The administrative recommendation to the Board of Education to privatize custodial services has been extremely difficult; regrettably, it’s something that the district has to pursue as a result of the financial difficulties that school districts are having across the State caused by legislative action that has resulted in reductions in funding/revenue and increases in expenses. Privatization of custodial services will save the district between $3.5 and $4.0 million over the next three years.
While we have to be fiscally responsible, this recommendation is a difficult one because it will impact some very incredible people whose dedication, service, and loyalty are recognized and appreciated. It’s just very unfortunate that we have to look at something that’s going to specifically affect our custodians in an effort to save our instructional programming, because that’s really what it’s all coming down to. If we do nothing, the ultimate impact will be on students; we will have to further reduce instructional programming. There is nothing more to reduce or eliminate without significantly affecting our instructional program.
The Board of Education will be taking action on this recommendation at an upcoming June Board meeting. Below is information in bulleted fashion to explain the decision to recommend privatization of custodial services. To also view the information in visual format with charts/graphs, CLICK HERE.
Why issue a Request for Proposal?
- Foundation allowance decreased from $8302 to $7832; $470 per pupil (2011-12), which is a 5.7% decrease.
- Mandatory Michigan Public School Employees Retirement System (MPSERS) rate which is set by the State has increased from 14.87% in 2005 to 24.46% in 2011-12 and expected to increase to 27.37% in 2012-13. This amounts to 12.2% of expenditures solely for retirement.
- Michigan Department of Education – Governor’s Budget – Best Practices Incentive – “The district has obtained competitive bids on the provision of pupil transportation, food service, custodial, or 1 or more other non-instructional services with a value of at least $50,000”. By securing bids for custodial services (RFP) the district qualified for the required four of five criteria to receive $100 per pupil (@$770,000) as one-time funding.
What have we done to contain costs/reduce expenditures?
- We have contained costs in many areas; initiated energy management programs, shared services with the county and other districts, coordinated transportation routes, imposed employee concessions and contributions to health care, streamlined operations, and reorganized instructional programs.
- We have made $19 million in reductions since the 1999-2000 school year; $3 million in this year alone (2011-12) with cuts at every level (elementary, middle and high school and in every department (central office, business, operations...).
- These cuts have affected everyone; administrators, custodians, drivers, secretaries, staff associates, teachers…
- Over a period of 12 years, there has been a 7% average of reductions each year; this year we reduced 16% (more than double).
- In the administrative area there have been reductions as well as cost avoidance measures.
- Since 2002, despite an increase of 340 students, there has been a reduction of six administrators; two in 2011-12 alone.
- In 2010-11 executive administrators took a 3% reduction; building administrators average reduction was 3.14%
- In 2010-11 administrators were the first to contribute to health care.
- Cost avoidance (retirement and other benefits) has resulted in the savings of $434,000 annually as a result of:
- contracting with six administrators instead of hiring them as employees
- sharing two administrators with a neighboring district
Fund Balance Impact
Despite these reductions, we have had to dip into the fund balance in order to balance the budget. The district fund balance has gone from a high of 24.95% in 2008 to 12.58% in 2012
- DMBGroup is the recommended vendor for custodial services.
- In year one, because of potential unemployment costs, payout of sick/vacation days, etc., the savings to the district the first year is $780,000; in subsequent years, the savings to the district doubles to $1.6 million. The savings to the district for three years is expected to be between $3.5 and $4.0 million.
- All things staying the same, with privatizing of custodial services we should be out of deficit in the next 3 years; without privatizing custodial services we will continue to have a deficit for at least the next 5 years – cutting into the fund equity by $2 million next year alone if we make no other reductions.
- While the LOCS custodial subgroup of 45 employees in the AFSCME union (238 members) presented a proposal to take further concessions beyond that already negotiated with the entire unit, it did not match the bids of the recommended bidder, DMBGroup, nor would the proposal provide long-term savings to the district.
- Custodial Proposal: $478,000 in wage reductions (20%) and $63,000 in “soft” reductions such as vacation days, furlough days, etc.)
Immediate Instructional Program Needs
- Mandated Common Core Standards require alignment of all curriculum.
- English/Language Arts is in the works this year
- Next year, 2013, alignment of Math K-12 to common core will cost $500,000 (this is for instructional materials alone; does not include staff)
- Science and Social Studies scheduled next for alignment
- Support media for instructional resources that come with textbooks are multimedia requiring certain technology enhancements such as projectors in all classrooms (275 classrooms=$687,500)
- New Graduation Requirement calls for two years of a World Language which will require additional staff, textbooks, materials @$350,000
- Maintenance/support and enhancement of current initiatives
- Freshman Academy
- Readers’ - Writers’ Workshop
- Olweus Bully Prevention Program…
- Expansion of Programs – Advanced Classes, Dual Enrollment, Online Opportunities, World Language...
- Potential restoration of previous instructional reductions (media specialists, counselors...)
There are close to $10 million in immediate facility, site and security equipment and maintenance costs including technology infrastructural and equipment costs; these do not include any program related renovation, enhancement or advancement costs. (Today’s graduating seniors were in 4th grade when much of this equipment was last replaced).
To also view the information in visual format with charts/graphs, CLICK HERE.