A special report prepared for The Mind Trust by Sam Mehta and Erin Covington of Alvarez & Marsal, based on lessons learned in their work with large urban districts.
Large bureaucracies that run school systems are havens for ineffective and inefficient spending. New York City; Washington, DC; Chicago; Baltimore; Houston; and many other cities that struggle to overcome a seemingly intractable student achievement gap have found ways to direct more dollars to the classroom.1 These cities understand that a disciplined allocation of resources requires a willingness to change the status quo. They can serve as an example for Indianapolis Public Schools (IPS) as it seeks additional efficiencies to make more resources available for local autonomous schools and for citywide priorities such as new school incubation. These school districts and others have discovered wasteful spending resulting from:
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❋ Ineffective organizations — Disconnected organization structures do not distribute control proportionally, keep departments isolated from one another, and limit accountability across departments.
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❋ Inefficient processes — Redundant and manual processes do not
reflect the changing needs of schools and students or leverage new technologies.
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❋ Antiquated technology — Antiquated systems that are not integrated require significant manual intervention.
District officials must scrutinize every dollar of nonclassroom spending to evaluate student outcomes and customer satisfaction. While there is no single formula for assessing cost efficiencies, there are lessons to be learned from other districts. Examples include:
1. Academic management, oversight, and support
Many districts create administrative instructional support structures, such as curriculum offices, outside of individual schools. These management layers are intended to link schools to senior instructors with subject-matter expertise. Yet instructors serving multiple schools, students, and teachers often provide inconsistent help.
1 Snell, L. (2009). “Weighted Student Formula Yearbook.” Available: http://reason.org/files/wsf/ yearbook.pdf; New York City Department of Education (2009). Children First: A Bold, Common-Sense
Plan to Create Great Schools for All New York City Children. Available: http://schools.nyc.gov/
NR/rdonlyres/51C61E8F-1AE9-4D37-8881-4D688D4F843A/0/cf_corenarrative.pdf; Hanyes, V. D., & Labbe, T. (2008, Mar. 12). “Firings Cut Payroll by $6 Million.” The Washington Post. Available: www.washingtonpost.com/wp-dyn/content/article/2008/03/11/AR2008031102747.html; Rossi, R. (2011, Sept. 23). “Chicago Schools to Cut 200 Office Jobs to Save $16 Million.” Chicago Sun Times. Available: www.suntimes.com/news/education/7815315-417/chicago-public-schools-to-cut-200- office-jobs-to-save-16-million.html; Green, E. (2011, May 4). “Reorganization Under Way in City Schools.” The Baltimore Sun. Available: http://articles.baltimoresun.com/2011-05-04/news/bs-md- ci-school-system-reorganization20110504_1_city-schools-central-office-jimmy-gittings; Mellon, E. (2011, Apr. 7). “Budget-Strained HISD Agrees to Cut 277 More Jobs.” The Houston Chronicle. Available: www.chron.com/news/houston-texas/article/Budget-strained-HISD-agrees-to-cut-277- more-jobs-1687074.php
136 Creating Opportunity Schools: A Bold Plan to Transform Indianapolis Public Schools
An inevitable consequence of creating structures such as these is that individuals are often responsible for ineffective spans of control when put in context of number of schools, students, and teachers served. For example, school districts often feel compelled to have a specialist with a span of control over significant numbers of schools, which results in spending money on specialists who do not have the bandwidth to serve all schools or students equally and, ultimately (if indirectly), an inequitable and ineffective allocation of resources.
A review of academic support management in one district illustrated that significant money was being spent without measuring its impact on student outcomes. This review revealed that:
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❋ The structure placed too many managers in some areas and not enough in others.
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❋ A limited number of schools received money for nonpersonnel needs such as professional development and curriculum, with little transparency about why these schools were selected.
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❋ Schools were limited to services provided by the administration and had little flexibility to select resources that were best for their school and students. In most instances, some schools used administrative resources more than others, leading to an inequitable distribution.
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❋ Control of funds was concentrated among a few administrators unconnected to day-to-day school operations.
It was apparent that streamlined support could generate additional money for schools without disrupting service; a plan was developed to provide schools more focused instructional help. The administrative organization was reduced by about half, and an average of $150,000 was reallocated to each school. Principals most frequently used the new dollars to hire more teachers — which had a direct positive impact on students.
2. Facilities management
Facilities costs — including repairs and maintenance, energy-related expenses, and custodial costs — are critical to operate school districts. But districts across the country have inefficient spending from ill-defined work rules, poor use of contractors, insufficient vendor management, and inappropriate staffing ratios. Areas for significant cost savings from several districts include:
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❋ Repairs and maintenance — Using contractors rather than in-house personnel; consolidating vendor contracts; adjusting shift times of skilled and unskilled trade workers to maximize productivity and minimize overtime; and monitoring contracts to ensure that pricing and payments align with contractual commitments.
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❋ Warehouse costs — In multiple school districts, efforts to audit inventory, liquidate obsolete assets, and reconfigure space have generated
cash from asset sales and reduced lease costs. In other instances, outsourcing inventory management and logistics led to significant savings.
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❋ Energy and utilities — While school districts everywhere are major consumers of local utilities, centralized budgeting and invoicing leave schools with little financial incentive to conserve electricity and no ability to audit individual building’s energy use. In multiple school districts, energy conservation programs that combine building-level accountability in exchange for the flexibility to apply savings toward other school needs have saved money as well as energy. In addition, audits of past invoices and payments often uncover overbilling.
3. Transportation and school bus replacement
School districts have reduced transportation costs by using software programs to identify time-efficient bus routes that serve more students with fewer buses.
Districts also can save money by improving school bus replacement processes and evaluating costs and benefits of outsourcing school bus management. Analyzing metrics such as average school bus life span and student bus use can provide valuable insights into overall spending.
4. Food services
In many large school districts, food operations generate a deficit due to low student participation; significant variation across schools in the quality of food and service; and poor labor, inventory, and contract management. Several school districts have improved food operations by outsourcing or restructuring how they are delivered, managed, and measured.
With labor costs generally accounting for more than half of total food services costs, school districts have saved money by increasing productivity, changing scheduling to eliminate unnecessary overtime, and identifying kitchens with too many staff. Additionally, school districts have been able to increase the number of students who buy lunch by making food tastier and more appealing, thus improving profitability and economies of scale.