Contact: Steven Wasko at 313-873-4542; Cell: 313-212-5636; steven.wasko@detroitk12.org
or Jennifer Mrozowski at 313-873-8401; Cell: 313-401-9018; jennifer.mrozowski@detroitk12.org
In response to untrue claims by the Coalition of Bargaining Unions, and in an effort to maintain full transparency, Detroit Public Schools has published a worksheet that details the full cost savings from the outsourcing of physical plant operations currently being implemented by seven minority-owned companies, five of which are Detroit-headquartered, along with Sodexo. The chart shows the calculations used to determine a five year savings of $72.1 million, onetime savings and annual rental income totaling $3.6 million, resulting in a total five year savings and income of $75.7 million.
“The bottom line is saving the maximum amount from these non-core functions, savings that can be redirected to the classroom and to reduce Detroit Public Schools’ deficit,” said Emergency Financial Manager Robert Bobb. “If there were a valid proposal from the unions or anyone else that would have saved more, we would have taken it. The fact is that combined union proposals would have saved the district only $16.6 million.”
Calculation of DPS Savings from Outsourcing
Fiscal Year 2011-12 Original Budget $ 68,773,060
Annual Outsourcing Contract Amount $ 43,960,066
DPS Oversight Staffing $ 900,000
Maintenance Supplies, Repairs not within Outsource Scope $ 8,459,162
Paper Towels and Tissue for Schools $ 1,032,396
Total $ 54,351,624
Net Annual Savings from Operations $ 14,421,436
Five Year Savings $ 72,107,180
Sale of Vehicles & Equipment $ 840,685
Payment of Sick/Vacation $ 2,000,000
Rent for 5 years $ 791,469
Total Savings + Revenue $ 75,739,334
The district has also detailed the non-financial benefits of outsourcing, including improved performance and accountability, retraining of all staff, guarantees that all positions will be filled for the entire shift every day, a new work order system, as well as green cleaning, capital program support. “By turning over support functions to professionals whose expertise falls into these areas, we will have sorely-needed cleaner and better maintained schools, and increased accountability and productivity,” Bobb said.
NON-FINANCIAL ADVANTAGES OF OUTSOURCING
Advantages
- Improved Performance and Accountability
- Retraining of all staff (managers, custodians, trades workers and engineers)
- Productive Hour Guarantee = All positions will be staffed for every shift. Sodexo guarantees that all positions will be filled every day for entire shift. Any absences will be paid back to DPS with extra project work or financial credit.
- Green Cleaning – products and methods; fewer chemicals will improve air quality and the learning environment
- Capital Program Support – Sodexo will provide a detailed facility capital needs study at no extra cost
- New Work Order System – Sodexo will provide a web-based, user friendly system for managing pending work requests; Principals can track progress on line and will get email notification of work completion.
- Energy management plan development – Sodexo will devote technical resources to helping DPS develop an energy management plan to reduce energy costs.
- Hiring of DPS Students:
- 65 DPS student interns annually
- Two DPS Graduates will enter Sodexo’s management training program
- Support for Local and Minority Businesses: 46% of contract value will be paid to Local and Minority Partner Businesses
There is no truth to union Coalition claims that union proposals for outsourcing would have saved additional dollars. The school district published a detailed line by line response to the savings claimed by the Unions during the RFP process.
The District has not yet seen the $95 million in savings now claimed by the Unions.
Union Claim Response
1. $95 million savings over 5 years from the combined union proposals This is overstated. Only $16.6 million in savings could be realized from the combined Union Proposals. Below are responses to the itemized proposals.
2. $4.5 million in annual savings from building engineers (IUOE) The District gave credit for $3 million in claimed savings from IUOE. The higher figure claimed was also based on false comparisons with budgeted numbers that were not accurate.
3. $2 million in annual savings overtime reductions (IUOE) Significant overtime reductions were garnered in 2010 through contract modifications that eliminated “automatic” and unnecessary overtime. The District now budgets only $770,000 for IUOE overtime. Thus, there is no room to save another $2 million from overtime. Reducing overtime to $0 is impossible because weather conditions require additional heating on the weekend and evenings to avoid pipes freezing up.
4. $6.6 million in annual savings from (Building Trades) This savings is largely based on the false assumption that there are 147 trades positions. The actual savings is $0.
5. $546,426 in annual savings for furlough days (Building Trades) This is not a true savings because the District loses services when a furlough occurs. The District needs the services of 70 full-time trades workers. The outsourcing contract provides this level of service at a much lower cost per day per worker.
6. $450,000 in annual savings from flexible staffing (Building Trades) This proposed savings was never documented with proof that the “flexible” staff from the union hall would cost the District less than full time DPS trades workers. Thus, no credit could be provided. Further, it carried the downside that the trades workers assigned from the hall would not be regulars who would know DPS schools and become more efficient from consistent work.
7. “Potential” health care savings: $9.1 million over 5 years (Trades and IUOE) The unions provided no support for their claim that the cost per employee for health care could be reduced from $17,000 to $10,000.
8. $943,000 in annual savings proposed by custodians (AFSCME) by the elimination of Aramark management services. This savings was already included in the base budget analysis for all proposals (in-house, as well as outsourced) because Aramark’s contract terminated on December 31, 2010.
9. $930,000 in annual savings by eliminating lawn cutting contract and having custodians perform this service (AFSCME) This is not a true savings. The existing custodians should be cleaning buildings. Additional staff would need to be hired to perform this service. In addition, the District would have to invest in equipment and maintain it. As it stands, the cost of cutting grass through contractors is less expensive than providing it through DPS staff.
10. $390,000 in annual savings by eliminating pest control contracts and floor mat cleaning contracts (AFSCME) This is not a true savings. Staff would have to be hired to perform this service. In addition, pest control contractors perform required tests and inspections that custodial staff are not trained to perform. Floor mat cleaning is specialized and requires equipment that DPS does not own.
11. $1.8 million for cleaning contractors to prepare buildings for opening of school This expense was already eliminated in the base in-house budget. It is not a regular part of the DPS budget and was necessitated only because existing staff could not get buildings ready for opening day.
