At Issue
Too little known about contracts between districts, private companies
We don't know how taxpayer dollars are being spent, MSU professor says
 |
| David Arsen |
One of the primary reasons cited by school board members voting to privatize school services is the potential for saving money, especially in districts facing budget problems.
Yet, even as school administrators and privateers promise cost savings to wary parents and taxpayers, a leading education researcher in Michigan says too little is known about the financial arrangements between school districts and private companies to know whether any money has actually been saved—and, if so, how.
“These are taxpayer dollars and we don’t know how they’re being spent,” said David Arsen, a professor of educational administration at Michigan State University. Arsen is an economist with specialization in public policy analysis. His research focuses on educational finance, school choice, charter schools and the privatization of education services.
The MSU professor has spent significant time looking at private management of public charter schools. Arsen has studied contracts between charter schools and private companies that manage them and employ teachers or other staff who work in them.
Contracts aren’t always clear
Despite some oversight from charter school authorizers, including community colleges and public universities, the contracts for private services aren’t always clear. “It’s amazing how poorly structured some contracts are,” Arsen says.
Contracts between school districts and private companies may be scrutinized even less. And while it’s possible to ascertain how much public money is paid to a private company, little is known beyond that about wages or benefits paid to private workers or staff turnover, even though similar information about district employees is subject to public disclosure.
We also don’t know much about profits received by private companies, Arsen said. In order to earn a profit and do the work for less, which many private companies claim they can do, the contractor must cut worker salaries and benefits, improve managerial efficiencies or scale back services, he added.
“Even if costs are reduced, we’d like to know how,” Arsen said.
Little research on private contracts
There is little, if any, systemic research looking at private contracts between traditional public schools and private companies hired to do everything from custodial and maintenance work to occupational therapy and other ancillary services, even though such contracts funnel millions of public dollars into private coffers.
Though school support personnel account for a small percentage of a school district’s budget when compared with instructional or administrative costs, support services represent big business.
In the 2004-05 school year, the most recent year for which data is available, Michigan public schools spent more than $870 million for wages, benefits and FICA for operations and maintenance workers (or about 5.2 percent of total expenses). Almost $450 million, or 3.3 percent of total expenses, went to transportation in 2004-05, according to MEA’s Research Department.
Support staff part of community
Beyond the financial questions, though, Arsen said there’s a greater public interest to consider when privatizing school services—the need to provide good jobs in the public sector.
“It’s beneficial to the state’s economic development to have a stratum of people working in good-paying jobs,” Arsen said.
And the most powerful argument for keeping work in house, Arsen says, is hard to quantify.
“For schools to work, it takes collective action from a group of people and they form a community,” he said. “Support staff (employees) are part of the community. They care for the children.”