Competitive Contracting for School Support Services
A Savings for Nevada of $52-$58 Million Per Year
- Monday, February 15, 1999
Executive Summary
Saving money without compromising services ought to be a chief concern of school administrators. To help channel more resources into instructional programs, school administrators are increasingly turning to the efficiencies of the private sector for services such as public transportation, facilities maintenance and cafeteria operations.
Competitive contracting can provide public schools with the kind of expertise, flexibility and cost efficiencies not always available with in-house service provision. Experience with contracting has been well-documented in the public schools, where private contractors provide roughly 30 percent of bus service, 10 percent of custodial and maintenance services and operated at least 7 percent of school cafeterias.
Any savings in support services can be used to provide additional resources for the classroom. Properly designed and monitored, contracts between the public schools and private providers can help legislators and school administrators do more with less. The potentials for savings are significant.
In transportation alone Nevada has the potential to save a much as $12-18 million. This figure was derived by calculating the national average cost per student for transportation services and provided by the public sector minus the average cost per student in the private sector. At present, Nevada expends approximately $50 million for transportation services. The figure could be cut by one-third and applied directly to the classroom. Why is this important? Since 1972, nearly 30 percent of education revenues have been shifted away from the classroom.
According to the Reason Foundation, the national average of cost maintaining a single school building and grounds surrounding it is $265,060 per year, accounting for over 9 percent of each school's overall budget. In Nevada, the overall cost of maintenance approaches $142 million per year. When incentives change, savings occur. In government, a manager's measure of success, whether a janitor or groundskeepers, is highly correlated to the size of his budget and staff. In private industry however, the measure of success is found in providing an excellent product, efficiently, and for the lowest possible price. Private contracting, according to Reason Foundation, can save individual schools nearly $75,000, or 28 percent of their maintenance and operations annual budget. For Nevada the potential savings is at least $40 million per year.
This report presents a step-by-step guide to competitive-bidding process -- from the make-or-buy analysis to the details of contract proposals. It also describes the scope of current service provision for food service, busing and maintenance. Case studies explore the actual experiences of several school districts making use of support-services contracting.
In Nevada, doing more with less through competitive contracting is an imperative. The implementation of recent finance reforms means an end to the days of revenues increasing at double the rate of inflation. Nevada public schools are entering an era of cost containment in which more efficient use of scarce resources and innovative strategies that involve the private sector will make or break budgets. The potential savings of $52-58 million just with these two reforms are compelling enough reason to aggressively pursue.
Contracting successfully requires a high degree of care and study. Toward that end, this group of reports should prove useful to legislators and school officials throughout Nevada.
