In the recent Board of Education meeting in which the budget was passed, the following exchange occurred:
Board member Steven Lee: Almost every one of the central office departments has an increase yet we are decreasing services at the bottom line. I have very serious concerns in regard to where it is.
Superintendent Davis: The data say that the progress of moving more money to the school-house is being made.
CFO Burbridge: There are several technical reasons why expenses are higher in certain central offices than in the FY14 budget.
First, let’s take a look at administrative spending, how it is changing as a percent of total spending and see if these statements are supported by the numbers.
In the chart above (click to enlarge), you can see that the combined Central Office School Administration and General Administration costs have gone up – both when comparing FY15 to FY14 and for the last two years. This component of spending is up $9.2 million as compared to FY14 and $18.0 million as compared to FY13.
It is also interesting to note that the Direct Instruction and Student Services expenditures are also up by $17.5 million over two years – but notice that this is less than the increase for administrative functions.
As CFO Burbridge notes, there are some technical reasons why spending in these two categories of administrative functions are up as compared to FY14, but the technical reasons do not explain a substantial part of the total difference.
And the technical reasons fly out the door when comparing FY15 to FY13. So maybe there is another way to justify the increasing cost of the administrative functions.
Below is a chart that presents each major category of spending as a percent of total adjusted spending. Please note that I am using the “Total expenditures before other items” as the denominator in the calculation as the other items below this line are not relevant to the assessment (see Note at end of post for further discussion of why this is the case).
This chart (click to enlarge) does nothing to support the administration’s contentions either. As a percentage of the total spending (as adjusted) the administrative functions have steadily increased over the three-year period, going from 11.3% in FY13 to 13.9% in FY15. That is a 2.6% increase in the share of expenditures gobbled up by the administrative function in just two years.
And where did the administrative function increases come from? You guessed it – primarily from both Direct Instruction which, as a percent of spending, is down 2.0%, and Professional Development which is down 0.3% over the last two years.
So let’s keep looking and see if we can find anything in addition to “technical reasons”. Is it possible that staffing changes might have had an effect on the increasing cost of administrative functions?
Well, well, well – the number of teaching positions in Direct instruction are down 197 over two years, but the number of administrators is up by 17 during the same period.
While I agree that there are certain technical reasons the cost of the administrative functions are going up, there are also certain key expenditure increases that also contribute to the increase that were not mentioned. Staffing increases is one – and the relationship between the increases in administrative staff as compared to decreases in Direct Instruction staff – is a very disturbing trend that has now persisted for some time. In addition, there are other substantive reasons why administrative expenditures are going up – and here are the changes:
- Information Technology – $4.7 million of the increase is related to incremental Professional Services and Supplies & Materials.
- Legal – a $704 thousand two-year increase in Professional Services (this in addition to the two staff attorneys added).
- Human Resources – up $3.6 million over two years – a substantial portion of which was approved for Project Thrive. However, much of this increase was related to the transfer of staff (and related cost) from Central Office School Administration.
- Central Office School Administration – remember those savings from transferring staff to HR that were just mentioned. The “savings” did not happen. The transfers to HR were made, but then the positions were replaced within the group. Total change in staffing for this group – up one over last year – up at least four in two years – and these numbers are net of any transfers.
While the administration focused on the technical changes, there were also additional – and substantial – reasons for the ever-increasing cost of administrative functions in APS.
Board member Jason Esteves may have summed it up best when he commented on the budget prior to its approval (Esteves voted no),
We should not expect the community to accept large class sizes and limited academic programs if this BOE and administration is not making the central office more efficient.
The full Board is looking forward to working with the new superintendent to amend the budget. Hopefully some of the disturbing trends noted above will be reversed and the focus of an amended budget will be on educational priorities and not on funding the ever-growing ‘administrative beast’.
Note – in the expenditures as a percent of the total chart above, the denominator excludes certain costs that are not allocated to departments including Vacancy Management in FY15 and the Salary Increase. Both of these are likely to be allocated across multiple categories and the result would likely be immaterial to the assessment. I have also excluded the Pension Liability Payment as most of this is a past cost and requires limited, if any, administrative costs to manage this. Also, I have excluded the Charter School funding as the administrative cost of managing these is generally covered by the 2% fee assessment which, along with the administrative costs, is accounted for in Special Revenues.
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