Shared services can push Illinois toward more effective and equitable schools
$544 per pupil. Illinois spends double the national average per pupil in general administrative spending, money used for district level staff like superintendents. Instead, that money could be used for hiring more teachers, funding arts programs and other instructional activities. Illinois’ students deserve better. So, what can we do about it?
MPC is dedicated to advocating for effective government practices for a prosperous, sustainable and equitable region. The majority of property taxes go to education in Illinois, so any evaluation of effective government should include an analysis of education spending.
Illinois’ per-student cost is more than double the national average of $226.
In 2017, many in Illinois celebrated as the budget impasse ended and the state passed a more equitable way to fund schools, known as Evidence-Based Funding for Student Success Act (EBF). The law set Illinois on a path toward equitable funding of all Illinois school districts based on academic need. However, according to the Center for Tax and Budget Accountability (CTBA), even if the State increase education spending to the $350 million maximum required by statue every year, it would take decades to fund the current $7.35 billion shortfall.
Our children, particularly in nonwhite and low-income communities, cannot afford to wait.
Illinois needs other solutions, and funding is not the only answer. MPC analysis shows that more school district efficiency could help solve school funding woes in Illinois. But general administration spending has only increased, from $518 per pupil in 2014 to $544 in 2016.
Illinois spends more than other states on general administration
Not only does Illinois spend the most on general administration, but we also spend at a very high rate per student as compared with other states. Illinois districts spent $544 per student on general administration. This is the third highest rate for any state behind only North Dakota and New Hampshire, two states that have less density overall than Illinois. Illinois’ per-student cost is more than double the national average of $226.
In FY 2016, Illinois spent $1,105,435,000 on general administration expenses, making us the only state in the country with more than $1 billion general administration expenses, despite serving the fifth most students. For comparison, Illinois spent 33% more than California, despite their public-school system serving over three times as many students.
What would Illinois districts save if they could reduce general administration spending to the national average? They would spend approximately $459 million per year, a savings of approximately $645 million. This would be a savings of $318 per pupil.
Larger school districts spend less per pupil
One of the drivers of administration costs is the number of students a district serves. As of July 1, 2018, there were 852 school districts in Illinois. There are 211 districts that serve only one school. There were 31 school districts with fewer than 100 students enrolled and 463 districts with fewer than 1,000 students enrolled. For example, Morris Illinois, a town with approximately 15,000 residents, has 3 elementary school districts and one high school district. Each elementary school district only has one school. Among the elementary districts, one district only had 86 students, while the other two have an enrollment level over 800. The high school district enrolls over 1000 students. Ideal school district size has often been debated, but we should give more attention to creative methods of providing effective administrative services within the current district structure.
Examining general administration spending across the state revealed two trends, disparities between single school and multi-school districts as well as disparities between elementary/high school districts and unit districts. On average, multi-school districts spend only $484 per student on general administration compared to $842 per student for single school districts, a disparity of 74%. A large portion of this savings represents Chicago Public Schools, which spends $349 per student on general administration.
Disparities in spending also arise with separate elementary or high school districts. On average, elementary districts spend $619 per student and high school districts spend $603 per student on general administration. In contrast, unit districts spend $439 per student on general administration spending, meaning elementary and high school districts spend 40% and 37% more respectively.
Larger districts exhibit greater growth in academic achievement
District size is correlated with higher academic growth. Analyzing report card data from the Illinois School Board of Education (ISBE), on average, in single school districts, 16% of students reach growth benchmarks in English & Language Arts and 15% of students reach growth benchmarks in Math. In comparison, at the average multi-school district, 45% of students reach growth benchmarks for both English & Language Arts and Math, nearly 3 times better. In general, multi-school districts exhibit greater growth than single school districts. There are many different factors that impact student achievement, so greater analysis is needed in this area to find more causal relationships between spending and student learning outcomes.
What are other states doing to address general administration spending?
Research has shown service sharing is a good way to take advantage of economies of scale. We can take a cue from innovation done in school districts from other states.
- In New Jersey, boards of education have been authorized to share their superintendents and school business administrators with other boards and to “subcontract” the services of their school business administrators to other school districts and have done so since 1996.
- The State of New York also utilizes administrative service sharing through Boards of Cooperative Educational Services (BOCES), and differential state aid encouraging sharing services with poorer districts.
- The State of Texas authorizes Shared Services Arrangements that allow for a shared district unit or a shared fund in accordance with the shared services arrangement districts' agreement.
- The State of Ohio explicitly shares district staff, in particular, a treasurer, and has demonstrated cost savings. In Hamilton County, the Reading City Schools and Three Rivers Local School District reported annual saving of about $55,000 to $66,000 in each school district sharing a treasurer. The Wyoming City Schools and the Oak Hills Local School District report saving $45,000 for Oak Hills and $60,000 for Wyoming sharing a treasurer.
Benefits to districts are more than just financial
There are several non- financial benefits that can be realized from shared administrative services that result in more effective learning outcomes.
Sharing administrative services would net some cost savings, but there is also an opportunity to be more strategic and effective in school district management. There are several non- financial benefits that can be realized from shared administrative services that result in more effective learning outcomes.
- Alignment of K-12 education for non-unit school districts. Shared administrators can develop a strategic plan that aligns K-8 instruction with high school learning needs and learning outcomes.
- Regional alignment of school services and strategy. Depending on the geographic area of the districts, shared administration can coordinate more regionally effective bus service, share financial management staff, share technology and identify other service efficiencies.
- Cost savings can be directed toward the classroom and instruction activities. Cost efficiencies that are realized can be directed to schools, providing more resources to children. If funding adequacy targets are met, the ability to provide property tax relief could be pursued based on the service level needs of schools.
What is Illinois doing to address general administration spending?
One strategy to more effectively spend general administration dollars is to encourage service sharing among school districts. Sen Sue Rezin (R-Morris) introduced a bill that would allow a referendum to direct superintendents to evaluate and pursue sharing general administrative services such as superintendents and administrators. Existing school boards would remain the same and would collectively enter into an agreement to share an administrator.
A second strategy is to research possible cost savings through reorganization. The Classrooms First Act, put forth by Sen Tom Cullerton (D-Villa Park) in the Senate and Rep Rita Mayfield. (D-Waukegan) in the House would create a School District Efficiency Commission that would study the effects of school district consolidation across Illinois. Consolidation changes governance structures in addition to combining general administration services.
Either of these strategies potentially save districts money or improve service outcomes. The more service sharing that occurs, the greater the benefits Illinois will realize. As school districts consider sharing services, there are a few things to consider.
- Administrative effectiveness should be the focus of service sharing activities. Effective use of administrative dollars allows for strategic leadership and increased curriculum quality across participating districts. Savings can also be used to increase the quality of instruction in the classroom, whether that is hiring instructional staff or purchasing learning materials.
- Target school districts with similar geographies. Illinois can take advantage of coterminous elementary and high school districts or elementary districts that feed into a single high school district. Districts that inhabit the same geographical area makes sharing easier.
- Evaluate the strengths of each district. School districts can learn from each other and adopt best practices among partnerships organically as cooperation becomes common practice.
We know that effective and efficient local units of government, including school districts, are critical to creating a strong, vibrant Illinois. In education, streamlining administrative spending will allow us to be more effective with taxpayer dollars and push more funding to instructional activities for better investment in our children.
Nick McFadden is a former MPC Research Assistant and second-year MPP candidate at the University of Chicago Harris School of Public Policy. His work in effective government research is motivated by his career in teaching and education administration.