The nation's largest school cafeteria services firm handles meals for students in at least two dozen Michigan districts. Central administrative tasks such as payroll, insurance, and worker's compensation, are often reduced when a contractor handles management and operations. In the area of cost control, savings through competitive contracting in other states are extensive and well-documented. Several studies comparing in-house and contracted cleaning services found savings to be as low as 13 percent and as high as 50 percent for contracted service. In a KPMG Peat Marwick survey of school districts in Washington and Oregon, more than 60 percent of the districts reported lower costs after they hired private firms.
Contracting enables schools to become customers in a market of competing providers.
If schools don't like the price or service quality of one provider, they can take their business elsewhere. Because a provider must attract and satisfy customers to stay in business, the incentive to do well fosters a degree of accountability not usually present when the public sector does everything itself. As part of the process, schools must carefully evaluate which services they should provide themselves and which they should buy. Too many districts have yet to undertake the serious study of their costs and give open-minded consideration to contracting opportunities. With increasing frequency in other states, public schools are putting the competitive efficiencies of the marketplace to work.