CONTRACTING SERVICES

Presentation to the Delaware Valley Association of Business Officers

Ron Farkas, Ph.D., CCRES, Executive Director

Charles Gibson, President, ServiceMaster

Oct. 2, 2014

WHY CONSIDER CONTRACTING SERVICES ?

Things change…….

School of the Past

4

School of the Present

5

School of the Future

6

WHY CONSIDER CONTRACTING SERVICES ?

Follow the money trail…

Budget Crisis…why?

Revenues Expenditures

PSERS History/Projections Employer Contribution Rates

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

2019-20

2020-21

2021-22

0%

5%

10%

15%

20%

25%

30%

35%

6.04%

4.61%

1.94%1.09%1.15%

3.77%4.23%

4.69%

6.46%7.13%

4.76%4.78%5.64%

8.65%

12.36%

16.93%

21.31%

25.80%

28.30%

29.15%30.14%

30.87%

30.76%

30.93%

Health Insurance Premium Costs

Affordable Care Act Will Penalize Cadillac Plans• Although most plans currently do not fall in this category, it is anticipated that with the rising

cost of healthcare, most plans will be in this category by the year 2018.

Affordable Care Act Requires Monitoring Hours Worked• Some districts are reducing hours of aides and assistants to <30/week to avoid health

insurance costs or penalties.

THE FUTURE

With increasing PSERS costs and continually rising medical benefit costs in the coming years the pressure will likely continue to look at contracting services.

16

CCRES is a non-profit organization of dedicated and highly trained staff members providing quality educational and behavioral health services to students and families

17

Who We Are

• Incorporated in 1999 as a non-profit, 501(c)(3) organization

• Board of Directors includes district superintendents / school officials, two IU

executive directors, college president, and 14 executive leaders from local private

industry

• CCRES employs over 900 professional staff

• CCRES is the leading provider of behavioral health service staff in Chester County18

Who We Are

CCRES Partnership with CCIU Home and Community Services Achieved $26,626,425 in Savings for the

Chester, Delaware, Lancaster-Lebanon and Montgomery County School Districts for Special Education Support Services Paid Directly by Medicaid in Last Two Years.

19

Chester Delaware Montgomery Lancaster$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

2012-132013-14

Success Story Kennett Consolidated School District

• In May 2013, KCSD engaged CCRES to provide all Instructional Assistants (58) and Teacher Assistants

(7)

• Interviewed, Trained, and Transitioned KCSD staff to CCRES organization. • Flat hourly billing rate of $20.00 per hour • CCRES employee hourly rates were $.07 - $1.05 higher than then current KCSD hourly rates• Elimination of PSERS liability and healthcare claims and administrative costs• Training coordinated with school district• Substitute employees provided by CCRES

20

Success Story Kennett Consolidated School District

• In 2013-14, reduced KCSD’s annual costs from projected $2,241,054 to $1,533,862 (-$707,192 or 31.6%)

• Ensured continuity and consistency of KCSD staff• Reduced future Human Resources costs for KCSD related to Instructional and

Teaching Assistant staff• Contract increases tied to Act 1 of 2006 index.

21

“While the economic decision to outsource 64 employees was difficult, CCRES made the transition to contracted paraprofessionals trouble free and seamless. At the forefront of our decision to award the contract to CCRES, was its ability to meet the demands of our educational programs and service our diverse population of learners. CCRES’s paraprofessionals work side by side in classrooms with our faculty delivering a spectrum of services including one-on-one assistance, instructional computer software help, cafeteria duties, and clerical responsibilities. When visiting our educational facilities it is impossible to discern our employees from CCRES employees.

Testimonial

22

Throughout the inaugural year, CCRES’s commitment to provide highly qualified, well educated paraprofessionals each and every day has unquestionably set the stage for a long-term successful partnership. Honestly, we couldn’t be more pleased with the outcome. “

Barry Tomasetti, Ed.D. Superintendent Kennett Consolidated School District

•

Testimonial

23

Privileged & Confidential

With more than 5,000 company-owned and franchise locations in North America, 100+ offices in Pennsylvania alone, Memphis-based ServiceMaster is one of the world’s largest, and most respected, residential and commercial service networks. ServiceMaster Commercial combines trusted ServiceMaster® brands, a network of pre-screened and qualified service providers and a convenient, cost- effective technology platform to manage your facilities’ maintenance needs. Access and manage the array of ServiceMaster® Commercial services, all from one single portal and through one point of contact.

21,000 Company Employees

10,000 Service Vendors

$3BillionAnnual Revenue

7Trusted Brands

5,000 Locations in North America

8 Million Customers Serviced

ServiceMaster By the Numbers

Privileged & Confidential

INCREASED CONTROL Allows management to monitor all services in real time for all staff. Provides full visibility from one vantage point via online portal Proactive alert system to alert appropriate staff of priority events or

situations Work Order management technology

ENSURED COMPLIANCE Legal compliance by working directly with school districts legal

representation budgetary certainty by entering budgets into online portal and keeping

a real time accounting of all activity contractor licensing via our vendor management team risk management handled by ServiceMaster Insurance & tax issues handled by Service Master support staff

REDUCED COSTS Provides manual/administrative processing efficiencies via our central

support staff streamlines inefficient processes Leverage ServiceMaster’s buying power

ServiceMaster significantly reduces process and operating costs without any infrastructure investment.For School District, it means:

MORE EFFECTIVE FACILITY SERVICE MANAGEMENT Single point communication to better manage

staff/vendors throughout entire portfolio of locations immediate access to all

service and budget information via online portal. better document organization by having direct access to

all critical data via the online portal. customized reports to meet the needs ad requirements of

all level of management Best in Class service providers

ENHANCED COMMUNICATIONS place and track service requests by phone, fax, e-mail, cell,

etc. dedicated Management team support 24/7/365 operations

Client:Avon Grove School District

• Providing daytime and nighttime custodial services• Estimated annual savings $713,690 this fiscal year

“ The Chester County Intermediate Unit, supported by ServiceMaster and Brickman Landscaping, this group has completely transformed the outward and inward look of our schools and facilities. In a short summer, 5 weeks, with many projects such as security enhancements, from top to bottom scrubbing and cleaning of the hallways and classrooms, a new high school gym floor and the beautification of our school campuses these people gave it their best each and every day and look at the results, therefore I would like to publicly acknowledge their work and thank them for their efforts. Our schools are in tip-top shape…”

M. Christopher Marchese, Ed.DSuperintendent Avon Grove School District

Client:Oxford Area School District

“ We originally partnered with SM when we opened our new high school in 2006. We were so pleased with their services we wanted to expand their presence in the school district without adversely affecting our staff. We were able to accomplish this by adding SM building by building as our staff diminished through attrition. SM is now in 5 of our 7 buildings and our plan is to expand their presence as we experience more attrition”

Charles LewisOxford Area School District

Client:Octorara Area School District

“With the heavy rain this morning, we had a great deal of water make its way into the High School Band Room, Office and TV Studio. I want to thank the ServiceMaster folks who stepped in and assisted with the clean-up today. Their quick response was greatly appreciated!!” Dan CarsleyOctorara Area School District

Custodial Staffing“In-House” vs. “Outsourced”

Kennett Consolidated School District

ServiceMaster Case StudyKennett Consolidated School District

• 3,800 +/- students• 4 elementary schools• Middle school• High School• District office• Well maintained and organized, clean schools, stable management and staff.

Problem: 2013-2014 General Fund Budget Deficit

32

Comparison of Operation and Maintenance Costs per StudentSchool Districts with Enrollment of 3,700 – 4,800 Students2010-2011 Annual Financial Report Data

Cheltenham Township SD

Rose Tree Media SD

Upper Merion Area SD

Colonial SD

Great Valley SD

Wissahickon SD

Upper Dublin SD

Unionville-Chadds Ford SD

Garnet Valley SD

Kennett Consolidated SD

Springfield SD

Southeast Delco SD

Oxford Area SD

2,007

1,772

1,712

1,684

1,557

1,535

1,533

1,414

1,334

1,327

1,253

1,097

1,013

Comparison of Night Time StaffingKennett In-house 2012-13 Contractor

Kennett High School (7) 8-hour custodians (3) 8-hour custodians(7) 4-hour custodians

56 hours total 52 hours total

Kennett Middle School (7) 8-hour custodians (3) 8-hour custodians(5) 4-hour custodians

56 hours total 44 hours total

Greenwood Elementary (3) 8-hour custodians (1) 5-hour custodian(4) 4-hour custodians

24 hours total 21 hours total

Mary D. Lang (3) 8-hour custodians (1) 5-hour custodianKindergarten Center (4) 4-hour custodians

24 hours total 21 hours total

New Garden Elementary (3) 8-hour custodians (1) 5-hour custodian(4) 4-hour custodians

24 hours total 21 hours total

Bancroft Elementary (3) 8-hour custodians (6) 4-hour custodians(1) 5-hour custodian (1) 5-hour custodian29 hours total 29 hours total

__________________________________________________ ____________________________

Across the District Summary

(26) 8-hour custodians (6) 8-hour custodians(1) 5-hour custodian (4) 5-hour custodians

(30) 4-hour custodians

213 hours total 188 hours total

Pros Cons

1. More control 1. Dealing with personnel problems first hand

2. More flexibility – snow removal & emergencies 2. Time spent recruiting & interviewing new employees

3. More familiarity with buildings 3. Time spent ordering cleaning supplies

4. Less turn – over 4. Scheduling subs

5. Higher comfort level with keys & security codes 5. Time spent on “Right-to-Know” requirements

6. Easier to cover off-hours building use – i.e. Saturdays 6. More personnel costs

7. Pride of ownership

8. Ability to cover a Head Custodian absence with a Night Custodian

IN-HOUSE CUSTODIAL STAFF

PROS CONS

1. Less personnel costs

2. Less personnel issues

3. Substitutes for absences covered by contractor

4. They order cleaning supplies (except paper products & large trash can liners)

5. Fixed Monthly Cost

6. Layered supervision (on site manager, area manager, operations manager, etc.)

7. No guessing on rising employee benefits cost

1. Less flexibility

2. More frequent turn – over

3. Not as familiar with building (short term)

4. You turn over use of your equipment to them (auto-scrubbers, buffers, vacuums, etc.)

5. They are primarily just cleaners – no lamp replacing, minor repairs or grounds work in summer

OUTSOURCED CLEANERS

Projected Savings

Existing Night Custodial Staff compared to ServiceMaster Services

2013 2014 2015Projected Saving at existing staff level In-house 1,401,799$ 1,513,728$ 1,595,023$ Night Staff Only SVM Employee 1,140,174$ 1,168,678$ 1,197,895$

Savings 261,624$ 345,049$ 397,127$ % from Baseline Total 18.7% 22.8% 24.9%

Projected Savings thru Staff reconfigurations In-house 1,401,799$ 1,513,728$ 1,595,023$ and ServiceMaster Programs SVM Employee 1,009,054$ 1,034,280$ 1,060,137$

Savings 392,744$ 479,447$ 534,885$ % from Baseline Total 28.0% 31.7% 33.5%

38

Projected Savings: Supplemental Supply Savings

Existing Supply Expense compared to ServiceMaster Services

2013 2014 2015Supply Costs In-house 88,518$ 90,288$ 92,094$

SVM 64,794$ 66,375$ 67,998$ Savings 23,724$ 23,913$ 24,096$

% from Baseline Total 26.8% 26.5% 26.2%

40

Next Steps for Interested School Districts:

1) Have ServiceMaster and/or CCRES team meet with appropriate School District staff.

2) Develop analysis of current costs and savings opportunities.

3) Execute a mutually acceptable contract.

4) Develop Transition and Implementation during the Summer break (estimate 45-60 days for full transition and implementation)