South Bend schools finalize deal to outsource facility services

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SOUTH BEND — South Bend Community School Corp. will begin the process of outsourcing employees in its facilities management department in January.

The school board voted 5-2 Monday night to contract custodial, grounds management and plant operations and maintenance services to Knoxville, Tennessee-based SSC Services for Education at a rate of $18.3 million per year.

District officials say the move will result in long-term cost savings, greater benefits to employees and stability in services amid national workforce shortages, all of which should allow the school corporation to invest more money in the classroom.

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“Having this partnership can give us access to more proactive systems,” Assistant Superintendent of Finance Kareemah Fowler said Monday. “We have about $117 million worth of deferred maintenance that needs support to be completed. This partnership adds that additional layer of support.”

Opponents say, however, they fear the contract represents a new trend of outsourcing in the district, which contracted in 2019 with food service vendor Chartwells, a partner of SSC, under the umbrella of support services company, Compass Group.

“I think that it’s rushed,” Board member Jeanette McCullough said before voting against the contract Monday night. “How much of this savings … is going to trickle down to the kid, to the students, to the children?”

What happens next for employees?

More than 150 district employees, nearly half of whom have been with South Bend schools more than 10 years, will be included in the outsourcing, Fowler said Monday night.

Administrators explored keeping some employees on in a hybrid outsourcing model, but Fowler said she recommended transitioning all staff to SSC because paying both for a partial contract and continued employment of some staff would put the district over its budget for facilities services.

The transition will begin Jan. 1 with employees receiving their last South Bend schools paycheck on Jan. 14. 

All employees will be guaranteed a position with the company, and SSC division vice president Val Emery said his team plans to hire 75 more positions locally in addition to those already working for South Bend schools.

Custodians will remain in their current building assignments and employees are not expected to have any lapse in insurance coverage, Fowler said.

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District employees who continue on with SSC will be offered a “transition incentive” of $1,200 to $5,200 based on their years of experience with the school district. Seniority will carry over to the company.

In addition to SSC’s $18.3 million annual contract price, South Bend schools will pay up to $795,000 in start-up costs and just over $2 million for equipment purchases, according to the agreement.

The company will take inventory of items already owned by the district and subtract from the $2 million equipment fee the costs of any items SSC plans to buy from the district, Fowler said.

The contract guarantees an initial term extending through Dec. 31, 2022, which will then auto-renew on an annual basis until Dec. 31, 2026.

Why are South Bend schools outsourcing?

Administrators have raised concerns over the last several months about the district’s ability to recruit and retain facilities management employees.

Fowler noted the district currently has 35 staff members who are eligible for retirement and “could retire tomorrow if they want to.”

The district has already used “one-off” or “situational outsourcing” to meet needs like mowing as it has addressed internal staffing challenges.

“Situational outsourcing is very expensive because you’re doing it at the last minute and you really don’t have the time to do the necessary research that it takes,” Fowler said. “Organizations will put an upcharge on some of those.”

SSC will be responsible for recruiting and retaining staff for hard-to-fill positions and will hire 19 salaried managers to work locally across the school system. The company has its own recruiting team that tracks vacancies, advertises positions and reaches out to past employees to gauge interest through a reattract program, SSC human resources director Shannon Thornton said.

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The company will also take inventory of South Bend equipment and catalog items in a database that allows district leaders to better stay on top of preventive maintenance of the life cycle of expensive items like air-handling systems.

“Replacement should happen without you knowing,” Emery said. “For example, you should schedule an HVAC repair, not when it’s broken and it’s hot in the building and we have to do an emergency repair.”

Plus, district administrators say, the new contract brings employee benefit opportunities the corporation can’t offer on its own. 

With SSC, Fowler said, staff will receive higher 401(K) matching, earn tuition assistance and become vested in retirement benefits after only three years of work compared to South Bend’s 10 years.

“Overall, we came to a good resolve for the employees,” she said. “The benefits that they’re offering, the pay and the benefits, will be equal or greater than South Bend schools.”

Why are some concerned about the process?

While a majority of board members approved of the plan, two members – McCullough and Oletha Jones – voted against it.

In multiple meetings this fall, the two members have raised concerns about outsourcing services not explicitly identified for drastic reductions in an efficiency study conducted for the district last year.

While the study indicates South Bend’s custodial and groundskeeping positions don’t appear to be overstaffed compared to similar districts, it did suggest developing a request for proposals to see if third-party services could help drive down costs and improve quality.

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McCullough also pushed for an answer on how much money had been saved in contracting out food services and how much of that was finding its way to classroom needs.

“That’s a tough questions just because of COVID … We were set to save $1.6 million,” Fowler said, when also asked by Board President John Anella. “We had our last review at the end of last year and we about broke even.”

Mozell Bowens, president of AFSCME Local 686 representing facilities staff, challenged the district’s characterization of employment needs, saying the efficiency study actually found the district was overstaffed in its maintenance services and that many of the 35 workers eligible for retirement wouldn’t leave because they haven’t yet reached retirement age.

“First we went from being overstaffed, now we’re short,” Bowens said, adding after the contract was approved, “Hopefully, the management skills of this company shows a little more promising things than what I’ve already seen.”

Stuart Greene, a South Bend board member involved early in the district’s consideration of outsourcing, called the process “sound” from the beginning.

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Greene said he attended union meetings where only about half of the members were present.

“I’m sorry that more people didn’t participate in that process. If I understood right, they were invited,” Greene said. “This is larger than individual buildings. This is larger than custodial services. What SSC brings is an infrastructure that enables us to be proactive, more so than before. It enables us to troubleshoot, to anticipate, to be on a schedule that will create consistency, transparency and predictability.”

Email South Bend Tribune education reporter Carley Lanich at clanich@gannett.com. Follow her on Twitter: @carleylanich.

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