Using Metrics to Drive Efficiency
Moderator:
Ali Mehanti. Business Manager, J. Sterling Morton High School District 201
Presented by:
Christine Smith, Principal, Baker Tilly Virchow Krause LLP
Nick 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
4
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
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•
•
•
•
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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
•
•
•
•
•
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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
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•
•
•
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•
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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
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–
–
–
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
BUILDING
Building A
Building B
Building C
Building D
Total District Staffing Costs
FTE
Allocation
6.00
1.50
4.00
1.50
13.00
Overtime
Salary and
Salary and
Benefit Costs - Benefit
Non Overtime
Costs
418,941.00 17,177.00
105,680.00
2,747.00
255,934.00
7,733.00
98,031.00 11,830.00
878,586.00
39,487.00
Student
Enrollment
459.00
232.00
351.00
160.00
Number of
Classrooms
Utilized
24.00
10.00
15.00
6.00
1,202.00
55.00
Building
Total FTE
Square
per Square
Footage
Foot
112,820.00 18,803.33
25,013.00 16,675.00
33,010.00
8,253.00
32,209.00 21,473.00
203,052.00
15,619.00
Average
Cost per
Enrolled
Student
950.00
467.00
751.00
687.00
Average
Cost per
Classroom
18,172.00
10,843.00
17,578.00
18,310.00
Average
Cost per
Square
Foot
4.00
4.00
8.00
3.00
764.00
16,692.00
5.00
• 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
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Case Study – Increase Class Size/FTE Reduction
Entry Level
Salary/Beneifts
Costs Per FTE
Kindergarten Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Total
Total Sections
Current Total Students
Allocation Average Class Size
45
941
20.9
41
825
20.1
37
813
22.0
35
768
21.9
35
800
22.9
38
845
22.2
231
4992
21.61
Scenario 1 Reduce 1 section
44
21.4
43
22
42
22
41
23.0
40
23.5
40
20.6
39
21
38
22
37
22.3
36
22.9
36
22.6
35
23
34
24
33
24.6
32
25.4
34
22.6
33
23
32
24
31
24.8
30
25.6
34
23.5
33
24
32
25
31
25.8
30
26.7
37
22.8
36
23
35
24
34
24.9
33
25.6
225
22.2
219
22.8
213
23.4
207
24.1
201
24.8
Estimated
Savings
Change
Scenario 2
Scenario 3
Scenario 4
Scenario 5
Average Class Size
Reduce 2 sections
Average Class Size
Reduce 3 sections
Average Class Size
Reduce 4 sections
Average Class Size
Reduce 5 sections
Average Class Size
6
0.6
12
1.2
18
1.8
24
2.5
30
3.2
$
36,792
$
220,752
$
36,792
$
441,504
$
36,792
$
662,256
$
36,792
$
883,008
$
36,792
$
1,103,760
• 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
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Factors to Consider When Modifying Service Delivery
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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 Cavaliere
n.cavaliere@bakertilly.com
630-645-6244
Christine Smith
Christine.smith@bakertilly.com
608-240-2391
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