Outsourcing Support Services - school administration

Don't act to privatize without a cohesive board that's ready to weather a culture change

In the squeeze to meet spiraling educational needs with shrinking resources, a growing number of school districts are turning to outside contractors for support services. It is an opportunity to save money and free educators to educate. But there's a catch: Making outsourcing a success is a learning process that demands careful planning, commitment and lots of communication.

"Converting to an outside contractor requires strong leadership and a cohesive school board," said James A. Williams, former superintendent in Dayton, Ohio. "You need to define the objectives and process and be open and honest with everyone. It may take several years to see results, but the right outsourcing arrangement ultimately will benefit pupils, teachers and employees."

Contracting out work operations has been a standard operating procedure in the private sector for many years. Today's corporations apply make-versus-buy scrutiny to nearly every facet of their operations. Companies rely on complex networks of contractors to meet just-in-time delivery schedules. Some even contract out their basic manufacturing in order to concentrate on marketing and product development. The resulting efficiencies help companies compete in the marketplace and on Wall Street.

School districts can reap the same benefits by using outside contractors for support functions, such as custodial and maintenance services, food service and transportation, to free administrators to focus on education. The difference is that a school board's decision to privatize is a public debate that usually is controversial.

The concept--whether called outsourcing, in-sourcing or privatization--generally sparks opposition from employees and their unions. Some administrators are reluctant to relinquish control. Board members may be subject to political pressure, especially when a locally owned company bids against national firms for the school district's business.

"This is a culture change," said Williams, now deputy superintendent for organizational development in Montgomery County, Md. "Board members and administrators need to think differently, and employees and union leaders need to be involved in the decision-making process. If you make the right decision and work through all the issues that come up, the results are very positive."

Outsourcing Options

It's possible to outsource any function outside an organization's core activity. School systems are using contract services that include custodial care, facility maintenance, energy management, grounds keeping, food service, security, transportation, technology, computers and networks, laundry and linen, supply and equipment purchasing and accounting and billing.

Sometimes outsourcing offers a clear solution to an overwhelming problem. An unprecedented desegregation court order in Kansas City, Mo., several years ago required a massive upgrade of school facilities. "There was no way we could hire the specialized talent and purchase the equipment needed to maintain our upgraded buildings," said Bill Threatt, former associate superintendent for facilities in the district.

A facilities management contract enabled the financially strapped school district to improve custodial service and building maintenance while minimizing expenses.

Not every support service is a candidate for privatization. In both Kansas City and Dayton, outside contractors could not provide a more efficient or higher-quality cafeteria service than the school districts already had.

The school system's technology requirements, however, made a compelling case for outsourcing in Dayton. "We knew our outdated mainframe computer was not equipped to take us into the 21st century," said Williams, who was Dayton's superintendent from 1991 to 1999. "It was evident that we did not have the resources or expertise needed to implement a new computer system and train people to operate it."

The Dayton school district, with 27,580 students, retained its in-house food service operation and now uses a contractor for computer and technology services.

Although cost issues often trigger a move to outsource support services, successful contract arrangements often improve service quality as well as overall efficiency. Successful custodial services get high marks from teachers and staff, and some food service suppliers have succeeded in wooing more students to school cafeterias.

Employee Issues

The most controversial issue school districts generally encounter is the impact of outsourcing on employees. Employees and their unions frequently fight outsourcing proposals and may spark community opposition.

"Custodians came to school board meetings when we expanded outsourcing of custodial services," said Judson C. Crane, purchasing manager of the 18,420-student Santa Rosa County schools in Milton, Fla.

The fate of existing employees has been a sore issue in some outsourcing contracts. Some contractors prefer to transfer school district support employees to the contract firm's payroll under a variety of arrangements. In some cases, employees are placed on the contractor s payroll immediately. In others, employees continue to be employed by the district but are replaced with contract workers when they retire or leave. Some contractors will offer to interview existing employees but will not guarantee they will be hired.