Changing of the Guard

5th Annual Privatization/Contract Services Survey

School districts have reversed a trend this year by increasing their use of privatized non-educational services, while colleges and universities continue to embrace the practice, according to American School & University's 5th annual privatization/contract services survey.

Prior to this year's survey, school districts reported that they were steadily turning away from privatization. However, largely due to increasing costs and more specialized operations, more districts are investigating-and eventually hiring-outside contractors to provide non-educational services. For the purpose of this survey, privatized non-educational services refer to those operations separate from the academic mission of the institution that are turned over to an outside company.

Still a highly charged issue that can create emotional and political chaos, the use of private contractors to provide a variety of non-educational services is becoming more of a common practice. Educational institutions are finding that it often is more practical to privatize certain services-especially those requiring specialized expertise or that are cost prohibitive-so that the primary responsibility of educating children can be better accomplished.

Methodology and highlights Surveys were sent in April to a representative sample of 500 public school districts and 500 colleges. Usable responses were received from 11.4% of school districts and 19.6% of colleges. Of the school-district respondents, 60% represent institutions enrolling between 1,000 and 4,999 students. College respondents (61%) have enrollments between 1,000 and 9,999.

In addition to the findings that both schools and universities are increasing their use of privatized services, a number of additional developments surfaced this year. For example, the number of school districts that outsource one to four services grew to 82.5% this year from 74.2% last year. Fewer institutions, however, contract out five or more services, down to 5.2% this year from 6.2% last year.

The college picture is quite different. Whereas fewer higher-education institutions are outsourcing one to four services (59.8% compared to 62.4% last year), more are contracting out five or more services (35.1% this year compared to 31.7% last year).

A number of services are more likely to be outsourced by both schools and universities. For schools, transportation (40.4%), food service (21.1%), HVAC maintenance (19.3%), computer servicing (19.3%) and printing (15.8%) continue to be the areas privatized most often. Table 1 identifies the percentage of school districts that contract out these and other services.

The services most often privatized by colleges and universities include food service (66.0%), vending (57.7%), bookstore operations (39.2%), custodial work of academic buildings (22.7%) and laundry (22.7%) (see Table 2).

A number of areas showed significant increases or decreases in the percentage of institutions that contracted out particular services. For example, a greater number of school districts are outsourcing transportation (40.4% vs. 30.9% last year) and computer servicing (19.3% vs. 8.2% last year). Other services being privatized by school districts more this year than last include food service, grounds maintenance, HVAC maintenance, payroll preparation and security. Fewer institutions are contracting out their custodial and maintenance functions (3.5% vs. 8.2% last year and 1.8% vs. 3.1% last year, respectively).

At colleges, increases were posted over last year in the number of institutions that outsourced bookstore operations, HVAC maintenance, instructional-equipment repair, laundry, payroll preparation, printing, security of academic and residential buildings, and transportation. Much like their school district counterparts, fewer colleges contracted out custodial and maintenance services of both academic and residential buildings.

The key players When it comes to privatized non-educational services, two titles at both the school-district and higher-education levels were most often reported as being responsible for overseeing the majority of contract-service operations-the chief business official and the director of physical plant.

At school districts, the chief business official was referenced as being the most likely person to oversee contractors for computer servicing and instructional-equipment repair (along with the director of technology, if the district has one), food service, maintenance operations, payroll preparation, printing, security (along with the director of security at larger school districts), transportation and vending (along with the in-house director of food service). The director of physical plant was reported as being the primary person responsible for privatized custodial services, grounds maintenance, HVAC maintenance and laundry operations.

At colleges, the chief business official is the title most often mentioned as overseeing private contractors for bookstore operations, facility management, food service and vending (along with the director of auxiliary services and, if part of residence-hall operations, the director of housing) and payroll preparation. The director of physical plant was referenced most as being responsible for privatized custodial work of academic and residential buildings, grounds maintenance, HVAC maintenance, laundry (along with the director of housing), maintenance of academic and (along with the director of housing) residential buildings, and security of academic and residential buildings.

What the future holds Both school districts and colleges expect to further increase their use of privatized services over the next few years, and for a number of reasons. More than 42% of school districts report they will turn to outsourcing select non-educational services (compared to 31% last year); approximately 54% of colleges expect their use of contract services to increase in the near future (compared to 52.5% last year).

The primary reasons why educational institutions expect to increase the use of privatized services over the next few years are fairly similar at both the school and university level-except for the most important reason. School districts will primarily turn to privatized services to save dollars, followed by an attempt to improve operations. Colleges, on the other hand, will turn to outside contractors to improve operations, followed by the quest to save dollars.

Other reasons institutions are investigating privatization of non-educational services include (in order of importance) a contractor's ability to do a better job, save management time, provide greater accountability and the ability of a contractor to provide professional management.

School districts, more than colleges, are turning to contract services in an attempt to balance shrinking operating budgets and burgeoning enrollments, searching for alternative ways to provide necessary services. Colleges are seeing an increase in specialized services and equipment as the driving force behind their desire to outsource. At both levels, institutions comment that privatization of non-educational services allows them to focus more on their core mission-to educate students.

The principal reason school districts and colleges reject contract services is because it would threaten the jobs of loyal employees; another is because it costs too much. Just as many institutions turn to privatization in an attempt to save money, a number have discovered that it often proves to be more expensive. Other reasons educational institutions reject contract services include the problems that are created with union contracts and quality-of- service issues.

A more complete, in-depth report of American School & University's 5th Annual Privatization/Contract Services Survey is available for $75. Contact Laura Shown, (913) 967-1959, for more information.

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