Ann Arbor school board votes down privatization contract for noon-hour supervisors
- Previous coverage: Ann Arbor school board to vote Wednesday on privatizing lunch supervisors
The Ann Arbor Public Schools will continue to manage its nearly 300 lunchtime supervisors, after the Board of Education voted Wednesday against a contract that would have outsourced employees to a private company.
The high administrative fee Professional Contract Management Inc. (PCMI) quoted the district for its human resource services was the deciding factor.
The district would have paid PCMI an annual administrative fee equal to 24.83 percent of gross wages for employees. Deputy Superintendent of Operations Robert Allen negotiated a drop of 1 percent from its original proposal of 25.83 percent.
The three-year contract would have saved AAPS 6 percent of its expenditures for the noon-hour supervisors, or about $55,000. Allen said with the 1-percent reduction to the administrative fee, the total savings would have been about $61,000.
Not paying in to the Michigan Public School Employees Retirement System for lunchtime supervisors, who don’t work enough hours to be eligible for their state pensions, was where the savings would have been generated.
PCMI still would have been required to pay the 7.5 percent of gross wages to FICA, so the administrative fee actually would have been 17.33 percent of gross wages, Allen said.
But this clarification was not enough to sway the board.
“I understand that we are trying to save money every place that we can. But the amount of money we would be taking from our stewardship money, our state-given money at a 25-percent administrative rate — I would rather take the public, taxpayer money we receive and give it back to MPSERS than hand it outside,” Mexicotte said. “Well, actually I’d rather not pay it at all because it makes no sense but at least that way I’m passing my money into a system that supports public employees.”
Mexicotte said while the board has approved cuts that have generated less savings than $61,000 in the past, typically the district retains 100 percent of the money from the cut.
Stead weighed in that board members are charged with being good stewards of the money they control. And she did not think giving such a large chunk of funds to PCMI to only save 6 percent of the total cost of employing the supervisors was being financially responsible, she said.
And because PCMI was the only company to submit a bid in response to the district’s request for proposals, Stead said she doesn’t feel as though the district was quoted a competitive rate.
While Thomas shared “some sympathy” for Stead and Mexicotte’s opinions, he said, he was “not willing to put hubris above economic reality.”
“This, to me, looks like a win-win. Employees are not disadvantaged in any way, their wages stay the same. Students are not disadvantaged in any way. To me it’s a no brainer,” he said.
In April, during the budget process, district officials had estimated outsourcing lunchtime supervisors would save $75,000. This projected savings was included in the $3.84 million in cuts that the board approved en route to balancing Ann Arbor’s $188.5 million budget for the 2012-13 academic year.
Allen said all of the figures for revenues and reductions are simply estimates at the time the budget is finalized. As the school year progresses, districts make continual adjustments based on actual cost savings generated, expenditures and incoming revenues. He said every year, AAPS has some projections turn out higher than the expected and some turn out lower.
The district now will need to find at least $61,000 in the budget somewhere, Allen said. He said the district will monitor how its projections are shaping up before determining whether additional cuts will need to be made.