Tuesday, April 19, 2005

GRPS Sticking to Its Guns

Yesterday the Grand Rapids Public Schools board voted in favor of outsourcing all school bus services. The move is estimated to save $2 million per year for the school district and $18 million over five years. Hundreds of protestors showed up, according to the Press, to try and convince the board not to outsource.

How can the district save so much by outsourcing? One reason is that the state's retirement pension system is extremely expensive for school districts to pay in to. In addition, school districts have no choice - all employees are covered by the pension system whether they want it or not. The pension system is very similar to Social Security in that it's another pay as you go system that will only get more expensive and unsustainable as time goes by. It's a "defined benefit" plan rather than a "defined contribution" plan. It's the same type of system that the legacy manufacturers of America are getting clobbered with, again, because of union demands.

Second, the teacher's union runs its own health care plan, called MESSA, which is estimated to be 20% over market cost. What does the union do with that extra money? They apparently skim it into their own coffers.

Basically, the school district can outsource those jobs to companies that will pay the bus drivers the same wage, but save millions on the extremely expensive benefits that the state and union mandate. These folks will still get benefits, just not benefits that subsidize the union.

Unfortunately, these folks are the victims of their own union. They demanded more and more until the market simply couldn't sustain them any more. Now they have priced themselves so far ahead of what the average worker gets in terms of benefits, that the school district can save $2 million a year by outsourcing only 225 jobs. That's over $9,000 per yer, per job, that the school district will save. And that's just for part-time bus drivers.

We applaud the board to sticking to its guns and ensuring the school district spends its money wisely. Hopefully they won't stop at just bussing.

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