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The Case Against Privatizing School Support Services

Privatization can weaken the school-community link and threaten the quality of education.


There is less accountability to the residents of a school district by their elected representatives when vital services are taken over by private contractors. Contractors tend to focus on performing only the tasks contained in their work descriptions, which is understandable because they are hired only to perform specific narrowly defined jobs.

By contrast, school district employees tend to view themselves as a vital part of the system of education, and provide numerous “intangibles” that enhance the quality of their work and the educational experience of children in school.

School district employees routinely perform a range of tasks that are not typically thought of as being in their official job descriptions but that are vitally important in providing a high quality education for children. [i] The great majority of educational support workers live in the school district where they are employed, and they feel responsible to their neighbors for the quality of their work.

Most private contractors base their sales pitch on the premise that they can provide the same or greater service at lower cost — in other words, “the same for less.” However, in reality “less” is rarely the same. Here are some of the risks of privatization:

Lower Quality Services

Advocates of privatization argue the profit motive provides an incentive for efficiency, but all too often it is actually an incentive to “cut corners” by skimping on the quality of the work performed. In order to keep costs low and profits high, contractors typically pay lower wages and offer fewer benefits to educational support workers, making it difficult to attract and retain a quality workforce.

For example, in a survey of school district transportation departments conducted by School Bus Fleet in 2000, it was reported that “private operators apparently are having a harder time finding and keeping drivers than their public counterparts.” [ii] Not coincidentally, the reported wages were substantially lower for contractor drivers than school district drivers.

Quality is also endangered when contract specifications are vague or poorly defined, which could be the case when they are written by people unfamiliar with the work being performed. Sometimes, privatization might be a smokescreen for service cutbacks that would otherwise be difficult to “sell” to the community, in which case the contract specifications would intentionally reduce the level of services formerly provided by public employees.

Accountability Problems

When services are contracted out, problems can't be as easily or directly addressed as when services are directly provided.

If a parent has a concern, he or she may voice that concern to the school district, who in turn would approach the contractor and attempt to resolve it. Problems or disagreements may be handled in discussions or negotiations between the school district and the contractor.

When the school district no longer has direct control over the services it is responsible for delivering, the parent no longer has direct access to the provider of the service. Also, as more services are privatized, public schools move from being open and accountable systems to being closed and secretive.

 Private companies cannot be held to the same standard of public scrutiny as school districts because they are not subject to the same requirements for open meetings, public information, and public input.

Dependency

Organizations become vulnerable once they lose the capacity to perform work themselves. For example, once a school district has contracted out its school bus operations and sold off its fleet of buses, it becomes quite costly to re-enter the transportation business should privatization not live up to its promise.

This loss of leverage can lead to price gouging by contractors in future contract negotiations and the deterioration of service quality. Contractors have been known to engage in a practice called “low-balling” (offering an attractive price on their first bid) to win an initial contract, and then raise their prices later once a dependency relationship is established.

Hidden Costs

Those who argue that contracting out is less expensive than in-house service delivery often ignore the hidden costs of privatization, such as expenditures for contract monitoring and administration, conversion costs, charges for “extra” work, and the contractor’s use of public equipment and facilities.

The administrative costs alone typically add 10 to 20 percent to the price of the contract. [iii] Further, there are indirect costs that are difficult to put a price tag on, like the risk that “payroll savings may show up as welfare or health care costs in a different budget or at another level of government.” [iv] One potential social cost of contracting out is the erosion of the community’s employment base when good jobs are replaced by poor jobs or removed altogether.

Another potential social cost is the draining of resources out of the local economy as profits are transferred to faraway corporations rather than being spent on providing services in the community.

The decision to privatize is often characterized as being essentially economic. However, in reality it is surprising how often the privatization decision is made without the benefit of an accurate economic analysis.

First, the data necessary for a meaningful cost comparison is often not readily available due to “a general lack of adequate performance data to adequately measure cost and quality in order to know whether either a bid or later performance represents an improvement in cost or quality of the service.” [v] The government organizations that assemble the necessary data and carry out an accurate cost analysis are the exception, not the rule.

Benefits Remain Unproven

Second, there is considerable doubt surrounding the efforts of academic researchers to capture the cost effects of privatization. For years, advocates of privatization have claimed that in study after study substantial cost savings have been consistently found.

However, one recent analysis of this body of literature published in the Public Administration Review reached a startling conclusion. After examining a large number of studies purporting to find cost savings from privatization, the author found that “virtually none of the evidence can be taken at face value.

Many of the studies contain specific methodological flaws that cast doubt on the validity of the evidence on the impact of service contracts, and in some studies, the authors draw conclusions that are not substantiated by their own evidence.” [vi] Thus, after years of study the alleged economic benefits of privatization are still unproven.

Overall, while corporations and companies in the contracting business, their paid advocates in trade associations and think tanks, and sympathetic academicians and politicians have trumpeted the benefits of privatization for years, there is a multitude of reasons to be wary of the practice.

While the practice is widespread, it has not been proven to be irreversible and there is a considerable downside. In the words of one researcher, “privatization at best may be a disruptive, and ultimately harmful method of cost saving. At its worst, privatization can actually increase costs, lower the quality of services, reduce public accountability, and marginalize citizen involvement in the democratic process.” [vii]

Endnotes

[i] See the Building a Quality Workforce series of publications that describe the work performed by education support professionals in custodial, transportation, secretarial, and food services; Washington: National Education Association, 2001.
[ii] See “Annual School District Survey — 2000,” http://www.schoolbusfleet.com/contractor2001.cfm.
[iii] Martin, Lawrence L., “A Proposed Methodology for Comparing the Costs of Government Versus Contract Service Delivery,” The Municipal Yearbook, Washington: ICMA, 1992, p.13.
[iv] U.S. Secretary of Labor’s Task Force, op cit., p.48.
[v] ibid.
[vi] Boyne, George A., “Bureaucratic Theory Meets Reality: Public Choice and Service Contracting in U.S. Local Government,” Public Administration Review, November/December 1998, pp. 474-484.
[vii] Hebdon, R. “Contracting Out in New York State: The Story the Lauder Report Chose Not to Tell!.” Labor Studies Journal, Spring 1998, p.24.