Monday, March 15, 2010

Privatization History

In the course of looking up information about the 1985 reorganization, I came across some information about the history of privatization, all of which is taken from the earliest User-Friendly Budget on the AAPS website, 2002-2003, to wit:
Out-sourcing has occurred over the years in order to reduce costs, comply with mandated regulations, and to complete projects within short schedules. The effects of using contracted services includes: the reduction of F.T.E.s, benefits, retirement, and other employment costs. While the Board policy does not show preference to local vendors, a substantial number of local contractors do win contracts to provide goods and services to the district.
What follows, then, is a list of contracts that they have tried to, or decided to, outsource over the years. (This is on pp. 37-40 if you are looking for it.) It's actually pretty shocking reading:
Since 1990, district managers have also explored the possibility of privatization in areas such as Custodial, Maintenance, Warehousing, and Transportation. Private companies were given the opportunity to meet with district employees and to review operational practices. Although each of these reviews did not result in proposals that would have reduced costs, we will continue looking at using the best combination of in-house employees and private services. (Emphases added.)
 Here are the listed bids:

1990, Facilities, Service Master
Declined bid invitation
1990, Facilities, Unbar
Declined bid invitation
1990, Facilities, Marriott
Received proposal of $7,184,909 for 90/91
Proposal would have resulted in an increase of costs of $1,650,000 over 3 years

1991, Facilities, Marriott
Declined bid invitation
1992, Transportation, Laidlaw
Not able to provide the same level of service and generate savings
1993, Facilities, Witt, Fiala, Flannery & Assoc.
Received proposal of $6,739,151
Proposal would have resulted in an increase in costs of $239,151

1994/95, Warehousing, U.P.S.
Not able to provide the same level of service at our costs
1995, Transportation, Laidlaw
Not able to provide the same level of service and generate savings
1996, Facilities (Snow Removal), Arbor Building Services
Snow removal pilot program at Pioneer
Increased costs: Cost of pilot program was 50% of total district costs

Do you think I was cherry-picking the worst outcomes from this report? That is not the case. That was the whole list. Which kind of makes you wonder. . . under what conditions does privatization actually work?

And you will wonder even more, if you read this Ann Arbor Chronicle article on the last school board meeting, which quotes Mark Zullo, who has studied the privatization of the AAPS food service workers, and says, that "AAPS is spending less on food service because of increased revenue being sent from the federal government via the school lunch program" and that workers were harmed by the privatization. According to him, "new hires were paid at $9 per hour, and that none of the workers could afford to use the health care offered to them – due to an increase in co-pays to $3,000 annually."

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