[EDITOR'S NOTE: This is the most recent privatization study, published in 1999. Look for the next report in the September 2001 issue of American School & University Magazine.
To view the charts and tables accompanying this article as they appeared in the magazine click here.
When it comes to the use of privatized non-educational services, school districts increasingly are opting to keep operations in-house. Colleges and universities, on the other hand, regularly turn to outsourcing. According to American School & University’s 6th Privatization/Contract Services Survey, 21.7 percent of school districts do not outsource any services, compared to 12.3 percent in 1997. Only 5.3 percent of the nation’s colleges do not embrace the practice.
Privatization remains a highly charged issue, especially at the school-district level. The use of outsourced services by school districts was on a downward trend prior to an increase reported in 1997, but seems to have resumed its slide. 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.
Detailing the data
To arrive at the results for this year’s report, detailed surveys were sent in April to a representative sample of 750 chief business officials at public school districts and 750 chief business officials at colleges. Usable responses were received from 8 percent of school districts and 17.5 percent of colleges. Among the school-district respondents, more than half represented institutions with 1,000-4,999 student enrollment. Almost half of the college respondents were from institutions with the same student-enrollment size.
While more school districts are abandoning privatized services altogether, there is a representative sample that actually is increasing the amount of outsourced services already in place. In 1997, 5.2 percent of school districts contracted out five or more services; in 1999, 15 percent do. It seems those that have experimented with outsourcing in a number of areas are more likely to add additional services, while those that test the waters on a smaller scale (outsourcing only one or two services) are more likely to discontinue the practice altogether if unhappy with the results.
Districts with enrollment of more than 2,500 are more likely than smaller institutions to privatize services. This could be due to a number of factors. One that was mentioned time and again by a number of smaller districts is that because of their size, it was difficult to get outside companies interested in providing services.
Colleges and universities also are more likely to increase their privatization practices when multiple services already are outsourced. In 1999, 43.6 percent of higher-education institutions contracted out five or more services, compared to 35.1 percent in 1997.
What’s being outsourced
Historically, certain services are more likely to be privatized by both schools and universities.
Table 1 identifies the percentage of school districts that contract out various types of non-educational services. Among the most common are transportation (30.0%), HVAC maintenance (28.3%), food service (23.3%), office-equipment repair (23.3%), computer servicing (18.3%) and vending (16.7%).
Table 2 outlines those services most often privatized by colleges and universities. Among those that top the list include food service (75.6%), vending (58.8%), bookstore operations (46.6%), custodial work of academic buildings (39.7%), HVAC maintenance (23.7%) and laundry (22.9%).
School districts reported increasing their use of privatized services in a number of areas from what was done two years ago. Among the areas of growth include custodial (up 11.5%), HVAC maintenance (up 9%), maintenance (up 3.2%), grounds maintenance (up 2.9%), vending (up 2.7%) and food service (up 2.2%). The largest declines were reported in the outsourcing of transportation (down 10.4%), printing (down 5.8%) and laundry (down 5.3%).
Colleges and universities reported significant percentage increases in a number of areas. Among the largest gainers were custodial work of academic buildings (up 17%) and residential buildings (up 9%), food service (up 9.6%) and grounds maintenance (up 8%). Fewer colleges are outsourcing computer servicing, instructional-equipment repair, printing services, security of academic and residential buildings, and transportation.
Titles in charge
As has been reported in past surveys, the two titles at both the school-district and higher-education levels most often reported as being responsible for overseeing the majority of contract-service operations are 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).
--Security (along with the director of security at larger school districts).
--Transportation (director of physical plant also was frequently mentioned).
--Vending (along with the in-house director of food service).
--The director of physical plant at school districts was reported as being the primary person responsible for privatized:
At colleges and universities, the chief business official is the title most often mentioned as overseeing private contractors for:
--The director of physical plant was identified most often as being responsible for privatized:
--Custodial work of academic and residential buildings.
--Maintenance of academic and residential buildings.
--Security of academic and residential buildings.
A look ahead
A smaller percentage of school and university administrators expect their use of privatized services to increase over the next few years compared to what had been reported in past years. Approximately 27 percent of school districts report they will probably outsource additional non-educational services in the near future (compared to 42 percent in 1997). Slightly more than 37 percent of higher-education institutions expect their use of contract services to increase over the next few years (compared to 54 percent in 1997).
The reasons why institutions privatize services are similar for schools and universities; however, the importance attributed to each varies. For example, school districts’ primary reason to outsource services is to save dollars, followed by an attempt to improve operations. Higher-education institutions, on the other hand, most often turn to contract services to improve operations, followed by the desire to save dollars.
Other reasons school districts privatize non-educational services include saving management time, a contractor’s ability to do a better job, and the ability to provide greater accountability. Colleges give high marks for a contractor’s ability to do a better job, save management time, and provide professional management.
While the majority of comments from school administrators revolved around money, college officials focused more on the desire to improve performance and the need to secure specialized expertise in a variety of increasingly complex areas. As one higher-education official commented: "Let the experts do a better job; this is about quality service to the customer."
The belief that turning over operations to an outside service would threaten the jobs of loyal employees is the principal reason why school districts do not embrace the practice. Other reasons include "if they can make a profit, we ought to be able to do it for less;" too expensive; and union contracts make it too difficult. Colleges most often reject privatizing services because it is too expensive, followed by the belief that it would threaten the jobs of loyal employees.
An educational institution’s satisfaction with outsourcing rests heavily with each school’s experience in the area. One bad experience can have administrators questioning the decision and if it was worth the political risk. This scenario often results in total abandonment of the practice. A good experience, however, often results in more non-educational services being contracted out, allowing administrators to dedicate more resources to their primary responsibility—education.
SIDEBAR: Capitalizing on opportunity
When it comes to outsourcing non-educational services, Robert R. Jones, vice president of administration and finance for Edison Community College, Fort Myers, Fla., says he can’t think of an area the college hasn’t taken advantage of.
Edison, which educates 14,000 students in approximately 40 buildings on three campuses, contracts out everything from grounds, security and maintenance services to printing, payroll and food service. It also outsources management of its performing-arts hall, which provides a number of benefits while limiting financial risk to the college.
"It [outsourcing] has worked out very well for us," says Jones.
Each of the services has its own particular reason for being privatized, including benefits in cost, quality and expertise. Most recently, the college outsourced its computing services.
"This was done primarily because we could not afford to hire the right people," says Jones. "Now we can get the expertise we need."
Jones is quick to add that outsourcing may not be for everyone.
"We have a very big network of providers in our area," says Jones. "Outsourcing may not be the right choice in an area where services are not readily available. They may not be able to achieve the savings we do. You really have to look at the environment."
Such is the case for Creede Consolidated School District No. 1, Creede, Colo.
"We are too isolated and too small to attract privatized services," says James Boydston, superintendent.
The rural district educates 160 students in two main school buildings and one stand-alone gymnasium building. The nearest town is 45 miles away.
"Even if we were able to attract an outside company, the expense would be far more than if we did the work ourselves."
SIDEBAR:Top 5 reasons why school districts turn to privatized services:
1. Save dollars.
2. Improve operations.
3. Save management time.
4. They could do a better job.
5. Provide greater accountability.
SIDEBAR: Top 5 reasons why school districts do not use privatized services:
1. Would threaten jobs of loyal employees.
2. “If they can make a profit, we ought to be able to do it for less."
3. Too expensive.
4. Union contracts make it too difficult.
5. Not necessary; we can do the job as well.
SIDEBAR: Percent of institutions that expect their use of contract services to increase over the next few years:
Top 5 reasons why colleges turn to privatized services:
1. Improve operations.
2. Save dollars.
3. They could do a better job.
4. Save management time.
5. Provide professional management.
The primary reasons why they don’t:
--It would threaten the jobs of loyal employees.