Special Report
Budget & Finance

Districts Scour Budgets for Potential Savings

By Sean Cavanagh — January 05, 2011 8 min read
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With nothing but financial hardship on the immediate horizon, many districts are taking new approaches to scouring their budgets for potential savings—and, in some cases, also comparing their performance against that of other school systems.

Some of their strategies focus on cutting costs in the nuts and bolts of district operations, such as transportation, purchasing, and maintenance. Other cost-saving measures are aimed at reworking teacher assignments and class schedules. In many cases, school leaders say that their primary goal in making changes is to improve services and streamline operations for the benefit of students, parents, and taxpayers—not to reduce costs.

Yet the potential financial payoff from those strategies has become increasingly important to district officials during this difficult financial period, as they face pressure to trim budgets while also meeting standards for academic achievement. School systems like Florida’s Orange County district have made changes with dual purposes in mind. Administrators in the 180,000-student district, which has a $1.3 billion annual operating budget, found savings everywhere from their bus routes to their warehouse and supply operations.

Up until last year, the district, which has its headquarters in Orlando and runs 936 bus routes a day, used a “radio-relief fleet” of buses, a dedicated group of about 100 stand-by drivers who were supposed to fill in if regular drivers called in sick or if their vehicles broke down. But that system required the district to keep more vehicles and drivers standing by than it needed, which added to maintenance and fuel expenses.

Beginning this school year, the district did away with that system, and instead arranged to have a much smaller group of “float” substitute drivers on call when buses break down. That change alone has allowed the district to sell off 71 buses; a total of about 270 buses have been sold by the district as part of its transportation reorganization. Orange County also has reduced the number of drivers through attrition, and cut costs on gas and maintenance, says Michael Eugene, the chief operations officer for the district. Some of those changes were prompted by an audit of the school bus system, he notes. The sales of buses, as well as other significant changes across the transportation department, have saved a combined $5.9 million in fiscal 2011.

“It was new for us, but it was old for everybody else,” Eugene says of the strategy. “All we did was apply a model from other school districts.”

State regulations spell out how far students should walk to bus stops and the length of their rides. The district also made changes that were meant to minimize disruptions to students’ rides and to family schedules, says Jim Beekman, the district’s senior director of transportation.

“Constituents won’t stand for that,” Beekman says.

Seeking Efficiencies

Officials in the Florida district found other ways to cut costs and streamline operations, too. Employees used to wait up to a month to receive supplies they ordered from the district’s central warehouse. The Orange County schools moved to outsource delivery of those materials to a private contractor, and most orders are arriving in three days. The district expects to save $56,000 in fiscal 2011 through the move.

Employees used to purchase new equipment for their schools, unaware that used equipment and materials were available in storage. Now schools are being encouraged to use that equipment, and the district has saved at least $400,000 so far.

Many of the changes being made in Orange County were directly influenced by information the district gathered from an effort being run by the Council of the Great City Schools, known as the Performance Measurement and Benchmarking Project. Eugene, the Orange County operations chief, helped the council develop the model, which was based partly on strategies he used as the business manager for the Los Angeles Unified School District, where he worked from 2002 to 2009.

The project, which was begun in 2004, allows districts to compare themselves financially and operationally against each other—as they might compare academic performance through test scores.

When the council first began looking for models that might help develop a standardized tool for comparing districts’ performance, it didn’t have any luck, recalls Michael Casserly, the executive director of the Washington-based council, which represents large urban districts. School districts that wanted that sort of analysis typically had to hire a private company to help them do it.

“There was simply nothing in place in public education, nor in municipal government, or at the state level either, that provided the data we needed,” Casserly says.

Under the project, districts provide raw data in four major areas: business operations, finance, human resources, and information technology, explains Bob Carlson, the director of management services for the council. Local officials can now use nearly 340 separate key-performance indicators in 20 functional areas to compare their performance. The system automatically calculates and analyzes the data, allowing districts to adjust variables to identify increased effectiveness and savings, if certain actions were taken. For example, a district could examine whether its costs of preparing paychecks would rise or fall, and by how much, if it increased the number of deposits it makes online.

The program does not guarantee cost savings, notes Casserly. In fact, districts that go through the analysis may find that they need to spend more money to improve some aspect of their operations. But he believes the current economic conditions make the information the tool provides especially valuable. To date, 64 of the council’s 65 member districts are supplying the system with data. Casserly believes the standards and indicators can help smaller school systems save money and improve operations, too.

“The financial environment is such that it’s forcing them to find every efficiency they can come up with,” he says. “The general goal is to keep as many of these budget cuts as far away from the classroom as we possibly can.”

Academic Realm

Some schools, meanwhile, are finding ways to save money by rethinking how they provide academic services.

One such model is the one used by Rocketship Education, a nonprofit operator of elementary charter schools in northern California that works with low-income communities. The program supplements traditional classroom lessons with online instruction. Its model allows it to reallocate about $500,000 annually per school, based on savings in staffing and class structure, and put that money toward higher teacher salaries, tutoring, mentoring teachers, and other areas.

In Rocketship’s schools, students receive instruction throughout the school day from certified teachers. But the school also carves out about 40 minutes of time each day for a “learning lab,” supplementary lessons focused on math or literacy skills, which are led by noncertified teachers. Using online technology, learning labs build upon the math and literacy content students receive in their traditional classes. The labs allow for more individualized lessons that can be tailored to meet the needs of both struggling students, who may need extra time on a topic, and more advanced students who are ready to move at a faster pace.

Rocketship Education saves money from not having to pay a certified teacher for the lab portion of the day, says Judith McGarry, the vice president for marketing and development for the organization, headquartered in Palo Alto, Calif. It also keeps costs low because the learning labs allow for relatively large class sizes, serving up to 40 children, she says.

That money is reallocated into teacher salaries that are higher than those of surrounding districts, she says. It also pays for electives such as art and music, which, in hard-pressed districts, are often targeted for cuts. In addition, the money allows Rocketship to hire “academic deans,” administrators focused on improving achievement on its campuses.

“Kids are getting better, individualized instruction,” McGarry says. “On top of that, we’re able to make the economics swing so they’re getting more enrichment than in typical public schools.”

Rocketship Education’s model offers some advantages over traditional public schools that allow it to use funding creatively, she says. It has more freedom to modify its curriculum and school day than might be the case in many districts and states. In addition, in some regular schools, building design and space limitations might make it difficult to accommodate learning labs or classrooms structured like them, McGarry says.

Targeting Resources

Retooling class sizes and school and staffing schedules to provide more-targeted support for students is just one of the approaches recommended by Education Resource Strategies, a Watertown, Mass.-based nonprofit group that advises districts on whether resources are aligned with school-improvement strategies. Too often, districts have fixed policies on class size and scheduling that don’t consider the academic needs of their students, ERS contends. District spending in other areas meant to improve instruction, such as professional development, also tends to follow a one-size-fits-all model, without focusing on teachers’ greatest areas of need, such as building their understanding of curriculum and standards, ERS experts argue.

ERS analyzes district budgets, as well as human-resource and academic-course data. In some cases, ERS finds vast discrepancies in the amount that districts spend per course.

One district studied by the organization, for example, was spending $500 per student for a 9th grade algebra class, but up to $7,000 per student for an upper-level elective course. While that gap could partly be explained by the resources needed to offer the advanced class, the discrepancy probably didn’t make sense, given the district’s needs, says Karen Hawley Miles, ERS’ president and executive director and a member of the technical advisory group for Quality Counts 2011.

Cost-effectiveness doesn’t mean having a “lower-quality result,” Miles says. “The design of programs and the way they’re delivered can lower costs and improve outcomes. That’s the story we’re trying to tell.”

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