EDUCATION, BUSINESS AND GOVERNMENT GROUPS OPPOSE ANTI-SUBCONTRACTING BILLS

TRENTON, June 11, 2002—New Jersey public schools have reported savings of $40.8 million through the subcontracting of support services, according to studies conducted in 1999 and 2002 by the New Jersey School Boards Association. In addition, more than 94% of school districts that subcontracted services—such as transportation, cafeteria and maintenance—made accommodations for the employees whose jobs were affected.

NJSBA released the information today during a news conference about legislation—S-1537/

A-1714—that would restrict school districts’ and colleges’ ability to subcontract services.

A-1714 is scheduled for a vote by the full Assembly on June 13. The Senate Labor Committee will consider S-1537 the same day. Organizations representing higher education, school administrators and school business officials, local government and business joined NJSBA at the news conference to warn against the bills.

"Subcontracting has helped education institutions control their costs, save taxpayers and tuition-payers money, and direct more funds to the education program," said Robert A. DeSando, NJSBA director of governmental relations. "By directing savings to instruction, school districts maintain and improve the education program—without asking property taxpayers for additional funding."

S-1537/A-1714 would prohibit subcontracting during the terms of existing collective bargaining agreements, the vast majority of which last three years. The legislation would also impose lengthy negotiations and notice requirements.

"Taken together, these restrictions would force a school district to wait more than three years before it could use subcontracting to address a budget crisis," explained DeSando. "That makes the subcontracting option no option at all. To make ends meet, school boards would instead have to look toward program cuts, teacher layoffs…even tax increases."

In 1999, 250 school boards responded to an NJSBA survey, which recorded school district savings of more than $28 million through subcontracting. Updated information, collected by NJSBA since May 2002, cited over $12.8 million in savings. In general, these funds represent savings above and beyond the amounts reported in 1999, according to NJSBA. So far, 135 school districts have responded to the 2002 update, and NJSBA is still receiving responses.

The latest survey shows that 80% of the school districts that subcontracted services directed their savings toward instruction by hiring teachers or maintaining and improving school programs; approximately 20% used the funds to reduce property taxes.

"Just as important, more than 94% of the school boards [in the latest survey] reported that they made accommodations for employees whose jobs with the district were affected by subcontracting," said DeSando. "These arrangements included employment with the subcontractor, often at a guaranteed level of salary and benefits; a guaranteed interview with the subcontractor; and, increasingly, subcontracting existing positions by attrition. These efforts are far more accommodating than anything one could find in the private sector."

In 1999, when identical legislation was moving through the Legislature, then-Governor Christie Whitman vetoed the bill, citing NJSBA research that demonstrated the legislation was not necessary.

"The proposal to eliminate this option was bad public policy 18 months ago. It would be an even worse move today," said DeSando, noting how the state’s current fiscal crisis has led to frozen aid for schools during a time of rising student enrollments.

Examples of school district experience with subcontracting, taken from NJSBA’s 2002 survey include the following:

· In September 2000, Jefferson Township (Morris County) subcontracted food services. It is saving $150,000 a year and has used the funds to hire additional teachers. Affected jobs were subcontracted when employees retired or left the district.

· Franklin Borough (Sussex County) reported savings of more than $110,000 by subcontracting transportation and cafeteria services. The school district also arranged guaranteed salary and benefit levels with the private employer.

· Rockaway Township (Morris County) is saving $90,000 a year by subcontracting food services. It is directing the savings to the instruction program. Affected workers were offered employment with the subcontractor.

· The Tinton Falls School District (Monmouth County) saves $100,000 by subcontracting transportation, maintenance and cafeteria services. It applies the savings to teacher salaries and benefits. Employees whose jobs were affected by subcontracting were guaranteed interviews with the subcontractor.

Representatives of the Hopewell Valley Regional School District also attended the June 11 news conference. The fast-growing district, located in Mercer County, has reported savings of well over $1 million through the subcontracting of transportation and food services. It has used the savings to support instructional programs—thus reducing pressure on property taxes. It has also improved and expanded needed student transportation, according to NJSBA research. Hopewell Valley provided a variety of accommodations to affected employees, including retaining on the district payroll workers who were about to achieve "imminent pension milestones."

Higher Education. During the news conference, the New Jersey Association of State Colleges and Universities provided examples of how subcontracting of non-educational services has benefited the state’s colleges. Kean University, for example, receives some $650,000 for subcontracting its bookstore and food services. Private contractors that run the bookstore and food services at New Jersey City University save that institution $400,000. Rowan University saves $200,000 annually from its food-service contractor. And Ramapo College saves about $200,000 by contracting out lawn maintenance and housekeeping. It also generates $450,000 through the subcontracting of its bookstore and food services.

Organizations that participated in the June 11 news conference included the New Jersey School Boards Association, New Jersey Association of School Administrators, New Jersey Association of School Business Officials, New Jersey Association of State Colleges and Universities, New Jersey Business and Industry Association; New Jersey Chamber of Commerce; New Jersey Council of County Colleges; and New Jersey State League of Municipalities.

In addition, Rutgers, the State University and the New Jersey Association of Counties also cited their opposition to the anti-subcontracting legislation, S-1537/A-1714.