S-968

Establishes procedures and standards regarding public services privatization contracts.

NJEA supports S-968 (Vanieri Huttle).  This bill requires public employers to conduct a cost-benefit analysis that demonstrates actual cost savings prior to entering into a contract of $250,000 or more that seeks to privatize a public service.

Oftentimes, school boards and other public agencies consider privatization as an option for cost savings.  However, there have been numerous examples which have demonstrated that those cost savings do not materialize.  In 2002, the New Jersey Commission of Investigation released a report about the failed privatization of motor vehicle inspection services by the Parsons Infrastructure and Technology Group.  The investigation revealed that the State of New Jersey spent over $250 million more on the private contract than it would have if it had continued using public employees to provide the service.

In 2012, a report by the Keystone Research Center showed that Pennsylvania taxpayers paid $78 million more for school districts that privatized transportation services than they would have had school districts provided their own.

S-968 is a common sense approach to ensuring that taxpayer money is spent wisely.  It puts the responsibility of demonstrating cost savings at the beginning of the process, rather than taking a risk with taxpayer money that may or may not result in cost savings.  Had this policy been in place prior to the Parsons Group being hired in 1998, the cost-benefit analysis provided in the State Commission of Investigation report would have been provided to decision makers prior to entering into the contract, rather than four years and $250 million later.

NJEA urges your support of this bill.