information technology."
