To: Dr. Stowers
From: Sasha Jetton
Subject: Private Food Service in Houston’s Public Schools
Date: February 6, 2013
Introduction and Background:
Superintendent Roderick Paige of the Houston Independent School District (HISD)
encountered a classic public administration dilemma while trying to decide whether or not to
privatize the Food Services department. While he fully supported privatizing the Food Services,
he continued to struggle with making a decision. Houston’s State Comptroller and a panel of
experts known as PEER appointed by Paige both recommended some level of reform to reduce
costs and improve the overall efficiency HISD. Like many public administration decisions, there
were compelling arguments from other groups (Kettl, 2002).
Paige was convinced that privatizing the Food Services would be more effective than
simply reorganizing the current organizational structure. In his opinion, privatization and
outsourcing would very well reduce costs in some areas, which would leave room to pass on
such savings to educational operations. Paige felt that such funds would enable him to establish
a state standardized test and focus more on students’ educational success. While Paige favored
privatization, he was faced with considerable resistance from many stakeholders that opposed
such action. The political implications were clear and Paige had to be very careful when making
his decision. There were a number of public administration values present in the decision
making process; accountability, effectiveness, and efficiency.
Accountability:
While Sharp’s report did not criticize the Food Service’s financial standing, he did report
that there were several problems with management. The structure of the Food Service
department lacked a clear system that incorporated accountability. According to Sharp, Food
Services lacked clear policies, an inflated middle management, low quality control, and
productivity remained low. The Sharp report also highlighted that supervisors were responsible
for too much administration details. It appeared as though there was not one person or group that
was accountable for the decisions made in the department. Accountability appeared to be
nonexistent. Sharp’s report demonstrated that there was not one person to hold accountable;
therefore, the Food Services seemed to be in disarray. As a result, the department was running
below expectations. According to Hill and Lynn (2009), it is important for managers or
supervisors to generate a level of accountability among themselves and those that are working to
produce products or provide a service. Without having such accountability incorporated into the
environment, the Food Services department was not meeting standards.
Effectiveness:
Paige had become superintendent to carefully analyze and reform many departments
within HISD. The idea to privatize the Food Services stemmed from a larger desire to reform the
educational structure. In 1990, while a board member, Paige and other board members wrote
and adopted a declaration of “Beliefs and Visions”. The document highlighted that the board
existed to support the teacher and student relationship, decentralization of HISD, performance
rather than compliance, and to establish a common core of academic subjects for all students. In
order to improve service quality and reduce costs, it may be required to create a network to be
effective (Goldsmith and Eggers, 2004).
Paige believed that the organizational structure of the Food Services did not effectively
deliver the best outcome for the school district. Therefore, Paige strongly supported the
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privatization of such services. He truly felt that the faculty should remain focused on teaching
and not concern themselves with school meals. When Paige became superintendent, students’
performances were substandard. He felt that students deserved to have teachers that were
completely focused on education and less distracted on the non-educational functions of the
school district.
Efficiency:
While Paige completely understood the concept of public service, he felt that some
agencies should adopt private sector values such as efficiency. Paige felt that private firms
would be more efficient and cost-effective in providing such services. On a daily basis, Food
Services within HISD serve more than 140,000 meals and employed over 2000 employees. The
annual budget operated as high as $64 million at one point. Paige truly felt that the participation
rate would be much higher if the department was ran like a business. Although the participation
rates remained flat, Paige argued that privatization could help increase participation.
Paige was particularly concerned with the productivity level of Food Services. Food
Services were not doing a good job in attracting new students to participate in the meal
programs. The department was performing at a very low rate of 6.3 meals per labor hour,
increasing HISD labor costs drastically. The inefficiency of the Food Services was related to
duplication of services and unnecessary tasks performed by supervisors. Paige was determined
to make the department more efficient, which led him to privatization and outsourcing.
Decision Making Process:
Competitive contracting is the most common form of municipal privatization and has
consistently grown over the last few decades (Savas, 2005). While there is conflicting and
competing interests, the decision to privatize a public good should be carefully examined. As
Paige weighed the pros and cons of privatization, he needed consider the following elements: the
unions and board members that vehemently opposed privatization, the political atmosphere, and
the overall success of HISD.
Many stakeholders still viewed privatization as a threat to low-income wage earners.
Almost every attempt to privatize HISD services had failed and it was becoming difficult to
present the process in a positive manner. The HISD board was completely divided on the issue
and it appeared that the members would not reach an agreement. Although the state comptroller
advocated for privatization, it was clear that he may have been politically motivated. With
threats of reducing jobs and cutting some positions completely, local interest groups maintained
opposition to privatizing the Food Service department.
The National Association for the Advancement of Colored People (NAACP), religious
groups, labor unions, employees, and a coalition of civic, business and education leaders
including some board members established a clear opposition to privatization. The PEER panel
summoned by Paige recommended that HISD did not privatize its Food Services. The
community and civic groups felt that the job losses associated with privatization was a threat to
families of students. Most of the families were minorities and it was viewed as discriminatory.
However, Paige felt that privatization would create a cost-effective and efficient environment.
Paige was faced with a public sector quandary that many administrators find themselves
grappling with in an economically challenged environment. Like many public managers, Paige
needs to make a decision that would best serve the school district and the students.
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References
Goldsmith, S., & Eggers, W. D. (2004). Governing by network: The ne shape of the public
sector. Washington, DC: The Brookings Institute.
Hill , C. J., & Laurence, L. E. (2009). Public management: a three-dimensional approach. New
York, NY: CQ Press.
Kettl, D. J. (2002). The transformation of governance: Public administration of twenty-first
century america. Baltimore, Maryland: The Johns Hopkins University Press.
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