School Regionalization Does Not Save Money

The Ocean State Policy Research Institute has shot holes – on the basis of sound figures from the US Dept of Ed – in the well repeated and well intentioned suggestion to merge most of Rhode Island’s thirty six school districts.
This from an OSPRI press release of today. [Emphasis added.]

As more towns and schools scramble for cost savings, the call for “regionalization” seems to be gaining momentum. However, new research by the Ocean State Policy Research Institute (OSPRI) shows that, at least with education, it would probably increase costs.
“It’s a very easy pitch to say 36 school districts with 36 superintendents are more expensive than five regionalized districts with five superintendents. Unfortunately, it’s not true,” said OSPRI President William Felkner. “I bought it too, until I saw the data.”
The U.S. Department of Education’s National Center for Education Statistics’ (NCES) latest published data (The 2007 Digest of Education Statistics that reports extensively on the 03-04 school year) show that Rhode Island school districts on average spend 7.9% of their current expenditure budgets on administration and supplies, the 2nd lowest of any state.
Administration and the “economies of scale” derived from combined purchasing are the two items touted to deliver savings from regionalization and Rhode Island already appears relatively lithe in these departments. Even on a per pupil basis, RI spending in these areas is lower than most of the nation and in the top 20 when looking only at “general administration” which are the costs for school district management including the superintendent’s office.
“Using a business model, consolidation of services makes sense,” Felkner said. “But when government mandates such actions and higher levels of governance are created, accountability suffers and costs rise.”
Rhode Island has experience with regionalization and it has ballooned both administrative costs and per pupil costs. Taxpayers of regional districts have not seen savings nor has the state.
When comparing fully regionalized districts to similar size town districts we find that regionalized districts have the highest per pupil costs. One example is the Chariho Regional School District which was put together from three towns to make a school district whose student body is the same size as neighboring Westerly. But, the supposed economies of scale are nowhere on display in Chariho where administration costs per pupil are $825, forty percent more than the $589 spent in Westerly.
Indeed, when it comes to administration costs, the supposed venue for obvious savings, they are well above the median in ALL the regionalized districts.
“When it comes to schools, the solution is not ‘streamlining, streamlining, streamlining,’ it’s ‘salaries, salaries, salaries,’ and the way to reform salary and benefits is through transparency. Give taxpayers a window on exactly how their money is spent, before, rather than after committing to the spending – as reflected in the East Providence School Committee’s proposal for negotiating contracts in public.”
The same NCES data source shows that 58.8 % of RI school budgets are devoted to teacher salaries and benefits, the nation’s 6th highest. An evaluation of per pupil salary and benefit spending jumps that rank up to the 2nd highest in the nation. And if one wonders what methods might be effective at holding the line on teacher salaries, transparency or regionalizaton, just look at what teachers’ unions say. They object to the former and embrace the latter.

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13 years ago

If RI spends among the least on administrative costs for education, it should follow that we spend among the most on “in the classroom” direct education costs. So how do we explain the poor performance of our students? I suspect we may have fallen into the trap of “you get what you pay for” that has weak leadership manifesting itself in poorly performing teachers and poor results. Maybe, if we were to spend more on the smaller group of really high quality, effective leaders, they could produce a beneficial result while spending less on direct classroom costs. The billion dollar corporations paying those huge salaries to the “leaders” are not successful by accident.(Please don’t take that statement to mean I am in support of million dollar salaries, obviously not.) The thin layer of leadership we have now is spread too wide makes for a large group of mediocre leaders fighting for the scarce resources of the state at the ultimate expense of the local taxpayer. The structure forces local districts to direct their efforts towards more parochial needs and lose focus on educational outcomes through sound management practices and personnel management. A smaller administrative team, given a proper set of management rights, and being allowed to hire a staff of professional managers with authority to manage the schools as principals has got to be better than staying with the ineffective, but cheaper structure we have now. BTW, Monique, it’s the local control that has lead to the “contract one-upsmanship” you describe in your next post. That’s my best evidence to support my proposition that we spend too much in the classroom without being able to get good results. I think I have to fall on the side of less, but higher quality leadership, in order to get better results. It… Read more »

13 years ago

Not exactly. I’m suggesting that a more centralized administration combined with a proper set of management rights can be more successful in achieving positive results.
Centralizing the administration is to do the same things the Governor is beginning to do. One state health care contract to save money and take it out of the collective bargaining process, one transportation provider which should lead to more efficient transportation systems, a single data collection system for students that is purchased and managed by the single state administration, a single state contract for food service to eliminate the 35+ contracts being managed separately, etc. As for the unions, well, as I suggested over a year ago, have the unions remain in the districts their in now, but have one state contract for each union.
The kids will still attend their own local school, but their principal will have clear authority and performance expectations or they will be at risk of being fired.
That’s the rationalization I want.
It’s probably not the perfect solution, but it clears away the problems we’ve created with the local control, though I doubt anyone can call what we have now “control.” There are so many areas on school governance that will have to be considered, the job will take several years to accomplish.
For us to bitch about what we have and then bitch about a different model without offering a reasonable (and possible) solution is nothing but noise.

13 years ago

Monique, Thanks for placing our arguments before an engaged audience. Sorry I’m a little late to the party. I was in DC over the weekend and I thumbed a response on my phone yesterday, but when I clicked send my 1/2 hour went into the celestial infindibulum. John, I appreciate your criticism but without extending our press release to white paper length, you would not garner that we gave consideration to some of the facets of the problem you describe. You are absolutely right that more money as a percentage of spending in RI goes into the classroom, however all of that is in higher teacher salaries and lower pupil/teacher ratios. To the extent that these do not “buy” results, they are no better addressed by regionalization. In terms of addressing the first element, East Providence, not regionalization should be the model. And I speak not only of their fiduciary unilateral budget balancing, but of their insistence on opening contract negotiations to the public. Neither of these important stands would be likely made by regional authorities who have unlimited power to demand the budgets they set from municipalities! Fiscal oversight is essentially removed from the level at which the taxes are paid, is further from the taxpayer. Both Bill and I would have been susceptible to the regionalization argument until he spent time serving on a regional school committee and saw how it largely evaded accountability to the taxing level of government that faces the music for tax increases directly. I was suspicious of the motives of various proponents and found the numbers in comparing regionalized to non-regionalized districts in RI remarkably unconvincing as regards any ‘solution’ in regionalization. On the general question of economies of scale, Per pupil costs have a slight upward, not downward, trend by district in… Read more »

Barbara A. VonVillas
11 years ago

I agree with you that regionalization as a process by itself will not save money. Having served as an administrator in 3 regional school districts, I can say from experience that there is really only one way to save the kind of money that makes the concept worthwhile, and that is the closure of buildings. School administration from a distance isn’t effective. Administrators need to be in the schools, even the Superintendent. I served in that capacity in Rhode Island for 7 years, and I can say from experience that visiting classrooms and observing and giving feedback to teachers is the most efficient way to improve delivery to students and increase achievement. On the other hand, consolidating school buildings, especially high schools, offers the most promise for several reasons. The first and most important reason is that it would improve the educational program by providing a critical mass. On Aquidneck Island, for example, there are approximately 650 high school students in Newport, 700 in Middletown, and 1,100 (including Little Compton students) in Portsmouth. Each community has its own high school. Think of the number of Advanced Placement courses or foreign languages or career development programs that could be provided in a single large school in the center of the island. But the strongest reason for regionalization on Aquidneck Island is the ability to excess 3 aging and costly high school buildings, all in need of expensive upgrading and renovations, by uniting all 3 communities in a single campus with all the bells and whistles for 60% reimbursement plus 5% for energy-efficient mechanical systems. For regionalization to succeed on Aquidneck Island – or anywhere else for that matter – there must be a shared vision and shared ownership. I have been making the case in the local newspaper for at least… Read more »

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