While a majority of Michigan’s local public school districts do not report privatizing noninstructional services — such as transportation, student meals and custodians — the growing minority who do privatize these services often report substantial savings. Contracting out custodial services has yielded some of the biggest winners. Recent examples reveal that the Muskegon Reeths-Puffer district signed a contract to save $480,000 annually — about $114 per student; Avondale in Auburn Hills plans to save $490,000 annually — $128 per pupil; and the Jackson Public Schools would trim their annual custodial costs by $1.3 million, or $193 per pupil.

For 2006, just 63 of 552 local school districts reported private contracts for custodial services. Yet, if all of the other districts took the privatization plunge for only custodial services and saved an average of just $100 per pupil, the minimum annual savings statewide for Michigan public schools would exceed $150 million.

On May 22, 2007, the Michigan House of Representatives approved House Bill 4592 — legislation that would require school districts to create a plan to transfer their procurement, human resources, busing, contracting activities and other noninstructional services to their intermediate school districts. Just prior to the House’s final vote on this bill, State Rep. Judy Emmons, R-Sheridan, introduced an amendment that would have also required the consolidation plan to include opportunities for cost savings that may be achieved by seeking competitive bids and privatizing noninstructional school services like busing, food service and custodians. Six Republican lawmakers joined 56 Democrats in rejecting the Emmons amendment, and it failed 62-46.

As eventually passed by the House, the final bill encourages, but does not require, districts and ISDs to act on the support service consolidation plans, or to make plans to seek competitive bids on the services, as suggested by the Emmons amendment.

In a 2007 survey of competitive contracting at Michigan’s public schools, Michael D. LaFaive, the Mackinac Center for Public Policy’s director of fiscal policy, and Mackinac Center Adjunct Scholar Daniel J. Smith found that 40.2 percent of districts outsourced at least one noninstructional service and that the trend toward privatization was growing (up from a revised 37.4 percent the prior year). However, the authors also point out that despite annual cost savings that can exceed $100 per pupil, there are political impediments to competitive contracting.

The Michigan Education Association, the state’s largest public school employee union, is identified as one such obstacle by a school official whose district outsources for its food and transportation services: "The contracts certainly make us more efficient and provide a level of expertise that (the district) could not otherwise expect. We are currently satisfied with both of our contractors. In my opinion the largest barrier to privatization is the highly effective MEA campaign against contracting. I think that good arguments can be made for contracting and that efficiencies can be achieved, but it is a hard sell against the MEA public relations machine."

Samples of the MEA’s opinions regarding competitive contracting are summarized in the "Alternative Views" appearing nearby.

A summary of the Mackinac Center’s 2007 research on public school competitive contracting is located at
www.mackinac.org/8881. To keep up to date regarding privatization of government services across Michigan and the nation, see the biannual Michigan Privatization Report at www.mackinac.org/pubs/mpr/.

The MichiganVotes.org tally for the school contracting amendment that was defeated appears below.

Valentine’s Day is the anniversary of the birth of Thomas Robert Malthus. Some would view this as ironic: The day we celebrate "eros" is the birthday of the man who argued that the power of the passion between the sexes is "indefinitely greater" than our productive capacity to feed ourselves. The conclusion to be drawn — the dreaded "Malthusian trap" — is that the growth of human population will eventually outstrip the limited resources we have available.

But Malthus himself had a different view. For him, the population principle provided an impetus to think about the rules by which we choose to organize society. In Malthus’ account, the power of eros could be balanced by another human power — that of reason and foresight. People may, if circumstances are right, pause and ask themselves whether delaying marriage and having children later would be better than having them now. Of course, you’re going to say few of us are that restrained! And Malthus agreed. Our prudential reasoning needs assistance — incentives, if you will. And those incentives are provided by society’s institutions; the rules we choose to live by.

Malthus lived in a society whose rules he thought were imperfect in this regard. Great Britain had enshrined private property rights in the Magna Carta, but they largely protected the rights of large landowners, not the average citizen. The working class had few reasons to save because they had little prospect of acquiring property. The "parish laws," remnants of feudal times, tied people to the place they were born, preventing the free operation of labor markets. And the Church forced people to marry early in order to escape those sins associated with eros "out of wedlock." The imperfections of this English "constitution" — its set of fundamental rules — could lead to population growth without sufficient economic growth in 19th century England. The resulting poverty held the potential for starvation and disease: If our rules do not restrain us, Malthus said, nature will.

Thus, Malthus could understand how, after the French Revolution, William Godwin could call for a new English constitution that placed property in the hands of "the people," prevented market transactions and eliminated the Church of England. A society of liberty, equality and communal benevolence would surely be better than what Great Britain offered. At least, that’s what Malthus’ father, Daniel, argued to his son in 1798. Daniel thought that England could move toward such a world if it followed the path Godwin proposed in "Political Justice" (1793). But his son could not quite agree. After they debated the issue, the younger Malthus wrote up his argument in a short book bearing the title "An Essay on the Principle of Population" (1798).

This essay is often misinterpreted as a defense of the existing property regime in England and an attack on members of the working class, who lack the will to restrain eros voluntarily. But such an interpretation overlooks Malthus’ concern about institutional design. Instead, Malthus argued that the occurrence of the natural consequences predicted by the population principle were the result of poorly designed societal institutions. Private property rights that extend to everyone, free labor markets and rules that ensure that both parents bear financial responsibility for their offspring are essential, he claimed, to a constitution that would find the right balance between eros and the prudential exercise of human reason.

Of course, private property rights and free markets also are essential to innovation and entrepreneurship; two things that have ensured that the worldwide growth in productive capacity since Malthus’ time has outstripped the growth of population. Even in the poorest parts of the world, where property rights still need to be strengthened and markets are often restricted, production has grown at a rate faster than population.

So maybe Malthus was on to something. He didn’t argue that population will inevitably outrun the limits of our resources; in fact, he said that we can’t know what the limits of the productive capacity of the Earth are. Rather, Malthus suggested that good institutional design — including property rights and free markets available to all — will provide incentives that ensure that the power of eros we celebrate today will be counterbalanced by our desire to be economically secure tomorrow.

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Ross Emmett is Co-Director of The Michigan Center for Innovation and Economic Prosperity and an associate professor of political economy and political theory & constitutional democracy at James Madison College, Michigan State University.