Study Shows School Bus Privatization in Michigan a Growing Trend

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Research published this month by the Mackinac Center for Public Policy indicates that one in eight school districts are now outsourcing transportation services, an increase of more than one-third.

Overall, more than 53 percent of Michigan’s 550 school districts currently outsource at least one of three main non-instructional services tracked in the survey, which also included food services and custodial services. This represents a 9 percent increase over the 2009-2010 school year. The most recent study was conducted from late May through late July of this year and compared data since 2001, when the survey began.

Food services are the most commonly privatized service at 33 percent followed by custodial services at 31.5 percent. Transportation is the least commonly contracted service at only 12.2 percent, which equates to 67 districts. But James Hohman, the assistant director of fiscal policy at the Mackinac Center, pointed out that transportation is the fastest growing service that is being privatized, as only 21 school districts in the state, or one out of every 26, utilized private bus companies during the 2009-2010 school year. Fifteen school districts also opted to outsource transportation for the first time this year.

He added that only 3.8 percent of districts outsourced transportation in 2005.

A big reason for growth in privatized services, according to the survey, is a necessity for school districts to reduce labor expenditures. Retirement benefits alone can cost public school employers nearly 25 percent of an employee’s salary.

House Bill 4306 was introduced in March to mandate competitive bidding for non-instructional services. Previously, Gov. Rick Snyder introduced “best practices” funding, which offers an additional $100 per pupil to any district that meets four out of five criteria, one of those being the solicitation of competitive, private-sector bids for support services. The survey said that several districts have already signed on to participate in Snyder’s plan.

“Privatization remains an important option for school districts looking to reduce bureaucracy and save taxpayer dollars. School employee unions frequently oppose competitive bidding because it denies them members and dues, but school boards and administrators have a fiscal responsibility to seek the best and most efficient service providers for our schools. Increasingly, privatization has allowed them to do just that,” the report concluded.