Lansing School District Poised to Privatize Facilities Management Despite Union Outcry

At a recent meeting, the Lansing school board considered bids for privatizing facility management services, including custodial, grounds keeping and maintenance. The board heard recommendations from a committee charged with reviewing the bids, which called for awarding a contract to SodexoMAGIC, a partnership between Sodexo, Inc. and Magic Johnson Enterprises.

The company already operates the food services for the district, which has more than 12,000 students. According to Lansing’s WLNS-TV, the district had a $7 million budget deficit in 2013. The following year, it switched its food service management from Aramark to SodexoMAGIC. It also privatized busing through a contract with Dean Transportation, which is projected to save the district $760,000 annually, and gained $1.5 million from selling its fleet of buses.

These steps helped reduce the deficit by $3.5 million, and the district's target is having a $105,000 surplus by 2016. To accomplish this goal it still needs to find an additional $5 million in savings.

The Lansing State Journal first reported the district’s intention to open competitive bidding on facilities management last month, mentioning a July 29 deadline for bids. The newspaper reported that on Aug. 6 the review committee recommended SodexoMAGIC, despite its $7 million bid being the highest of several bids under consideration. Troy-based GCA Services Group bid $6.49 million, and CSM Services of Hudsonville bid $5.64 million. SodexoMAGIC offered a proposal to hire all current custodial, grounds and maintenance staff – roughly 115 employees – as well as maintain present wages and seniority.

Additionally, SodexoMAGIC offered to hire six new custodians and a new groundskeeper, add six new vehicles, and invest an additional $1 million in machinery and other items for the district. Its bid also included a plan to boost a student well-being grant from $30,000 to $60,000 and offer student-focused internships. The district would stand to save $1.1 million annually by implementing this transition, and no layoffs would be required.

Two days after the meeting, the Journal reported that union employees in attendance were still not satisfied, voicing concerns related to no longer being in the public school defined-benefit system. As a private company, SodexoMAGIC would be offering company retirement plans rather than taxpayer-backed ones.

School board President Peter Spadafore mentioned conversations with former in-house staff members now working for SodexoMAGIC has been “overwhelmingly positive.” Union representatives declared their “unequivocal” opposition to any further privatization, and said they were shut out of the bidding process, a claim that administrators insisted was simply not true. Board treasurer Shirley Rodgers summed up the situation saying, “We cannot wait to get into a deficit before making tough decisions."

The Lansing district’s privatization efforts are not isolated. Privatizing noninstructional services has become an increasingly popular tool for school districts looking to contain costs. A school privatization survey annually conducted by the Mackinac Center for Public Policy since 2001 has chronicled the trend. In 2001, just 31 percent of public school districts outsourced noninstructional services. By 2008, that figure was 42.5 percent; in 2014, it was 66.6 percent; and in 2015, it was 70.4 percent. Privatization has become so widespread that districts not using it are now in the minority.

The survey also reports high satisfaction rates with the vendors now providing non-core services. Private contractors that operate in several districts can achieve economies of scale, and face the cost-containing discipline imposed by market competition.

Members of the Lansing board have not yet voted on the management services contract. A vote could take place at the board’s next meeting, which is tonight.