Report indicates no savings with higher ed privatization

Internal Haslam administration documents, obtained and reported by WTVF-TV, indicate that – contrary to officials’ projections – outsourcing of state building maintenance would not result in any savings but there is nonetheless a “mindset” to justify privatization.

While the governor has insisted no decisions have been made, NewsChannel 5 obtained a strategy document that fully exposes the thinking behind that effort.

It suggests that, by outsourcing all state facilities “to a single vendor,” the UT system might be able to cut costs by more than $23 million a year. The Tennessee Board of Regents schools, it claims, could cut another $40 million.

…But NewsChannel 5 obtained data that had already been compiled by state officials, comparing the operation of those buildings to a key industry standard from Whitestone Research.

For UT Knoxville, the Whitestone numbers suggest it should cost $7.54 per square foot to manage its buildings.

But UT spends just $5. At UT Chattanooga, Whitestone suggests $8.08, but the real cost: just $6.20.

Across the state, the standard suggests $7.59 for the University of Memphis, but it comes in at just $4.26. Whitestone puts Middle Tennessee State University at $7.27, but it only spends $4.59. And Austin Peay blows out the standard of $8.69 with its $4.67 per square foot.

…”The initial undertaking was, if we can show using best-in-class information that there is cost savings, then it’s a done deal — now, in fact, it doesn’t,” said Mike Ledyard, an outsourcing consultant hired to oversee the Haslam administration’s effort.

… (A)n email from Haslam’s general services commissioner, Bob Oglesby, shows the mindset.

He writes that he begins with the “premise” that “the state ideally wants to have the private sector provide all of these services.”

On top of that, Oglesby wrote that “at least one (vendor) suggested we consider including additional services they offer their clients, including but not limited to postal, printing, copying, food service (and) warehousing.”

Ledyard, the Haslam administration’s outsourcing consultant, said that he is “talking to other educational institutions who have outsourced to find out what their results were before and after.”

While the data didn’t show what he had hoped, Ledyard said he hasn’t stopped looking for the “opportunity” for savings.

“All this work is done under the assumption that the decision will be made to go forward,” he said.

“To outsource?” we asked.

“To outsource,” he responded. “But it’s an assumption because this is still an opportunity assessment.”