Contact

KU News Service
785-864-8860

Study: Consolidating nonteaching services doesn't always equal savings

Mon, 07/21/2014

LAWRENCE — In an era when school districts are under near-constant pressure to improve budget efficiencies, they are increasingly looking at alternative solutions such as the consolidation of school districts, or, more recently, the consolidation of selected services. A study by a University of Kansas professor shows that consolidating noninstructional services, an increasingly common tactic, may produce financial savings in some but not all cases.

Thomas DeLuca, assistant professor of educational leadership and policy studies, authored a study in which he analyzed Michigan’s efforts to consolidate noninstructional services such as accounting, payroll, transportation, human resources, food service and custodial services. He wanted to determine whether these service consolidations did indeed produce financial savings, and, if so, if those savings were then re-allocated to instructional services.

While he found the arrangements did in fact produce savings in some cases, it was not across the board. And in cases where savings were realized it did not always equate to more funding for instructional services, but in other cases, the result was service quality improvement.

“I was expecting to see some substantial savings, but they just weren’t there,” DeLuca said. “I was also expecting some improvement in service quality, but not to the extent I found.”

DeLuca recently presented his findings to a conference of Michigan lawmakers and has published the findings in the Journal of Education Finance. A former teacher, principal, school finance director and Michigan native, DeLuca presented his findings to Michigan policymakers who are considering alternative service delivery solutions, some based on school district organizations such as county-based school districts. DeLuca surveyed school districts on their service delivery models and analyzed historical numbers of those that have already made the transition, comparing current spending with preconsolidation figures.

Among the most significant findings were that while the intent was to save money, service consolidation did not always equal automatic savings. However, when they did not, service quality often improved. In many cases this was due to certified public accountants providing services that previously were not available, especially in smaller districts. They were able to create efficiencies as well as applying professional accounting standards to situations where previous employees may not have had accounting expertise, and more specifically, the rigors of public school accounting.

“Often the districts would have someone who started as an aide or parent volunteer, moved to a secretary and eventually became the district’s bookkeeper who just didn’t have the public school accounting training,” DeLuca said.

While in some cases savings were re-allocated into instructional services, the amounts were typically very small. But the improvement in quality sets up a classic dilemma for policy makers, school boards and voters. Is it more important to save money, or improve services, and are the two mutually exclusive? For some districts and community members, the savings choice might be paramount, while for others, improving service quality may be worth offsetting any minor savings.

Service consolidations are often enacted to achieve savings through “economies of scale,” or reducing redundancies. The key to that goal, however, is that service quality must remain the same, if not improve, for it to be a true savings due to economies of scale. The research showed that services did not always maintain their quality, and in some situations, such as special check requests, accounting assistance to parent teacher organizations or extracurricular booster clubs declined.

A variety of factors including technological innovations such as Internet access and virtual private networks play into whether consolidation of certain services such as accounting, payroll and human resources accomplished savings. In other words there is no black and white, one-size-fits-all answer to whether such consolidation is the universal right move.

“We’ve talked about this in my school finance class. Some times the answer is simply ‘it depends,’” DeLuca said.

In future research, DeLuca, who specializes in studying how districts allocate funding once they receive it from the state, will analyze how states are making similar consolidations of noninstructional services. An initial sample shows that states such as Texas, Illinois, Michigan and Minnesota are pursuing service consolidation, usually with the stated intent of reducing spending.

Any states or districts looking to make such a move need to carefully evaluate their intended goals: saving money, improving service quality or a combination of the two.

“That’s the key to any policy initiative, setting the right expectations,” DeLuca said. “Policy makers should identify and articulate the goals of any policy initiatives designed to reduce spending or improve service quality through consolidation.”



KU in the news
"Hot diggety dog!" These were the words of KU alumnus Ronald Evans as he became the first Jayhawk in space. Evans served as the command module pilot of Apollo 17 in 1972, which was NASA's last mission to the Moon. Tags: KU Aerospace Engineering #KUtbt #KUleaders NASA - National Aeronautics and Space Administration

The flu vaccine clinic runs from 1-5 pm at the Watkins Health Center. http://t.co/P3kMOQ6fRd
Inside KU: Protein research, biodiesel fuel, and KU's Bioscience & Technology Business Center "Inside KU" takes a look at how the expanded Bioscience & Technology Business Center (http://bit.ly/1zzPvrw) brings a number of beneficial services to small start-ups, Fortune 500 companies, and everything in between. Also: A KU startup at the BTBC, KanPro, is producing proteins for research in medicine, biotechnology, and life sciences (See http://bit.ly/1DSY3s9). KU Innovation and Collaboration focuses on turning the university’s research into industry (See http://bit.ly/ZTOKZF). The "Feedstock to Tailpipe Initiative" grows algae to provide a sustainable source for biodiesel fuel (See http://bit.ly/1oPRovz). Undergraduate Research Awards allow students to explore their fields deeper (See http://bit.ly/KUcugr). **The Time Warner Cable Sports Network's "Inside KU" is hosted by Jeannie Hodes.**


One of 34 U.S. public institutions in the prestigious Association of American Universities
26 prestigious Rhodes Scholars — more than all other Kansas colleges combined
Nearly $290 million in financial aid annually
1 of 9 public universities with outstanding study abroad programs.
—U.S. News & World Report
46 nationally ranked graduate programs.
—U.S. News & World Report
Top 50 nationwide for size of library collection.
—ALA
$260.5 million in externally funded research expenditures
23rd nationwide for service to veterans —"Best for Vets," Military Times