Outsourcing School Support Services

The Portolan Group, Inc has no relationships with any company providing outsourcing of school district support services.  We do not provide outsourcing services, but have observed numerous such efforts over the years we have worked with school districts.  The following represents our perspective on issues/strengths related to outsourcing of support services in schools.

Support services that are typically outsourced in schools:

  • Custodial Services
  • Maintenance Services
  • Grounds Services
  • Transportation Services
  • Security Services
  • Food and Nutrition Services/Student Dining

Support services that have only recently been considered for outsourcing:

  • Printing Services
  • Payroll Services
  • Human Resources Services
  • After School Care Services
  • Information Technology (Central Office)
  • Computer Technology Services (Academic and Business)
  • Purchasing Services
  • Special Education
  • Nursing/Clinic Services

Factors that may be in favor of outsourcing:

  • May provide the service level in a more efficient manner
  • May provide the service level in a more effective manner
  • Fewer district employees means less benefit cost
  • Allows educators to focus on providing education
  • Large companies have strong buying power, thus saving money
  • In transportation, may relieve district of fleet obligation
  • In food service, participation rates usually increase
  • In food service, enrollment in free and reduced programs may increase, creating added funds in both food and nutrition department and Title One

Factors in opposition to outsourcing:

  • Culture shock (change resistance)
  • Employee opposition
  • Union opposition
  • Not all districts have seen the efficiencies and effectiveness promised – it doesn’t always work
  • Fears of outsiders interacting with students
  • Fear of loss of control
  • Fears of inability to bring back in-house, should outsourcing fail
  • Distaste for profit motivation and attitude

Factors that make an outsourcing effort more likely to succeed:

  • Strong analysis of the needs driving the interest
  • Consensus on the need
  • Change readiness preparation done by administration
  • Solid Request for Proposal process
  • Solicitation of employee feedback
  • Use of a review committee to evaluate RFP responses
  • Construction of a strong contract with provider
  • Identification and inclusion of all capable service providers
  • Regular Review/Monitoring of Contract

Factors that Make an Outsourcing Effort More Likely to Fail:

  • A hurried process
  • Skipping steps in the change readiness process
  • Pre-selecting a vendor prior to the RFP process
  • Allowing a vendor to drive the process
  • Limiting employee feedback and venting
  • Underestimating the forces opposed to outsourcing
  • Failure to do careful analysis of RFP responses (especially financial)
  • Failure to understand the legal limitations (especially in food service)
  • An early implementation in a new superintendent’s tenure (may make it easier initially, but will be more difficult later on)
  • Not considering all the options and then selecting the one that fits best into the culture of the district
  • Lack of understanding of the timetable for savings realization
  • Savings that are projected but not guaranteed by the companies

Outsourcing Myths

  • Outsourcing is inherently “better” than in-house management
  • The private sector can invariably do it “better”
  • Public school managers are poor managers
  • Outsourcing companies are only concerned with profit
  • Outsourcing companies won’t care about the students
  • It is inherently wrong to mix the “not for profit” with the “for profit”
  • Employees always lose jobs when districts outsource
  • It is impossible to return to in-house management once you outsource

      
Models of Outsourcing:

Consulting Model

The district uses the expertise of outside companies to provide specific counsel, advice and guidance for a specific period of time.  The model focuses on helping the in-house management team to be more effective and efficient.  In this model, the district maintains the management of the program.  The consultant advises and counsels, but does not directly manage.

Under this model, a consultant may be used to conduct an audit of the departments to make recommendations on how to implement greater effectiveness and efficiency.  The consultant may be able to help direct the district to the most effective solution for its problems.  A consultant may be used to help guide the district through a process of improvement utilizing either an in-house or an outsourcing model.  In this scenario, the consultant should not be biased to any particular solution except that which is in the best interest of the district.  He or she should not benefit financially from any one particular course of action.

The advantages of this model are that it minimizes employee resistance.  It is minimally disruptive to the system.  It is easy to terminate.  Costs are predictable.
It may not go far enough to solve the problems of a severely dysfunctional department.  It is not a good model for introducing rapid change.

Management Services Only Model

The district brings in the managers, management systems and purchasing power of the management services company.  Employees, and in the case of transportation, the fleet remain in the district. 

The advantages of this model are that it can bring significant change to a department without the loss of the employee’s relationship to the district.  Projected financial savings under this type of arrangement can and should be guaranteed.  Employee resistance is less than with a full-service model.  It is easier to terminate than a full-service model.

The disadvantages of this model are that it may not create the same level of financial savings to the district as a full-service model.  Not all management services companies will offer this option.

Full-Service Model

There are two versions of this model.  The first and most common is a model where all existing employees stay on the district payroll.  New employees are hired on the company’s payroll as vacancies occur.  In this model, employees are often given a choice of staying on the district payroll or going to the management services company’s payroll. 

The second version of this model is one in which all employees are required to immediately go on the company’s payroll.  This can be very traumatic for the employees.  It is a version that should be reserved for extreme of financial need.

One advantage of these models is a maximum cost savings to the district.  The companies should guarantee all savings with a clear time schedule for their attainment. This model is advantageous to the company because it allows them maximum control.  It also promotes the likelihood of a long-term relationship.  It is easier for the district to hold a company accountable when employees are on the company’s payroll.

The most significant disadvantage of this model in either form is that it tends to maximize employee resistance.  It also is makes it more difficult for the district to return to an in-house management program.  Significant assets (including the fleet) may be in the hands of the company.  It is more difficult to switch to another company should performance not be satisfactory.

Conclusion

The decision to outsource is not one that should be made without a great deal of thought and preparation.  Fixing departmental problems from an in-house perspective may lead to good results and may be culturally preferable.

There are several models of outsourcing.  They all should be carefully considered.  Outsourcing is not a monolithic concept.  It is not the solution for every district.  When carefully implemented, it may be of great help.

 The Portolan Group, Inc is the nation’s premier provider of school district support services consulting.  Please feel free to contact us at www.portolangroup.com or 1-87PORTOLAN.