Understand the Truth of Privatization
Hillsborough County School District custodial staff were informed Friday March 8, 2019 that their jobs could be taken over by a private company in the coming months. The letter sent to staff called this move a “potential redesign” and included an attachment for Q&A talking points, so principals could try and explain the district’s plans to staff. The letter says that no decisions have been made and this is only a first step in exploring whether or not the district could save millions. The letter also seeks to calm employees by stating, should outsourcing happen they could potentially find work within a new company. The reality is that the Request for Proposals (RFP) has been prepared and the district is actively seeking bids.
We want to be very clear, and want all of our bargaining unit members & the public to understand the reality of what it will mean for our members and our community should privatization of our working family jobs be accomplished. Intentional or not, you will hear misleading information about cost savings, benefits, quality & impact on stakeholders, to name a few. HSEF will cover the major issues here and continue to keep you informed as more information comes forward.
Budget cuts to public education across the country, especially in Florida, have led to vigorous attempts by school district leaders to cut costs, which we have clearly seen in Hillsborough County over the past several years. Counter to what will be said about the savings to be gained, proposals to contract out rarely take into account the initial indirect costs including the cost of transferring the service, the cost of bid procurement and monitoring, and the pension and severance costs for employees laid off as a result.
In a similar situation, our national affiliate, the AFT, was able to prove to school board members in Hernando County, Florida that in spite of the claims made by a contractor, the district would actually be spending more to contract out the service than to keep it in-house. In fact, many of the figures found in the proposal were shown to be questionable upon close examination by the board and the media. HSEF is prepared and ready to investigate and provide clear information as proposals come in and we will present the true costs to our members & the public in this same manner.
When seeking to secure the bid for a contract with a school district as large as Hillsborough County, contractors will “low ball” bids in order to secure that contract. Prices typically rise steeply in the second and third years of a contract as the school district becomes more dependent on the outside provider. Turnover for these types of contracts is also high as most companies stay in the district for just three to five years, leading to more costs associated with the continual bidding out for new contracts.
“QUALITY OF SERVICE”
Despite what district leaders may be led to believe about the quality of work to be done by an outside company, in order to cut costs and increase their profit, contractors generally cut staff, service and supplies. Contractors will save on costs by having employees work part time and do the minimum needed to fulfill their contract, which ultimately leads to others, including teachers and students, picking up the slack.
IMPACT ON EMPLOYEES
HSEF has clear contract language addressing the contracting out of public work, however layoffs and reductions in pay and benefits in other areas of the bargaining unit are a threat, as the district realizes the actual costs of contracting with a private company. Turnover rates could increase and employee morale will suffer.
IMPACT ON THE COMMUNITY
As we’ve seen in Hillsborough County with the passing of a local half penny sales tax to support the maintenance of public schools, the local community will be asked again to pick up the tab for the added costs of privatization through millage or other tax referendums. The community will also absorb the increased social cost of layoffs and reduced health and pension benefits, as the slope will become more slippery as privatization continues in yet another sector of the school district. School Board member, Steve Cona, has expressed publicly his desire to privatize more than just custodial services. Ultimately, our local economy will suffer when total privatization of a department is done from outside of the community.
District leaders & managers will lose direct control of the services the custodial department provides. Despite what district leaders expect and hope for in proper background checks, screening & qualifications, private sector providers can ignore regulations and laws put in place to ensure public accountability in the public school system. An example of this added bureaucracy & loss of direct control can be clearly seen in the contract Hillsborough County Public Schools currently has with Kelly Staffing Services for the hiring of substitute teachers as well as all of the problems & pitfalls reported by the media.
For more information on the true impact of privatization in the public sector you can read this Harvard Business Review article where 3 important conclusions are made:
1. Neither public nor private managers will always act in the best interests of their shareholders. Privatization will be effective only if private managers have incentives to act in the public interest, which includes, but is not limited to, efficiency.
2. Profits and the public interest overlap best when the privatized service or asset is in a competitive market. It takes competition from other companies to discipline managerial behavior.
3. When these conditions are not met, continued governmental involvement will likely be necessary. The simple transfer of ownership from public to private hands will not necessarily reduce the cost or enhance the quality of services.