Transparency Bills Could Help School Districts Avoid Outsourcing of Public Services That Lowers Quality and Raises Costs

Oct 15, 2026

Pennsylvania school districts face fiscal pressure that often leads administrators to outsource non-instructional support services to private providers. Research summarized in this brief links some outsourcing decisions to lower service quality and higher taxpayer costs, and notes that reversing contracts can create upfront transition and legal risks. Two companion House and Senate bills would require prior public solicitation, cost projections, hearings, and protections such as contractor transparency, hiring preferences for displaced employees, and termination rights if costs exceed forecasts.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages6

Reading Time15 min

AccessFree to download

Outsourcing of Public Services Often Lowers Quality and Increases Taxpayer Costs

Cost increases and failed projected savings

Limited benefits in food service outsourcing

Barriers to effective competition

Monitoring, contracting, and contractor profit costs

Internal collaboration and reclaimed work

Transparency Bills Could Help School Districts Avoid Outsourcing of Public Services That Lowers Quality and Raises Costs Keystone Research Center • 412 North 3rd St., Harrisburg, PA 17101 • 717-255-7181 Pennsylvania’s public schools employ tens of thousands of support professionals – bus drivers, cafeteria workers, custodians, maintenance workers, secretaries, paraprofessionals, and others. Due to fiscal challenges that many local districts face, school administrators often look to achieve savings and flexibility by outsourcing the provision of public services by education support staff. Research shows that there are significant downsides in some cases to outsourcing by state and local government, including lower quality services and increases in costs. Moreover, when outsourcing lowers quality or raises costs, changing the contractor or bringing work back in house may have upfront and transition costs. These costs can lock school districts into unfavorable outsourcing arrangements for the long term. This potential reinforces how important it is to get decisions to outsource or keep work in house right in the first place. To avoid counterproductive outsourcing of non-instructional pubic services by Pennsylvania public schools, companion House and Senate bills – one with a Republican prime sponsor (HB 1914) and one with a Democratic prime sponsor (SB 795)– would require, prior to outsourcing: • a solicitation of proposals publicly accessible online and at the school administrative office; • a minimum three-year projection of costs after outsourcing; • a public hearing to present the selected proposal and receive public input; • information on legal or regulatory violations by the private company and criminal records of its employees; • hiring preference at contractors for school employees whose employment was terminated due to outsourcing and who held the same or substantially similar position when employed by the district; and • a guarantee that schools may terminate outsourcing if costs exceed those projected. Justice Louis Brandeis once said that “sunlight is said to be the best of disinfectants.” When it comes to outsourcing support services by school districts, Justice Brandeis was right. Providing additional transparency when school districts consider outsourcing, and an escape route if savings do not result, can reduce the number of cases in which districts regret outsourcing because it increases taxpayer costs, compromises the quality of educational support services, or undercuts the quality of jobs for members of the local community. The rest of this brief summarizes research and public opinion polling that make the case for transparency and safeguards against counterproductive outsourcing provided by the Senate and House bills. 2 Outsourcing of Public Services Often Lowers Quality and Increases Taxpayer Costs Outsourcing often comes with promises of large savings for school districts, sometimes backed by year-one prices that would deliver significant savings. Significant savings often do not materialize, and in many cases outsourcing costs communities more. • A rigorous statistical study of school bus service outsourcing in Pennsylvania found that taxpayers pay $224,000 more when a typical school district contracts out to private bus services rather than provide all bus services in house.1 Contractors tend to “low ball” their original contract bid, but then increase costs once the school district has sold its own bus fleet and cannot easily bring work back in house: o In 29 school districts that increased contracting out substantially, the median increase in transportation costs equaled 16% in the year after privatization. By five years after privatization, transportation costs increased 26% in inflation-adjusted terms – five times the increase in the five years before privatization. o In late 2009, for example, Central Dauphin School District chose to outsource most student transpo

FAQs

Why do Pennsylvania school districts consider outsourcing support services?

Districts often seek savings and flexibility amid fiscal challenges, aiming to reduce costs and manage service delivery more efficiently.

What downsides does the research identify with outsourcing public services?

It can reduce service quality and increase costs to taxpayers, with additional transition and legal risks when districts later reverse outsourcing.

What additional safeguards do the companion bills require before outsourcing?

They require publicly accessible proposal solicitations, multi-year cost projections, a public hearing, disclosures about legal violations and employee criminal records, hiring preference for affected district employees, and a right to terminate outsourcing if costs exceed projected amounts.

Oct 15, 2026

Uploaded by WPS_1786070896