School Service Privatization in Alabama

by Dr. Daniel J. Smith and Robin P.K. Aguiar-Hicks 

Study Highlights:

  • Turning non-educational services like transportation, operations and maintenance, and food services over to private companies can save states millions of dollars. The money saved can be funneled back into the classroom for educational purposes.
  • Privatizing non-educational services also improves education by letting schools do what they do best: teach our children.
  • School officials and administrators could spend more time on the educational needs of students and less time managing non-education programs and employees.
  • Alabama is behind other states in adopting this innovative approach, meaning its children will fall behind as well
  • Less than 16 percent of school districts have adopted this approach.
  • Many Alabama Public School Districts have resorted to budget cuts that adversely impact educational quality. Schools and teachers should not have to compromise when it comes to the time they devote to teaching.
  • Private companies have been proven to deliver higher quality services at a lower cost than school districts, which have specialized skills and training to run educational institutions but not cafeterias.
  • Just as individuals hire professional plumbers and companies contract with landscaping companies to mow their lawns, school districts can save money and get better service by contracting with professional companies to provide non-educational services. This helps ensure that taxpayer dollars earmarked for education are actually spent in the classroom.

Key Stats:

  • Alabama school districts currently spend almost $1.4 billion—nearly $2,000 per pupil—on food, operations and maintenance, and transportation services. This represents nearly 20 percent of Alabama’s education budget.
  • Instead of compromising classroom quality, school board members and administrators should turn to private companies for non-academic functions.
  • Nationally, one in six education dollars goes towards funding these services so even modest savings can result in millions of more dollars in the classroom.
  • A study on transportation contracting in Indiana by Robert McGuire and Norman Van Cott found that contracting school districts saved an average of 12 percent.
    • In Alabama, 12 percent savings on transportation would translate into more than $40 million in annual savings. 
  • School districts around the country are hiring private companies for food management, maintenance and operations, and transportation services. Michigan is leading the way with more 65 percent of school districts contracting out for at least one of these three major services. And, the results have been staggering:
    • Cheboygan Area Schools is saving $34,000 a year contracting out food service management;
    • Gaylord Community Schools saved $100,000 the first year contracting out custodial services and expected to save $1 million over the following three years; and
    • Hastings School District is saving more than $100,000 per year contracting out custodial services.

News Articles:

Privatizing could boost school funding," The Montgomery Advertiser.

"Troy University's Johnson Center releases report to improve education,"

"High public employment hurts state's economy," The Montgomery Advertiser

"A better way to spend more on education," Troy Messenger

"Privatizing School Services in Alabama," National Center for Policy Analysis

"Troy University institution boosts school choice, privatization," Dothan Eagle.

"It's plain fact: more choice is better,"

"Study says outsourcing services could save schools money," WAKA Montgomery.

"Supporters, critics weigh in on Troy University studies on school choice, privatization," 

"Troy University's Johnson Center releases report to improve education," 

"Study shows Alabama schools could save millions by privatizing non-educational services," 

"Millions for the classroom? Troy study promises painless way to save precious funds,"

"School Support Service Privatization: Saving Money, Improving Quality," Remarks at the National School Transportation Conference. 


EconVersations with Daniel Smith and Robin Aguiar-Hicks, Troy University TrojanVision, Troy, AL (9/11/201

Alabama Public Radio, Tuscaloosa, AL (9/5/14)

Capitol Journal, Alabama Public Television, Montgomery, AL (9/4/14)

The Dan Morris Show (WACV-FM), Montgomery, AL (9/3/14) 


School Service Privatization in Alabama

Last Updated: 4/16/2015