Using Metrics to Drive Efficiency

Moderator: Ali Mehanti. Business Manager, J. Sterling Morton High School District 201Presented by: Christine Smith, Principal, Baker Tilly Virchow Krause LLPNick Cavaliere CPA,CFE, Manager, Baker Tilly Virchow Krause LLP

Metrics and Benchmarking

• What are Metrics?– A process of aggregating information that drives a

specific output and associated costs.– A way of measuring performance, service delivery,

and a broad array of other relevant factors.– Benchmarking is the process of comparing metrics

across organizations.

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Common Metrics in IL Public Schools

High Level Financial Metrics Applied to All K-12 Districts

• Financial Profile Score – AFR– Fund Balance to Revenue Ratio– Expenditures to Revenue Ratio– Days of Cash on Hand

• Operating Expense Per Pupil (OEPP) - AFR• Per Capita Tuition Charge (PCTC) - AFR

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Why the Need for Efficiency?

• Limited State funding• Increased mandates• Increased expectations relative to achievement• Limited ability to generate additional revenue

sources• Rising health insurance and pension costs

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How do you know you are cost efficient?

• You will need to create metrics for specific functional areas the data may identify areas that appear out of balance.

• Compare District metrics to industry standards or similar sized Districts to determine if efficiencies can be gained.

• Create specific benchmarks for various metrics that are achievable and continuously monitor performance results.

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What Metrics are Relevant?

• Identify key functions within the District and identify areas for additional analysis.– Instructional Services– Support Services

• Operations and Maintenance Services• Transportation Services• Administrative Services

– Payments to Other Districts & Governments• Tuition

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What metrics are relevant?

• Within each major function drill down into the associated drivers for costs– Support Services – Operations and Maintenance

• Square foot maintained per full time equivalent • Utility costs per square foot of building • Capital outlay costs per square foot• % of Benefits paid by employer• Supply costs per square foot• Supply costs per student

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What Metrics are Relevant?

• Within each major function drill down into the associated drivers for costs– Payments to other Districts & Governments - Tuition

• Cost per student serviced• Types of programs outsourced and associated enrollment• Costs of program outsourced per student• Per major program outsourced identify total hours of specialized

services purchased• Total student enrollment/number of students attending

outsourced programs

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What metrics are relevant?

• Within each major function drill down into the associated drivers for costs– Support Services – Transportation

• Fleet management costs per mile– Purchased Services– Supplies– Capital Outlay

• Students transported per bus route• Special education transportation costs per student• Transportation Fees charged for after school programs compared to costs

incurred

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What metrics are relevant?

• Within each major function drill down into the associated drivers for costs– Support Services – Administrative Services

• Administrator/student ratio per building• Support staff per student by building• Support staff per administrator by building• % of Benefits paid by employer• Supply costs per student• Purchased service costs per student

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What Metrics are Relevant?

• Within each major function drill down into the associated drivers for costs– Instructional Services

• Student/Teacher Ratios• Cost of program/student served• Caseload/Teacher• % of Benefits paid by employer• Substitute Costs per Student• Substitute Costs compared to total salary expense• Supply costs per student

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Efficient vs. Effective

• Efficiency and Effectiveness are not synonymous

• Should not choose efficiency over effectiveness– Student/teacher ratio of 35 to 1 maybe efficient but not

effective for achieving learning objectives

• Best value service = Service at required level for most reasonable cost

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Alternative Approaches to Drive Cost Take Out & Improved Responsiveness

• Optimization of Resources – Ensure that your budget allocations align with strategic priorities

• Ways to Enhance the Use of Resources– Operational Improvements

• Technology• Staffing Approach• Process Reengineering• LEAN concepts

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Alternative Approaches to Drive Cost Take Out & Improved Responsiveness

• Reallocation to priority programs/functions• Expand non-traditional approaches– Online– Team Teaching

• Ways to Reduce Costs– Operational improvements– Functional analysis – Eliminate non-core programs/services– Shared services– Outsourcing of non-core functions

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Alternative Approaches to Drive Cost Take Out & Improved Responsiveness

• Ways to enhance responsiveness/expertise– Functional analysis – eliminate non-core

programs/services

– Third party arrangements• Shared services• Outsourcing

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Case Study – Custodial Staffing

• Metrics for custodial staffing per square foot identified inconsistencies throughout buildings

• Metrics for custodial staffing costs identified inconsistencies per classroom throughout buildings

• Metrics for custodial staffing costs identified inconsistencies based upon student enrollment throughout buildings

• Benchmark set by the International Sanitary Supply Association estimates that an average custodian can clean between 20-40 thousand sq ft per day

BUILDINGFTE

Allocation

Salary and Benefit Costs - Non Overtime

Overtime Salary and

Benefit Costs

Student Enrollment

Number of Classrooms

Utilized

Building Square Footage

Total FTE per Square

Foot

Average Cost per Enrolled Student

Average Cost per

Classroom

Average Cost per Square

FootBuilding A 6.00 418,941.00 17,177.00 459.00 24.00 112,820.00 18,803.33 950.00 18,172.00 4.00 Building B 1.50 105,680.00 2,747.00 232.00 10.00 25,013.00 16,675.00 467.00 10,843.00 4.00 Building C 4.00 255,934.00 7,733.00 351.00 15.00 33,010.00 8,253.00 751.00 17,578.00 8.00 Building D 1.50 98,031.00 11,830.00 160.00 6.00 32,209.00 21,473.00 687.00 18,310.00 3.00

Total District Staffing Costs 13.00 878,586.00 39,487.00 1,202.00 55.00 203,052.00 15,619.00 764.00 16,692.00 5.00

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Case Study – Increase Class Size/FTE Reduction

• Nominal increases in class sizes could yield significant cost savings• Union agreement in effect limited classroom sizes to 27.5 students

without additional overload costs paid to teachers• Classroom space should be considered as well as perception of the

community regarding acceptable student/teacher ratios

Kinder-garten Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Total

Entry Level Salary/Beneifts Costs Per FTE

Estimated Savings

Total Sections 45 41 37 35 35 38 231Total Students 941 825 813 768 800 845 4992Average Class Size 20.9 20.1 22.0 21.9 22.9 22.2 21.61

Change

Scenario 1 Reduce 1 section 44 40 36 34 34 37 225 6 36,792$ 220,752$ Average Class Size 21.4 20.6 22.6 22.6 23.5 22.8 22.2 0.6

Scenario 2 Reduce 2 sections 43 39 35 33 33 36 219 12 36,792$ 441,504$ Average Class Size 22 21 23 23 24 23 22.8 1.2

Scenario 3 Reduce 3 sections 42 38 34 32 32 35 213 18 36,792$ 662,256$ Average Class Size 22 22 24 24 25 24 23.4 1.8

Scenario 4 Reduce 4 sections 41 37 33 31 31 34 207 24 36,792$ 883,008$ Average Class Size 23.0 22.3 24.6 24.8 25.8 24.9 24.1 2.5

Scenario 5 Reduce 5 sections 40 36 32 30 30 33 201 30 36,792$ 1,103,760$ Average Class Size 23.5 22.9 25.4 25.6 26.7 25.6 24.8 3.2

Current Allocation

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Factors to Consider When Modifying Service Delivery

• Barriers to change relating to mandated compliance• Potential FTE modifications• Potential impacts on current/future revenues• Anticipated savings• Student Impact• Staff Impact• Impact on service delivery• Potential shared service opportunities• Collective bargaining impacts

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Questions?

Presenter contact information:Nick Cavalieren.cavaliere@bakertilly.com630-645-6244

Christine SmithChristine.smith@bakertilly.com608-240-2391

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