Incentives key to reducing school administrative costs

State rules require every school administrative unit, or SAU, to have a superintendent and to assign students to their town-operated public school. State rules set forth a host of regulations that require administrative oversight. So long as state rules do these things, there is little chance that changing the number of SAUs will reduce administrative costs per pupil.

Other states have tried to consolidate districts to reduce costs. They have not succeeded. See the experience of West Virginia, Wisconsin and Arkansas, for example (Rural School and Community Trust, “The Fiscal Impacts of School Consolidation,” www.ruraledu.org).

Why does this seemingly logical reform not work? Because bureaucracies are skillful at creating new positions. How many new assistant superintendents will each new district have within 5 years? Bureaucracies find ways around mandates. Who would decide how such costs would be measured over time? What would be the consequences to a mega-district for not reducing per pupil administrative costs? A fine imposed years down the road would have little effect on operations now.

A major reason school administrative expenses are high is the state rules that now govern SAUs. So, cost-saving reform should start by reviewing and changing those rules. Allow towns and districts freedom to reorganize in ways that they can see will save money.

School boards and superintendents have few incentives to keep administrative costs low. State and local education dollars are levied and allocated based on positions and functions, not on cost per child. It is difficult for towns to reject the annual increases in school budgets requested by school boards. Over the past two decades in Maine, the average annual increase in public school budgets has been about double the annual increase in the Consumer Price Index.

How could the state provide incentives for districts to reduce administrative costs? We should provide families with options among public education programs, and fund schools based on the number of students they serve. Funds would follow each child according to a “weighted student funding” formula. When families have choices, schools and districts have a strong incentive to keep administrative costs under control. A school that spends too much of its budget on administration risks lowering the quality of its academic program, and, therefore, losing students, and hence, funds.

Having to recruit and retain students encourages schools to find cost-effective ways to meet student needs. Dissatisfied parents can move their child and find another public education option, with funds following the child to that program. This places local control at the school level, the best place for decisions to be made on behalf of the children entrusted to that school. Principals should have substantial budgetary autonomy so that each school has great flexibility in using its resources to meet its students’ needs.

“Weighted student funding” allows towns and the state to take into account the needs of each student in allocating funds. This approach would provide new ways to address issues of funding equity around the state, while encouraging districts and programs to spend as much as possible on student learning. Quality of programs would be judged both by external standards (state exams, SAT scores, NAEP scores) and by parents’ choices. To encourage improvements in education quality, two quality control mechanisms are better than one. Pioneered in Edmonton, Canada, jurisdictions that have weighted student funds follow each child to the public school of choice include San Francisco, Washington, D.C., Cincinnati and Hawaii. For more information, see www.edexcellence.net/fundthechild/proposal/.

To get a handle on Maine’s high administrative expenses, let’s start by removing state regulatory requirements that increase administrative costs. Then let’s phase in an incentive approach that gives families freedom to choose among public education programs with funds following each child. (Special allocations can be added for rural locations and other factors deemed important.)

In a few short years, districts and schools will have found myriad ways to increase learning and reduce administrative costs, without the destructive political battles that will take place if existing local control mechanisms are forcibly reduced, and families are faced with even fewer education options than they have now.

Judith Jones of Hope is a sociologist and education planner.