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In an era of new constraints on government spending, saving money without compromising services will have to be a chief concern of public school administrators everywhere in the future. Citizens are saying loud and clear at the ballot box that they want more bang for the buck.
In Michigan, doing more with less is an imperative. The implementation of Proposal A approved by voters last March means an end to the days of revenue increases for the schools that come in at twice the rate of inflation. Even if a funding shortfall does not occur, Michigan public schools will have to tighten their belts. That doesn't have to be bad news for school children. Innovative strategies and more efficient use of resources can make budgets go further.
What financially hobbles our schools in the first place is not a lack of money, but a lack of money management. When funds are wasted, when state and federal mandates hamstring local education budgets, or when onerous collective bargaining agreements squeeze school finances, even a generous amount of taxpayer money evaporates by the time it reaches the classroom.
School bureaucracy is a notorious consumer of education dollars. Between 1960 and 1984, the number of non-classroom instructional personnel in America's public school classrooms grew by 400 percent, nearly seven times the rate of growth of actual classroom teachers! Michigan has the 10th highest administrator-to-teacher ratio in the country. Twenty percent of Michigan school superintendents earn over $100,000 annually, which is more than 99 percent of what all Michigan workers earn.
Of the many ways to tackle the problem of money management in the schools, the most promising may be competitive contracting. Increasingly, public schools are turning to the private sector for services such as busing, building maintenance, and cafeteria service. Some schools are even contracting for instruction and management.
Examples are already easy to find in Michigan. The Pontiac schools are saving $500,000 per year since the district sold its bus fleet in 1993 and contracted with a private firm to transport its students. The Mt. Clemens school district in Macomb County is turning management of one of its schools over to the private, for-profit Edison Project. The nation's largest school cafeteria services firm handles meals for students in at least two dozen Michigan districts.
Contracting--when it's done after study and with care--can provide a much-needed infusion of expertise, accountability, and cost effectiveness to schools. Central administrative tasks such as payroll, insurance, and worker's compensation, are often reduced when a contractor handles management and operations.
In the area of cost control, savings through competitive contracting in other states are extensive and well-documented. Several studies comparing in-house and contracted cleaning services found savings to be as low as 13 percent and as high as 50 percent for contracted service. In a KPMG Peat Marwick survey of school districts in Washington and Oregon, more than 60 percent of the districts reported lower costs after they hired private firms.
Contracting enables schools to become customers in a market of competing providers. If schools don't like the price or service quality of one provider, they can take their business elsewhere. Because a provider must attract and satisfy customers to stay in business, the incentive to do well fosters a degree of accountability not usually present when the public sector does everything itself. As part of the process, schools must carefully evaluate which services they should provide themselves and which they should buy. Too many districts have yet to undertake the serious study of their costs and give open-minded consideration to contracting opportunities.
With increasing frequency in other states, public schools are putting the competitive efficiencies of the marketplace to work. For profit companies and non-profit organizations are being hired by public schools to prepare and serve meals, clean the buildings, drive the buses, teach the students, and even manage entire school districts.
Thinking about doing the same is no longer a luxury in Michigan. It's a necessity.
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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