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Loans to Districts Finance Studies Of Management

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In an unusual arrangement made possible by a $1-million loan from the Ford Foundation, the Council of Great City Schools is assisting its member school districts with low-interest loans to study ways of cutting costs through effective management practices.

The council, a consortium of 30 of the nation's largest urban school systems, established the revolving loan fund earlier this year at the recommendation of its research committee and has approved proposals from six school districts. Each of the six districts was eligible to receive up to $150,000.

Under the terms of the effective-management program, participating school districts are required to repay the loan, with 10-percent interest, within 12 to 18 months after initiating their studies.

Program proposals are judged by an 11-member committee, and primary consideration is given to those that offer, among other things, "high potential" for cost savings; quick turn-around time; savings through improvement in productivity; and the potential for sharing among other school districts.

Edna M. Brown, associate project director, said the short-term loans will permit more school districts to participate once the loans have been repaid. Even with interest, she said, the savings made possible in each district by the studies will far exceed the loan amount.

The council estimates that school districts will save $5 for each $1 spent once the studies are completed and better management practices implemented, Ms. Brown said. Overall, the program is expected to result in an annual savings of $75 million for participating districts.

The Ford Foundation will receive 4-percent interest annually on its original $1-million loan, which the council must repay by 1986, according to the terms of the agreement.

The program's objective fulfills a particular need among urban school districts faced with increased operating expenses, declining enrollment, and reduced financial support.

In Minneapolis, school officials have targeted transportation, physical plants, and clerical systems for study. "We need to get some sense of cost-effectiveness in those categories," according to Superintendent Richard R. Green. He said his district lacked the financial resources to devote to the study of its management practices.

"I would like to think the study will say we're doing well," Mr. Green added. "But, then, it could also reveal that we don't normally do a good job."

In Atlanta, the $150,000 loan will be used to study the school system's data-processing program and its maintenance operation, according to Walter D. Mayfield, district controller. "I've been wanting us to look at our [maintenance operation] for a long time," he said. "We need to do something about it."

Forced to close 10 schools this year because of declining enrollment, the district will spend nearly $28 million of its $176- million operating budget to maintain about 132 school buildings, according to Mr. Mayfield.

Since 1968, he said, enrollment has decreased by more than 50,000 students.

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