Governor Tim Pawlenty and key legislators today announced a bipartisan proposal that will require Minnesota school districts and charter schools to combine efforts to reduce costs. The proposal will compel schools to pool limited resources in order to deliver more cost-effective services, redirect administrative costs, and reduce duplication.

“There are 340 school districts and 150 charter schools in the state, but back-room functions don’t need to be duplicated 490 times,” Governor Tim Pawlenty said. “Shared services will allow Minnesota schools to focus resources where they are needed the most – in the classroom and on improving student achievement.”

Under the Minnesota K-12 Shared Service proposal, school districts and charter schools will be able to pool their purchasing power for information technology, food services, supplies and equipment, operations, transportation, and other goods and services.

All Minnesota public school districts and charter schools will be required to participate in shared services.

“We can use this financial crisis as an opportunity to re-invent our approach to the business of running schools; targeting our resources towards increasing student achievement,” Senator Bonoff said. “Let's take advantage of what 21st century knowledge and technology offers us in terms of best practices. Schools can pool their buying power, reducing expenses and ultimately providing more resources for the classroom.”

Under the proposal, the Minnesota Department of Education (MDE) will create and maintain a list of preferred vendors for various Shared Services. Once the list is compiled, MDE will create contracts with those preferred vendors on behalf of the State and work with school administrators, educators, school board members and other stakeholders to develop and implement a two year shared services plan to help schools best utilize those vendors for cost savings.

Governor Pawlenty is hopeful that the Legislature will pass a bill for this initiative sooner rather than later so that districts may realize savings during the 2009-2010 school year.

School districts in other states have saved 5 percent to 15 percent in purchasing and information technology services. For example:

One Pennsylvania school district was able to save approximately $100,000 through the sharing of food services that helped standardize health and safety practices.

The California Charter School Association entered into shared services agreements for worker’s compensation insurance resulting in approximately $20,000 in savings per school on an annual basis.

Through the Midwestern Higher Education Commission, IT software sharing occurs among Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio and Wisconsin resulting in a combined savings of $750,000.