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Study Shows Outsourcing Doesn’t Always Save School Districts Money



April 7, 2008

East Lansing, MI - Outsourcing is becoming a more common practice in Michigan's public schools as jobs in transportation, food services and janitorial work are handled by private companies in order to save money. However, a new report from the Great Lakes Center takes a hard look at the "bottom lines" of such deals, and finds that there often are trade-offs that don't show up on accounting ledgers.

Study author Dr. William Mathis is a longtime area school administrator. His research found school districts sometimes save money by outsourcing, but lose control of quality at the same time. In addition, he says, reports of employees making connections with students, and going the "extra mile" for them, become rare.

"When you have an international food provider or transportation system, you just don't get that kind of responsiveness or personalization."

The study found that lower costs are not a certainty with outside contractors. There often are hidden expenses in the service contracts and, although initial savings seem promising, they typically don't pan out over time. Instead, prices tend to creep up as the contractors look to improve their bottom lines.

"Anytime that you have a profit incentive, it's not going to reduce your cost. In the long run, it's actually going to increase your cost."

Mathis says another aspect of outsourcing is the impact to a neighborhood or community. Usually, he says, it means lost jobs, lower wages and reduced benefits when contractors perform services. Advocates of outsourcing argue that private companies can provide these types of services at less cost, which ultimately passes the savings on to taxpayers.

The full report is available online at www.greatlakescenter.org.

Deborah Smith/Craig Eicher, Public News Service - MI