NJSBA Fights Subcontracting Bill

A Senate panel on Monday advanced a union-backed bill that would undermine a school board's ability to subcontract services, even though NJSBA research has found subcontracting services has saved taxpayers millions of dollars every year.

S-968, which was released Monday by the Senate Labor Committee, would undermine the ability of a local board to subcontract services by imposing numerous restrictions and requirements on the process.

Bill's Provisions The decision whether to subcontract services is currently considered to be a managerial prerogative based on a district's finances, as well as on service quality and needs. S-968 would interfere with that by imposing numerous restrictions on state and local governments, including school boards.

Some of the key provisions include:

• The contractor's employees must have "wage and benefit rates at least equal to the agency employees currently performing the services."
• Competitive sealed bids for the contracts must be obtained, based on a "comprehensive statement of requirements." The affected union may review the agency's estimate of current costs and submit an alternative cost estimate and propose cost saving measures.
• Any subcontracting measure would require available positions to be offered to qualified displaced employees, and the agency would be required to prepare a plan of training and assistance for displaced employees.
• The Office of the State Comptroller would be required to review the subcontracting certification and prohibit the local government or state agency from entering into the privatization contract if it is determined that the bid does not provide cost savings or that the local government or state agency has otherwise failed to comply with any requirement of the bill.

The requirements of the bill would not apply to any subcontracting service entered into before the legislation becomes effective.

NJSBA Research "The NJSBA conducted a survey in 2009 which found that over 84 percent of its member districts fully subcontract one or more of the following services: food services or cafeteria management; maintenance, buildings and grounds or custodial services; and pupil transportation, among others," NJSBA testimony stated.

"Approximately 40 percent of the state's school districts responded to NJSBA's 2009 survey," according to the Association's testimony. "The responding districts reported annual savings of $34 to $38 million through subcontracting. They directed the savings to education programs, to decreasing the budget or keeping property taxes under control, and/or to new technology for the classroom, repairing facilities or hiring teachers."

The most common fully subcontracted service was cafeteria, followed by transportation, according to NJSBA research. The most common partially subcontracted service was transportation, followed by custodial/maintenance. The NJSBA survey also asked districts to rate their level of satisfaction with subcontractors as excellent, good, fair or poor. The average grade they gave subcontracted services was "good."

Similar union-backed bills to prevent subcontracting have been introduced over the years, and each time NJSBA has fought against the measures by providing data on subcontracting in New Jersey schools.

Accommodations for Employees A 2002 NJSBA survey found that more than 94 percent of the responding school districts made accommodations to assist displaced employees. The efforts included requiring the subcontractor to hire or guarantee interviews with any displaced employees; offering severance packages; privatizing only as employees leave or retire; and finding suitable jobs elsewhere in the district. "These efforts are far more accommodating than anything one could find in the private sector," NJSBA noted in its testimony.

"S-968 interferes with a local district's ability to negotiate the procedures by which subcontracting is undertaken, removing the ability of local district employers and employees to fashion agreements on subcontracting that meet local needs and conditions while protecting the interests of the public and the school children of New Jersey," NJSBA noted in its testimony. "Because S-968 mandates certain subcontracting procedures, NJSBA is concerned that, should this bill become law,  the subcontracting process will become more restrictive for local districts and employees, more expensive for local taxpayers and, ultimately, of little or no benefit to the students receiving a public education in New Jersey."

S-968 is now poised for a vote in the full Senate. The identical version in the Assembly, A-998, has been referred to the Assembly Labor Committee.