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Most Michigan school districts contracting out services

School kids eating meals from USDA summer program
United States Department of Agriculture

More than 70% of Michigan school districts used a private contractor for busing, custodial, or food service in 2015, according to the Mackinac Center for Public Policy.

James Hohman of the Center says privatizing helps districts trim their payroll. Districts must pay about 25% of payroll into the state's severely underfunded pension plan.

So, fewer employees on the payroll equals a smaller payment into the underfunded plan.

The state's pension plans are underfunded by about $25 billion.

Hohman says the situation is unsustainable.  

He says the state needs to stop overestimating the plans' returns – or move teachers into defined contribution plans like 401(k)s, "and until they do, it's just going to encourage more districts to contract out their support services."

Credit Mackinac Center for Public Policy
Mackinac Center for Public Policy
Chart showing increase in number of districts contracting out services.

He says almost always, once they privatize, the districts stick with that decision.

Only four districts brought a service back in house in 2015.

"These deals do fall through," says Hohman. "You need to monitor to make sure the service providers are doing the job they told you they are going to do."



Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Public. She began her career at Michigan Public as an intern, where she was promptly “bitten by the radio bug,” and never recovered.