Thursday, February 18, 2010

Privatization, Take II: The Bids Are In

Well, AAPS has received the transportation and custodial privatization bids. You can read a summary of the board discussion on here. Surprise, surprise--rather than having the board talk about what they think of the bids (or about privatization in general) in public, which is what Susan Baskett wanted to do (thank you, Susan!) the board president wants to do that in closed session.

Also no surprise--the savings basically come from the fact that, although wages and benefits were supposed to be comparable, there would be no retirement funds for those staff.

Steve Norton from Michigan Parents for Schools (MIPFS) writes very cogently in the comments of the article:
Not quite spelled out in the story is the fact that, while the base bids were required to offer current employees the same pay and "comparable" medical benefits, the district has not completed a review to see if the health benefits are truly "comparable." The presentation on custodial and maintenance privatization made it clear that bidders were including benefits packages that had a huge range of costs - these can't all be comparable. The bidders' costs minus benefits were quite similar. Unfortunately, the current AAPS costs were not broken out into benefits vs. other costs, so it was hard to compare the bids to our current costs.
I, too, hear a lot of anger at unions - and also some unfortunate disdain for custodians and bus drivers, the blue collar workers in our district. Remember that our kids are not encapsulated in classrooms, and that the educational experience has to be put together by a large team, which is not limited to teachers.

Moreover, unions are not the main problem here. Nearly all the savings in the base bids comes from moving these employees out of the state retirement system (MPSERS). Mandatory contributions to that system currently stand at 17%, and are set to climb. These are the district's costs; employees must also contribute.

MPSERS is administered by the state under rules set by the state legislature....
Employees who are not close enough to "buy" enough years to vest in the system will lose everything if privatized. MPSERS benefits are not portable if you leave public school employment. (Emphases added.)
So, there you have it. I don't think I could have said it better myself.
Except for the why: WHY does anyone think it is ok to take away retirement benefits from some of the lowest-paid staff in the district? I don't think that is okay.
Michigan Parents for Schools can be found at, and is an organization for parents concerned about the future of our public schools and working for a better way to fund education.
One more thing: did you know that you can write to the entire Board of Education, in one fell swoop, by sending an email to (When I did this, I only heard back from one board member--the secretary--who assured me that everyone else is reading my email--I have no confirmation of that, but I sure hope he is correct!)


  1. If the board could do the same to teachers it would, because it is choking on the weight of MPSERS. It picked an easy union to dissolve, unfortunately.
    Ultimately, since the state legislators won't undo current mechanism of funding to the pension system, that is what is going to happen to the teachers anyway. And the MEA won't get behind any real reform. Every man, every group for themselves.

  2. Ruth, thanks for the link, and I'm glad you found my comment helpful.

    As to the state pension system: there are no easy answers. The legislature made changes in the vesting and contribution rules for new employees in 2007 (the price for supporting a temporary increase in the income tax), but it will take years before the savings materialize. In her executive budget, Gov. Granholm proposes a more significant change to MPSERS, including a hybrid defined contribution and defined benefit system, but that requires significantly HIGHER contributions in the short run. Under that proposal, the districts' share would jump to 20% and employees would have to kick in a further 3%.

    That's the problem with most potential answers to the pension dilemma - moving to defined contributions means that current employees will contribute to their own accounts. But in the current system, a large share of contributions go right out the back door to pay for current retiree benefits. If employees start paying into individual accounts, we have to find the money somewhere to cover benefits for current retirees. Just taking their pensions away would be plain wrong and probably illegal.

    And, as they pointed out at the BoE study session, the proposal to increase employee contributions to MPSERS will give all school employees an immediate 3% pay cut but won't save the district a dime. This makes asking for more wage concessions in addition that much more difficult.

  3. At some point someone gets to draw the short stick on this. Taking pensions away can be made legal or illegal, and my guess is that the MEA will follow the UAW position, asking for big buyout packages for union members and a second tier status for incoming new members. Unluckily, there isn't money for a buy out package, and doesn't look like there will be. The district administrators can go about to just laying off people and letting the chips fall where they may, especially if unions don't get the buyouts for their members, The administration may be forced to if the union is really stubborn, or there may be a strike and really let this turn this into a crisis...
    In so many ways, it goes back to how the union decides to handle it. And union exist, by definition for their owns self benefit.