Last Thursday (January 8th) the Senate E-12 Education Committee held an informational meeting on the “Shared Services” legislation that has been proposed by Governor Pawlenty and a bi-partisan group of legislators.
The proposal, which is seen as a way to Drive More Money into the Classroom, is based on a study conducted by Deloitte Research and the Reason Foundation which identified seven major benefits of shared services: Standardize Processes, Gain Economies of Scale, Save Money, Flatten Expected Peaks and Troughs, Attract More Highly-Qualified Staff, Face Less Political Opposition (than other options) and Retain Local Control (and Achieve Scale).
The study states that, “the relationship between school district size, costs and performance is complex.” It further states that:
The study outlines a wide variety of services that are considered good candidates for shared service arrangements – in terms of fitness for shared services and savings potential. The areas identified as having both the highest fitness and savings potential are: transportation, purchasing, and facilities/real estate. Other areas with high rankings are: human resources, technology services, finance and payroll, followed by a number of other services.
The draft of the legislative proposal actually has two major components:
First, a mandate that school districts and charters would be required to purchase goods and services from vendors approved by the Commissioner for the following goods and services: all school materials, supplies, tools and equipment for school facilities operations and maintenance, technology equipment and communication services, food services and transportation services. It does provide for the development of shared services arrangements between a group of school districts or charter schools.
Second, the establishment of processes by the Commissioner to select the actual shared service providers that would be included in the list of goods and services. The Commissioner would also have the authority to negotiate contracts with providers that give discounts. There would also be a consultant hired who would be paid a percentage of the savings to schools and who would “study the specific services and activities across school districts and charters to make recommendations about combining services and activities in order to promote improved service delivery, efficiency and economy of operation.”
COMMENT:
We agree that the state should encourage school districts and charter schools to work together to save costs on the infrastructure services of school operations, but it should be on a voluntary basis; in fact it makes sense, both economically and public policy-wise for the state to encourage shared services, but the state should provide incentives to encourage it, rather than mandate it and create a new bureaucracy within the Department of Education to manage this kind of initiative. If the idea is to encourage folks to work across institutions, then the Legislature should be looking to require the Department of Administration to assist schools in creating shared services arrangement and vendor discounts, as that is more in their line of work than the MN Department of Education.
MACS is preparing a position statement that will present ideas to encourage shared service arrangements within the context of the comments above. We will keep you informed about the action on this issue.
NOTE:
The Shared Services proposal is included in a bill [Senate File 11] that has three other reforms: Comprehensive, Scientifically Based Reading Instruction, Quality Rating and Improvement System for Early Learning and Care Programs and State and School District Technology Guidelines.
We are monitoring the reading and technology components of the bill as they would apply and impact charter schools.
Eugene Piccolo