August 2, 2006

Socialized Education Vs. Capitalism

Naturally, Socialism loses again, as it always does.

From the Detroit Free Press we learn that "[c]ash-strapped school districts across Michigan are increasingly turning to private companies to manage food, custodial and bus services"

And why do you think the Michigan schools are cash strapped? Because they are inefficient. Everything they do, costs more than it should. This is what happens when you don't have the discipline of the market to keep expenses in line. Let's let the Detroit Free Press tell the story:

The move can save money -- and in some cases allow districts to put more resources into their main mission of educating kids.
Sounds like a good thing so far. Cutting expenses on non-education services, frees up more money for education services. Win-win.

But it can also bring controversy. Outsourcing recently spurred outrage in Garden City, where an effort is under way to recall five of the seven Garden City Board of Education members who voted last month to outsource custodial and food service jobs...

The Garden City Board of Education expects to save $2.2 million to $2.3 million over the next three years, said Superintendent Richard Witkowski.
That's not an insignificant sum. Gee I wonder where this outrage is coming?

"We had to look for some options that would reduce our costs considerably," Witkowski said last week. "I feel for those people who have lost their positions."

One of those people is Liz Jefferson, 31, of Garden City who has worked in the district for 12 years, about eight of them as a custodian. She is among the 33 employees -- 29 custodians and 4 food service workers -- to lose their jobs.

So, the outrage is coming from the workers who lost their sinecures jobs. I'm shocked.

Though district employees whose jobs were lost to outside companies may later find work with those companies, they often find the same jobs they once held come with lower salaries and fewer benefits.

In Garden City, for instance, custodial workers pulled salaries of $17 to $21.67 an hour. Grand Rapids Building Services, which will manage custodial work, has proposed salaries of $10 to $13 an hour.

I suppose I'd be upset too if I lost my cushy job that was paying nearly twice the going rate. I wonder if these custodial workers got the same obscene benefits package that the teachers get?

Let's skip down a bit and find out about the Avondale school district's flirtation with privatitation.

Outsourcing food service three years ago to Chartwells has worked so well in the Avondale School District in Auburn Hills that it since has outsourced the maintenance of its bus fleet, and in June the Board of Education also voted to outsource custodial work.

"As districts look for ways to provide service more efficiently, more and more districts will look to outsourcing as a viable alternative," said Timothy Loock, outgoing assistant superintendent for business services in Avondale.

Avondale went that route because it was losing money on its food service program, Loock said. The last year the district ran it, there was a $104,000 loss. After Chartwells' first year, the district made a $15,000 profit. At the end of the 2005-06 school year, the district made a $50,000 profit.

So when the school ran food services they lost $100k, now that these services have been outsourced, the school district pockets $50k. Left unsaid is whether the quality of the food improved as well. No doubt it did. The Philadelphia Zoo outsourced their food services recently to private companies, such as Nathan's and Starbucks. Not unsurprisingly, the customer service and the quality of the food (it's now edible) improved dramatically. But I digress.

How did they do it?

"Primarily through lower labor costs," Loock said. "The food service staff as employed by Chartwells are paid more closely to the market for that type of labor."

White said school districts are more frequently considering outsourcing because of the tough economic times they face.

Of course, they face these "tough economic times" because they can't effectively control their spending and the public is starting to balk at paying skyrocketing taxes. They must have thought that taxdollars were like the loaves and the fishes.

"School boards are stuck between a rock and a hard spot on this. They're looking for ways they can save money so they can continue to keep the same number of people in the classroom," White said.

He should know. White also is on the school board for the Clinton Educational Service Agency, the intermediate school district that serves Clinton County in mid-Michigan. Six years ago, the board sold its bus fleet and hired a private company to provide bus service. The move wasn't made to save money, but to allow the district to focus on other areas.

"It's one of the most painful things I've ever done," White said.

Welcome to the real world, jerky. These are the same kind of tough decisions managers in the private sector have to make all the time. We'd all like to have our bloated 1950's era support staff back and be able to pay employees far above the prevailing wage and abide by all the archaic union rules, but companies (at least the ones without a government monopoly) that continue to do such things quickly become defunct companies with unemployed employees.

Union officials aren't happy.
Are they ever? Having already lost most of the private sector with their stuck in the 1930's mentality, they are now beginning to lose their last remaining toehold -- the public sector. Listen to the old-timey rhetoric:
"Our members are being displaced, losing their jobs, and in some case losing pensions," said Rosemary Carey, a communications consultant for the Michigan Education Association. The state's largest teacher's union has 160,000 members.

Does anyone still care about defined pension plans? You know, one of those pensions subject to employer (or in this case union) mismanagement. It's 2006, Rosemary, people have 401k's. You don't lose those when you change jobs.

They say communities are affected too, because the jobs being outsourced tend to be held by longtime district residents. Meanwhile, they say, the private companies tend to hire from outside the communities and the lower salaries tend to result in heavy turnover.

"You've got the possibility of strangers being hired and being gone within a few months because they're not making enough money," Carey said.

Longtime district residents that are milking the district dry through over-priced jobs. Remember the point made up-front -- every dollar that is being overpaid for these services is a dollar that isn't making it into the classroom.

High turnover is never a good think for any company, because it is costly. Companies balance pay scales to avoid excessive turnover. This is one reason why the outsourced company in the story is paying 2 -3 times the minimum wage for low-skilled custodial jobs.

Now all we have to do is find a way to outsource the teachers and, more importantly, the school administration, and maybe we'll get back to providing a decent education again.

As I pointed out in my previous post, the City of Philadelphia could slash their school budget in half by outsourcing their schools to the archdiocese of Philadelphia.


allen said...

I don't know anything about the Garden City school district but the Detroit School District is legendary for it's waste, profligacy, incompetence, malfeasence and, were it possible, bad breath.

Some years back a local TV station bought a telephoto lens and filmed DPS employees sleeping outside a district warehouse, walking out of the warehouse with boxes of district supplies and loading the into their personal vehicles, coming to work late, not coming to work at all, working a second job at the times they were supposed to be working for the district.

The district floated and passed a 1.5 billion dollar bond issue to renovate schools district-wide. They didn't have a plan in place to put the money to use so the money just sat there awaiting some display of competence.

While schools are shut down due to broken plumbing, broken heating systems, dangerous electrical systems and leaking roofs the district headquarters is assuming the sumptuousness of the Taj Mahal.

The list goes on but absent an obsession with detail, why go on? The point's made.

KDeRosa said...

the district headquarters is assuming the sumptuousness of the Taj Mahal

I wanted to post the Philly school district's HQ at the top of the post, but I couldn't find a photo on the web. Let's just say, it makes the Taj Mahal look like a shanty.