Fewer Administrators, More Teachers

TUSD Governing Board Member Mark Stegeman Teaching Students
Issues

A common perception about TUSD is that it is top-heavy with administration. This perception is true, by any reasonable measure that I can find. Here are some:

(1) TUSD’s last external audit, by Heinfeld Meech, shows that the number of central administrators grew by 22% over the last two years, while enrollment has been falling steadily. (The audit shows that enrollment fell 1.6% from 2012-13 to 2013-14 and another 1.8% in 2014-15.)

(2) The annual reports of the state Auditor General’s office show that the percentage of TUSD’s budget spent on pure administration increases slowly but steadily, every year. In the last year reported, 2014-15, it was 10.9%, as opposed to an average of about 8.5% in the other six large districts (those having 30,000+ students). The 10.9% does not include personnel such as counselors, librarians, academic coaches, etc. Reducing TUSD’s administrative percentage to the average of the other large districts would free about $11 million annually, which could be spent on instruction.

(3) The Auditor General’s office compares the efficiency of school districts in five different operational areas. In all five areas, the last report says that TUSD’s costs vary from “High” to (in most cases) “Very High.” This inefficiency extends beyond the 10.9% spent on pure administration. The result is that TUSD, for the past two years, has spent only 48.7% of its budget on Instruction (as defined by the state), while the other six large districts average almost 59%. That is a huge difference!

Scatter plot comparing the 2014-15 budget allocation of the seven largest districts.

TUSD has trouble accepting the reality of its budget allocation. It claimed last July that it had increased (state-defined) Instructional spending to more than half of its budget, but in March the state auditor general showed this was wrong: there had actually been no improvement. TUSD’s calculations were off by millions of dollars.

(4) TUSD’s organizational chart has about 60 administrative positions at “Director” level or above. In the much larger Mesa school district (the largest in Arizona), there are about 40 comparable positions. Many of TUSD’s administrative positions come with various assistant and secretarial positions attached.

(5) TUSD has commissioned two expensive management audits in recent years, receiving one in 2009 and the other in 2014. Both highlighted many areas of inefficiency (and some areas of efficiency), but TUSD has adopted very few of the recommendations in those audits.

TUSD has two disadvantages, relative to the other large districts, which make it harder to reduce administrative costs. One is the requirements of the court-ordered 2013 desegregation plan, which required a few new administrative positions (though these are paid entirely out of the desegregation budget). The second is that its schools are smaller than average, which means that TUSD pays a disproportionate number of principals.

Nonetheless, after closing 20 schools, in 2010 and 2013, neither of these explanations comes even close to explaining the huge gap in administrative costs between TUSD and Arizona’s other large school districts.

TUSD can do better

Can TUSD really do better? TUSD’s self-insured health plan, which was created under the Fagen administration, shows that the answer is yes. TUSD’s benefits consultant recently reported that, while most similar plans spend 13-15% of their revenues on administration, TUSD’s plan spends only 8%. In this area TUSD is not only matching the averages but beating them by a wide margin.

I have served on the Trust Board that has administered the self-insurance since its inception, and I personally recruited most of the members who have served on that board through most of that period. We have done a good job. The health plan has been able to keep administrative costs so low partly because the Trust Board has been (mostly) disconnected from Governing Board politics.

In April, 2015, the Governing Board made a major error by forcing the Trust Board’s chair off of the Board. The Governing Board did this by voting (3-2) to add a requirement that board members reside in TUSD. The chair, who lived just outside the district boundary, had been a major contributor to the health plan’s success.

Aside from preventing such meddling, changes in the Governing Board could help to bring such administrative efficiencies to the rest of TUSD.