A funny thing happened after Wisconsin Gov. Jim Doyle and Milwaukee Mayor Tom Barrett hired an outside consultant to examine whether the financial practices of the Milwaukee Public Schools were up to the standards of private business: We all found out how shallow, shortsighted and potentially disastrous the current financial practices of private industry really are.
When the financial audit by McKinsey & Co. was released last week, much of the media focused on the most negative interpretation: $100 million a year wasted by MPS!
But anyone who bothered to read the report would learn that a business consultant had suggested ways MPS could possibly save $100 million-and that many of those ideas would either be bad public policy or simply shift costs to taxpayers in some other form.
By far the greatest possible savings, up to $43 million, would come from reducing employee benefits, particularly health care coverage. That, of course, is easier said than done since employee health coverage must be negotiated with unions who want something for giving up benefits.
Even more important, Barrett said that neither he nor the governor wanted to be known for eliminating health insurance for the lowest-paid workers in the Milwaukee Public Schools.
Yes, it is true that MPS provides health insurance for part-time employees who frequently are not covered by private industry. But not long ago state officials were lambasting Wal-Mart and other rich American corporations for paying some of their employees so little with no benefits that Wisconsin taxpayers had to pay the cost of their employees' health care.
Barrett said if MPS employees lost their health insurance, he wanted to make sure they would qualify for the state's BadgerCare program. Not surprisingly, Doyle is unenthusiastic about the state providing health insurance for employees now covered by MPS.
Another incredibly bad idea the consultant said could save about $16 million a year would be to serve students box lunches instead of fresh, hot meals prepared at each school. The report suggests preparing all meals in a central kitchen and delivering prepackaged meals of lower-cost food for which students and their families would pay more.
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If you think that sounds like a terrible recommendation at a time when poor nutrition and obesity among children form a national crisis, you're right. But, hey, if you want our schools to be run like a business, any corporation in America would immediately take such steps to eliminate the equivalent of 358 full-time food service employees.
It's amazing how often business consultants examining public schools suggest cutting costs on the backs of the lowest-paid employees.
The consultants do say 65 central administration jobs with salaries of more than $100,000 could be adjusted to make the pay more comparable to similar jobs elsewhere. But that would save only a paltry $1 million.
But trashing the jobs of janitors and boiler engineers would be an absolute bonanza! MPS could save $12 million or so by cutting salaries and assigning higher-paid boiler engineers to 10 or 15 schools instead of just one as contracts require now.
Unique Challenges
Special tensions between various levels of government here make it difficult for MPS to shift other costs as the consultants recommend. The consultants say MPS should be able to negotiate a better discount for students to ride the Milwaukee County Transit System, described as one of the worst deals in the country. Milwaukee Public Schools students receive only a 6% discount on weekly bus passes compared to 25% to 50% discounts in other major cities.
It's a lot easier for city schools to negotiate discounts with their own city governments than it is for MPS to negotiate with a county system on such shaky financial footing it keeps cutting routes and raising fares, already among the highest in the country.
Other transportation recommendations such as limiting the choices of parents about where they can send children to school or charging parents for transportation based on income are politically even more difficult.
The report includes a few recommendations that are no-brainers, such as increasing central purchasing for all schools to cut costs by as much as $15 million a year.
And somewhere in the Milwaukee Public Schools system, the audit found a pencil sharpener that cost more than $100. Unless the thing sharpens every Ticonderoga No. 2 pencil in the building, we can quit buying those.
But what may have been most surprising about the audit was how well run MPS finances turned out to be. Many of the major savings recommended don't even sound like good steps to take.
What's most frightening is that the audit says in just three years there could be a $200 million gap between the revenue MPS receives and what it needs to maintain even the current level of service, much less improve.
What's your take?
