K-12: Stop the Spending

Who Can Help & How
by
Hugh Kemper

Last Thursday’s article addressed the imperative need to reduce K-12 education spending to levels consistent with providing a quality education and restoring Vermont’s financial viability. This piece addresses what voters can do to help reduce education spending by doing their homework on a proposed budget, identifying cost savings opportunities and proposing an amount by which a proposed budget may be responsibly reduced. However, since many mistakenly believe spending and performance go hand-in-hand, I begin by briefly putting into perspective the resources (a.k.a. capacity) vs. performance (a.k.a. outcomes) issue.

Capacity vs. Outcome

The capacity vs. outcome tradeoff is best summarized by the international Organization for Economic Co-Operation and Development (OECD) in its analysis of education spending and performance in 25 member countries:

While spending on educational institutions is a necessary prerequisite for the provision of high-quality education, spending alone is not sufficient to achieve high levels of outcomes and effective use of these resources is important in achieving good outcomes (OECD: Education at a Glance 2007, page 265)

Basically, once taxpayers have funded the capacity required for providing a quality education, the outcomes produced are a function largely of the effectiveness of those employed (e.g. administrators, teachers, teacher aides, etc.). In other words, spending more doesn’t buy better outcomes. The Education Funding Task Force last Winter/Spring likewise observed that there was no meaningful correlation between per pupil spending levels and students’ reading and math scores. This conclusion held true for students receiving free/reduced lunch as well as students not receiving free/reduced lunch.

Vermont’s profligate K-12 spending since the enactment of Act 60/68 has created the most staff intensive capacity for a public school system in a country that the OECD notes is one of the highest spenders and worst performers amongst developed countries in the world. Capacity is not an issue in the USA and is especially not in Vermont. On the contrary, with FY09 Pupil/Teacher (10.9:1), Pupil/Teacher Aide (21.1:1) and Pupil/Staff (4.8:1) ratios Vermont’s capacity can be meaningfully reduced without denying our children the resources they need for a quality education.

Your vote has consequences at the local school district level and in Montpelier

As only 16 (of 289) school districts comprising 0.8% of total equalized pupils tuition all of their children, virtually all registered voters in Vermont can influence directly all or at least a portion of  their school districts’ education spending. The level of education spending approved by school district voters directly impacts their district’s homestead property tax rate as well as the percentage cap on income for district residents who qualify for the property tax adjustment. In short, registered voters play a critical role in determining the level of statewide education spending. The state simply collects the taxes (primarily education property, personal income and sales) required to fund the spending approved by school district voters.

Beyond voting on school district budgets, registered voters can further influence directly the imperative need for Montpelier to reform legislatively Vermont’s anachronistic and costly K-12 administrative structure by electing state representatives, state senators and a Governor with the political will and courage to do so. The needed structural reform is not rocket science and is long overdue. We know the primary cost driver, increased staffing and related costs that account for approximately 80% of current education spending and that have continued to increase even as enrollment has steadily declined. Importantly, there is a wealth of thoughtful and well researched ideas and recommendations generated over the past 10 years by blue ribbon panels, committees, and individuals such as yours truly that have been simply ignored. K-12 education is an 800 pound spending gorilla consuming approximately 50% of Vermont’s revenues. We need elected individuals who understand that procrastinating further on reforming K-12’s structure and spending is not an option. 

Push back responsibly on costs to reduce excess capacity

Vermont K-12 staffing is too high for current and projected enrollment. While a specific non-staff related expense item may catch voters’ eyes and require attention, the primary source of K-12’s extraordinarily high and unsustainable spending is excess staffing.  Formulating an informed view on staffing requires accurate and current information on key staff ratios: pupil/teacher, pupil/teacher aides, pupil/support staff and pupil/administrative staff. If, as is very likely, excess staffing is identified, the voters’ next task is twofold: to estimate the associated cost savings that can be achieved by eliminating the excess staffing and to approve an appropriately reduced budget.

The following addresses information quality, the importance of differentiating between special education and regular education costs, staffing ratio guidelines, staffing costs and  comments on pushing back on costs to reduce education spending.  

(1) Getting the Information Voters Have a Right to Know May Require Spade Work

First, voters have the right per Title 16 to the information needed for an informed view on staffing cost effectiveness:

…data provided by the commissioner which enable a comparison with other schools, or school districts if school level data are not available, for cost-effectiveness. The commissioner shall establish which data are to be included pursuant to this subdivision and, notwithstanding that the other elements of the report are to be presented in a format selected by the school board, shall develop a common format to be used by each school in presenting the data to community members. The commissioner shall provide the most recent data available to each school no later than October 1 of each year. Data to be presented may include student-to-teacher ratio, administrator-to-student ratio, administrator-to-teacher ratio, and cost per pupil.

The problem is that cost effectiveness data is rarely provided and, when it is, is not provided in an accurate and useful manner. For example, at no time during my four years as a school board member did the commissioner (or superintendent or principal) provide cost effectiveness data. Instead, the school board read Title 16’s disclosure requirements for financial and other information and took the initiative to provide the data in the annual report.

Secondly, the most current and helpful staffing, enrollment and, of course, spending information is the school district’s 2009 annual report for FY10 and the proposed budget for FY11 which is available shortly before the annual meeting. While VTDOE’s website has spending, enrollment, and staffing data, none of it is current enough to be particularly useful for the FY11 budget process, particularly as enrollment continues to decline by approximately 1.5% p.a.

Thirdly, voters need to be particularly attentive to supervisory union assessments which are normally allocated amongst member school districts in proportion to each district’s percentage share of total equalized pupils within the supervisory union.

Once again, per Title 16, voters have the right to this information:

all revenues from all sources, and expenses, including as separate items any assessment for a supervisory union of which it is a member, and any tuition to be paid to a technical center;

Unfortunately, supervisory union assessments often appear as a line item without their underlying cost components and, as such, can distort the staffing resources being utilized by a school district. For example, in FY08, supervisory unions accounted for 12.7% of total K-12 staff or 2,441 employees including 5.9% of total teachers or 484 and, even more importantly, 14.6% of total teacher aides or 637. If the cost components of a supervisory union assessment are not readily apparent, voters have the right to know what they are.

(2) The Importance of Differentiating Between Special Education and Regular Education Costs

Regular Education costs are manageable by administrators and school boards while, from a local taxpayer’s perspective, Special Education costs are not.

From a local taxpayer’s perspective, Special Education (SpEd) is a black box- an activity shielded from local scrutiny by understandable confidentiality constraints. SpEd related costs are driven largely by legally enforceable Individual Education Plans (IEP) developed for every SpEd student that identifies the services (including staff resources) required.

What voters can do, however, is separate the direct instructional staff (i.e. teachers and teacher aides) dedicated to special education from those dedicated to regular education being sure to include, if any, the teachers and teacher aides by category who are included in the supervisory union assessment.

If a school district’s annual report does not provide transparently SpEd expenses and staffing data, voters should ask for it. SpEd costs are readily available to school boards and administrators by October 15th when the supervisory union, on behalf of each member district, submits a Special Education Service Plan that contains SpEd expense and staffing information. 
 
SpEd enrollment data, however, is not normally available for reasons of confidentiality. For analytical purposes, voters should assume that approximately 15% of enrollment is comprised of SpEd students as this is true for Vermont K-12 as a whole.

(3) Ratio Guidelines

•    Consider (a) a Pupil/Teacher ratio of 15:1 for all Regular Education students and (b) limiting Teacher Aides to SpEd students as required by IEP’s and to EEE-K enrollment at a 15:1 Pupil/Teacher Aide ratio.

The optimum Pupil/Teacher ratio is among the most researched of educational issues. Over the last 20 years or so, a Pupil/Teacher ratio of 15:1 has generated much support. With SpEd students receiving the staff resources per their IEP’s and with classrooms as small as 15:1, there is no need for Teacher Aides for regular education students other than for EEE-K students.

•    For support and administrative staffing consider the guidelines based on school size available here on page 11. Please note, however, that these staffing parameters assume these functions are not provided by a supervisory union. To understand fully the staffing resources providing these functions voters need to know what is done and at what cost at the school itself and by the supervisory union on behalf of the school district.

(4) Staffing Costs: Teachers, Teacher Aides and Administrators

Based on historical data available at the VTDOE site and published reports on teacher contracts negotiated last year, my estimates of the average teacher and teacher aide salary for FY11 are $54,115 and $16,706 respectively.  For FY10 the full cost of family healthcare was $16,722, for two person healthcare $12,474 and for single healthcare $6,346. FY11 healthcare costs should become available this December. My educated guess is that most school districts pay for 85%-90% of a teacher’s healthcare costs and for +/- 95% of a teacher aide’s healthcare costs. Each teacher also has available annually a tuition reimbursement allowance, currently approximating $1,500.

As there are relatively fewer administrators, their salary and healthcare costs are generally identifiable in a school district’s annual report.

(5) Pushing Back to Achieve Cost Savings: Fat vs. Process

Having done their homework, a voter’s objective is to develop a dollar amount by which a proposed budget can be reduced and get it approved by a majority of voters. There is no guarantee, however, that the savings will be realized in the manner envisioned by the voters as the School Board retains discretion over how any approved amount, whether proposed or amended, is actually spent.

Importantly, voters should consider simply pushing back.

Two years of research during my professional private sector career on issues of cost reporting/control and savings resulted in the following two rules of thumb: (a) savings of 5%-10% are achievable in most organizations by simply eliminating existing fat and (b) savings of 20%-30% are achievable by completely changing current work policies and processes.  Rule (a) is often the initial cost discipline imposed on an organization by a chief executive officer which delegates to senior managers of operating units the authority to determine where the fat lies. Rule (b) takes cost reduction to a whole new level via the application of major surgery to most, if not all, of a company’s cost structure by completely revamping the way in which a product is manufactured and/or a service (e.g. education) is provided.

Absent clear evidence to the contrary, there is no question these rules can be applied to Vermont K-12, given its extraordinarily high staffing numbers vis-à-vis enrollment. Local voters can apply rule (a) to local school budgets by pushing back on district spending which, in turn, will push back on supervisory union spending that is included in local budgets as an assessment. Lesson (b) can be applied by the Vermont legislature in reforming K-12 anachronistic and costly administrative structure.  

Conclusion

Taking the lead on cost reduction initiatives is not for the thin skinned or those without investigative and analytical skills. All voters, however, need to support local efforts to streamline Vermont K-12 education spending which significantly exceeds what is required to provide our children with a quality education. Quite frankly, in the absence of clear evidence to the contrary, which will be quite rare amongst Vermont school districts- any FY11 proposed budget for regular education that isn’t below FY10 spending should be simply rejected. The target for FY11 should be reduced regular education spending in the range of +/-5%. The only exception would be the tuition component of school district budgets as the spending problem stems from the source of the costs- the schools themselves and not those that pay tuition to them.

Cutting public K-12 school budgets and returning education spending to sustainable levels will not be easy. In fact, it will be hard. The educational system and spending is complex and not entirely transparent. There are powerful, entrenched special interest groups with a stake in the status quo that will fight back- hard. But the need to reduce education spending, initially at the local level and then in Montpelier, is urgent and essential. If left unchecked, K-12 spending will precipitate the ultimate collapse of Vermont’s financial viability.

Comments

[bob zeliff]

Very Well Said.
Thanks

[Vermont Woodchuck]

"If left unchecked, K-12 spending will precipitate the ultimate collapse of Vermont’s financial viability."

GOOD!!!!! That is the only way this mess is going to get cleaned up. None of he involved will take their faces out of the trough until the free food is gone.

Let them figure out how they can pay their bills when the entire system has collapsed! This state, this country, actually the world economy has been living on "free" and the bill is due.

God help you if you have any debt.

[Tom Licata]

Vermont Woodchuck, I share your pessimism and disgust but, your remark about "God help you if you have any debt" is a bit off the mark. The inflation that is coming will allow debtors to pay creditors with much cheaper dollars. Those "holding the bag" are actually the creditors, not the debtors.