Outsourcing 101: $50B That's Not Purely Public But Ain't a Voucher

Ideologues on both sides often try and draw a line between "public" education and "privatized" education that, in real life, may not be nearly so bright or distinct as it seems.

Towards a better understanding of the grey areas between what's purely public and purely private, TWIE research guru Eric Grodsky has dug up some interesting tidbits on outsourcing -- the first of what I hope will be a series of posts about the less-known world of K12 education and business.

During the 1999–2000 school year, public school districts spent some $35 billion on goods and services provided by private, for-profit businesses—about 10 percent of the nation’s annual K–12 education budget (The Private Can Be Public Education Next).

That figure has almost undoubtedly risen during the past five years. While one study suggests that the percentage of services being outsourced by school districts is declining (The Privatization Trend at Local Level NEA), large urban school districts have been busy outsourcers and NCLB has created abundant opportunities for the recipients of public funds (Annual Privatization Report 2004 RPPI.org).

For a good discussion of what’s being outsourced, see Keeping it Close to Home: Privatization Study.

While some decry the growth of outsourcing in education, others suggest that maybe there’s not enough. That’s what the Federal Reserve Bank of St. Louis recently suggested with regards to higher education (News-Leader.com).

What's next for outsourcing? Group outsourcing.

A recent report from the consulting firm Deloitte Touche suggested that districts could be doing much more outsourcing by using a model the firm calls "shared services." Nationwide, Deloitte estimates that districts could save $9 billion a year by aggregating just a quarter of the services beyond already shared tasks of professional development and shared transportation directors.

According to Deloitte, “School districts have barely scratched the surface in terms of tapping into the cost savings potential and other benefits” from shared service agreements.”

Want an introductory course on outsourcing? Check out Outsourcing 101(District Administration).


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