With many of the Billings School District 2 warehouse staffers as audience, SD2 trustees voted Monday night to take up the issue of outsourcing some warehouse operations.
SD2’s warehouse, which carries the district’s office supplies, has been operating in the red for the past seven years, said Scott Anderson, executive director of business services.
“Shame on us,” Trustee Allen Halter said. “Seven years of bleeding? Shame on us.”
To solve the problem, the district sought bids from companies that could offer the district the same office supplies as the warehouse at a lower cost. Two bids came in from 360 Office Solutions and Staples.
The offer from 360 Office Solutions was $240,015 a year, $10,000 less than Staples. If the district contracted 360’s services, it would probably eliminate two jobs from the warehouse and save the district about $247,000 a year, Anderson said.
By law, SD2’s warehouse can’t operate in the red, so the district has taken the profits from SD2’s copy center and used them to balance the warehouse budget.
“The print shop has essentially been carrying the warehouse,” said Patricia Hubbard, director of business services.
Mike Dilly, the warehouse manager, spoke at the meeting and said the district can save money without using 360 Office Solutions.
The problem is the district has set up the warehouse to fail, he said. The warehouse used to make revenue on what it sold, but the district took that revenue away, he said. He also pointed to purchasing habits in the district. Many times employees will buy supplies from other outlets — sometimes paying significantly more — rather than going through the warehouse.
That means merchandise sits on the shelf at the warehouse, adding to its deficit while employees rack up larger bills buying from other outlets. If the district began enforcing a policy requiring employees to buy from the warehouse and worked with SD2’s preferred vendors, it wouldn’t have to go through a business like 360 Office Solutions, he said.
“There are so many other options,” Dilly said.
Trustees, meeting as the performance monitoring committee, voted to recommend to the full board that it discuss the bid from 360 Office Solutions at its meeting next month.
Five of the nine trustees were at Monday’s meeting.
The administration recommends that the board accept the offer to go with a third party, said interim Superintendent Jack Copps.
“This is not an easy task,” he said. “The truth is, we’re running in the red every year and we need to fix it, and we can fix it by outsourcing.”