Sharing services can help school districts

Today the Flint Hills Center for Public Policy released (and several news outlets will publish) the following op-ed about the savings that school districts can achieve by sharing administrative services.

Given the constraints of op-eds written for newspapers, there are many interesting points that could have gone into the op-ed but did not. First of all, districts can also save money by sharing instructional services. That is, they can team up with each other to hire a single teacher rather than each district hire its own.  Distance learning, now morphed into virtual classes, is another example.

A second point that did not make it into the op-ed is that there are, of course, many other ways for schools to save money. But they are often hampered by federal and state regulations as well as tradition.

Finally, the difference between the political world of public education and the public marketplace of American enterprise is clearly seen in this issue. Politicians may seek to impose their ideas of what works best, and their ideas may work. But even the best politically derived arrangements tend to outlive their usefulness, and even failed government programs have a long half-life.

On the other hand, commercial enterprises don’t need a legislative committee to tell them to save money.  Think, for example, of Wal-Mart, which is famous for its efficient logistics system. When your survival depends not on political support but on the willingness of people to continue to buy what you’re selling, you find a way to reduce costs.

If we ever get to the day when schools must more actively compete against each other for student funding (say, through a voucher system), they will have plenty of incentives to be efficient–and won’t need prodding from legislators.


When School Districts Join Forces, Taxpayers Win

Speaker Mike O’Neal (R-Hutchinson) has called for the Kansas Legislature to study whether it’s possible to consolidate the number of school district administrators. He cited the budget shortfall as a reason for looking at doing things “fundamentally differently.”

Four scholars with the Reason Foundation, a California-based think tank that focuses on making governments more efficient, suggest that school districts can save money by cooperating with each other in buying services and supplies.

School districts might be able to share a large number of non-instructional services. Here’s a partial list: administrative computing and information technology systems; payroll and auditing; legal services; grant management; and staff training and development.

A district that shares services with other units of government (or even, in some cases, a private company) can get many benefits.

Instead of having one person on staff who tries to wear three hats, a district can draw on an outside organization that has a full-time specialist.

Also, it can purchase more or fewer services (as financing allows and student enrollment requires) without going to the trouble of hiring or laying off workers.

It can enjoy economies of scale from making bulk purchases, stretching its dollars so that more of them are used in the classroom.

There are several way to share services. A district can contract out to another for a specific task. Several districts can jointly enter into a contract with an outside vendor that specializes in, say, payroll management.

How much money could the joint purchase of administrative services and supplies save? The Reason Foundation suggests that school districts could conservatively save 20 percent of their non-instructional costs.

How important are these savings in the big picture? According to the National Center for Education Statistics (NCES), only 55 percent of Kansas’s school expenditures during the 2005‑06 school year were “instruction expenditures,” meaning that 45 percent were not. There’s some room to debate what should and should not be included in which category, but if we take the NCES data at face value, districts in Kansas could shave 9 percent off their overall spending. In 2005‑06, that came out to some $393 million. By contrast, the Kansas Association of School Boards has suggested that districts respond to the state’s budget deficit by preparing for cuts of 5 percent.

So in the abstract, there’s room for Kansas public schools to pitch in and help address the state’s budget situation. As the saying goes, the devil’s in the details. At least two districts (USD 371 Montezuma and USD 476 Copeland) already share a superintendent, and the state is dotted with organizations, called “educational service centers,” which districts use to jointly purchase some of their services. Legislators may wish to investigate just how widely the state’s local education authorities already share administrative functions.

An across-the-board reduction in state aid would certainly stimulate school districts to investigate shared services. It would, though, have the unfortunate effect of punishing those districts that are more lean than others, while letting less efficient districts off the hook.

For that reason, legislators might wish to consider an additional option: Enlist the state’s 2.7 million residents as budgetary watchdogs by requiring each district to put its check registry online. “Google government,” as this idea is sometimes called, is based on the idea that the best government is open government. It’s hard to tell what sorts of savings a keen-eyed observer outside the school system could find. Google government won’t be an immediate money saver, but it could promote the state’s long-term health.

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