July 5, 2012
Chicago Public Schools (CPS) announced today that it has freed up more than $42 million in savings in Fiscal Year 2013 (FY 13) through a new approach to procurement strategies and upgrades within its Information Technology Services (ITS) department. The savings from procurement strategies and ITS is just part of $144 million in Districtwide savings that will enable CPS to invest in programs such as Full School Day, early childhood development, and maintaining class size while expanding quality school choices.
“We can’t ask students to wait another day to get the quality education they deserve, even during a time of fiscal crisis,” said CPS CEO Jean-Claude Brizard. “That’s why we are using every available tool to protect investments in programs that support student learning and expand high quality choices for parents. Ending the way CPS does business with contracts means less money will go into the pockets of vendors and more will go into our schools.”
The rigorous new procurement approach to vendor relationships and contract negotiations – which mirrors successful private sector business strategies – is making a positive impact on the District’s bottom line, resulting in $31.5 million in identified and targeted contract savings Districtwide. The approach involves working closely with every department and:
- Renegotiating existing contracts to secure additional savings wherever possible and systematically requiring cost transparency to find avenues for saving money;
- Creating increased competition by coordinating purchases with sister agencies to secure lower pricing; and
- Building stronger vendor relationships to further encourage cooperation in identifying smarter practices and cost efficiencies. As part of this strategy, CPS is personally meeting with its vendors to find 20 percent cost reduction within three years.
CPS has implemented these strategies to account for approximately $11.5 million in contract savings for its FY 13 budget across all departments. In addition, CPS is targeting an additional $20 million in savings by focusing on upcoming construction, transportation, food, utilities, office and education supplies, IT hardware (computers etc.), waste removal and janitorial supplies and custodial contracts. The new procurement strategies will have a positive impact on the District’s bottom line including:
- Custodial Services – CPS savings is targeting approximately $3.5 million in FY 13 (a total of $7 million over the contractual year) as a result of communicating with the private vendor and learning that changing custodial work hours to evening means more efficiency and, in turn, cost savings.
- Electricity – CPS is currently renegotiating its electricity contract which was set at a fixed rate two years ago when the market was much higher. By taking advantage of today’s lower market price, targeted savings is more than $3 million for FY 13.
- IT Hardware – CPS is expected to generate $1.5 million in significant savings of IT hardware such as computers in FY 13 by moving from two vendors to one vendor and bundling its purchase volume with that of City of Chicago sister agencies.
- Milk Purchase and Delivery – CPS is saving $1 million by renegotiating a one-cent per carton price drop in its milk contract.
The same philosophy on cost cutting and efficiency measures implemented across the District has resulted in
$11 million in FY 13 savings within the CPS ITS department. The department was able to generate the savings through migrating to Google Apps for Education, reducing external consulting expenditures and negotiating reduced rates with external vendors. Not only will the Google Apps for Education contract save CPS approximately $2 million in FY 13 ($6 million dollars over three years), it will greatly enhance CPS communication and e-learning tools.
Copies of the FY 13 budget will be available to review on the www.cps.edu website on July 6. The District saved $15,000 in printing costs by making the proposed budget book available online this year, rather than printing additional copies.
Chicago Public Schools serves 405,000 students in 675 schools. It is the nation’s third-largest school district.