The first Kansas school district  to complete an efficiency audit could save another $1 million a year even though it already spends less per pupil on non-instruction functions than similar districts.

But the audit isn’t all good news. Derby, USD260, is one of only four of the state’s 293 districts to ask for an audit by the Legislative Division of Post Audit (LPA). State officials refused to require the audits and districts’ ongoing lack of adherence to accounting standards limits the ability to draw meaningful comparisons..

The audit revealed Derby generally spends less per pupil than peer districts on non-instruction functions and a few additional efficiencies could save the district another $1 million dollars annually.

About $620,000 of that could come from switching to a traditional 48-minute per class schedule instead of the 96-minute block schedule at Derby High School. Derby requested the audit examine block scheduling. Filling classes to capacity could save at least another $200,000 a year.

Both changes would reduce the number of class sections and teachers, potentially saving at least $827,000 annually. The changes would have to be negotiated with the Derby teacher’s union and approved by the Derby Board of Education.

The contract requires that teachers have 55 minutes of planning time each day, but the current schedule provides 96 minutes daily. To cover the class schedule and additional planning time the district had to hire the equivalent of 13 additional teachers.

According to the LPA report the district’s 2010 budget includes more than $100,000 to “buy back” planning time from 11 teachers to get them to teach a sixth class. Some of the “bought” time includes excess planning time. “That means the district pays for some of those minutes twice — once as part of the teacher’s regular salary, and again to have them teach the extra class,” the LPA report says.

Overall Derby spends $2,153 per pupil on non-instructional spending. That’s less than the $2,404 peer average. But the district’s 18.7 non-instructional staff per 500 students is slightly more than the 18.2 peer district average.

According to the report, Derby chooses to cover more of its maintenance needs in-house, while many peer districts have fewer employees because they contract out more maintenance work.

LPA recommended lowering the ceiling in the Education Support Center.

The report said most instructional support staffing levels were reasonable, with the exception of library staffing. Derby spends about $32,000 more for a librarian than a librarian aide. The report suggests making librarians responsible for libraries at two elementary schools and hiring an aide for the second library. The change would save $160,000 each year.

By consolidating administrative offices into one building instead of two, the district could save $24,000 annually and receive about $300,000 from selling the vacated building, the report says.

USD260′s administrative offices should be moved to the Education Support Center and this building closed.

The audit also noted that Derby does not have a systematic approach to evaluating and managing efficiency. In the district’s response to the report Derby Supt. Craig Wilford thanked LPA for their work.  He said the district would begin discussions about changing from a block schedule “in light of the budget cuts that have been made at the state level.” Other districts using block scheduling have asked for information from the audit as well, Wilford said.

In a phone interview Tuesday Wilford said, “For the most part, we’re doing a pretty good job keeping track of where the money is being spent and looking at ways to enact efficiencies. Over the last few years we’ve made significant reductions to the budget and we’re always looking for ways to be more efficient and provide a quality education to our kids.”

Wilford said he thinks the Derby BOE will be very open to LPA’s recommendations and welcoming of the opportunities the audit affords.

The report includes a list of 25 “best practices for school district efficiency” Derby should or could implement. According to Brenda Heafey with LPA the “best practices” offer savings opportunities for all districts to explore.

In his official response to the report Wilford said the district would look into implementing an efficiency management process but noted, “while comparisons to other districts can be useful, reliance on these statistics can be misleading due to the differences on how each district reports their finances.”

That fact isn’t lost on the auditors at LPA. Recent LPA school audit reports, including one in 2005 and another in July of this year, noted that districts do not report some types of data consistently, making meaningful comparisons difficult. Problems include differences in the chart of accounts among districts and the ways district personnel categorize expenses.

Evaluation of school spending efficiency has been called for in legislation but elusive in practice. In 2005 the Legislature increased state funding for K-12 education and created the 2010 Commission to “conduct ongoing monitoring of the school district finance act.” Legislators directed the commission to “ensure that the Kansas system is efficient and effective.”

In 2008 the 2010 Commission asked LPA to analyze staffing and expenditure data reported to KSDE to determine where spending appeared to be out of line. The first phase released July 25 revealed significant differences in spending among peer districts and continuing deficiencies in accounting procedures that made comparisons difficult

LPA said reporting errors could be evaluated and corrected by completing the audit plan originally requested by the 2010 Commission. The second half of the audit was postponed in April and cancelled in June. Derby voluntarily chose to complete the audit.

Stephen Iliff, a certified public accountant and the only member of the 2010 Commission not connected to or retired from public schools or government, criticized ongoing accounting problems in public education. In dissenting minority reports for several 2010 Commission annual reports he said district accounting staff must be trained and held accountable so comparable information can be obtained. “Public school accounting practices would not be tolerated in the private sector.”

In a phone interview Wednesday, Iliff said, “Some districts don’t want standardized accounting. They’re going to have to get to it, and the more it reveals and the more it forces the issue the better. Those questions should be answered.”

In his dissent from the commission’s 2006 report Iliff wrote, “Legislators are continually being asked to provide more funds for education and do not understand where the money is going or how it is being used. This is like writing a blank check to the school system by the taxpayers.”

The report goes on to say, “At least 6 out of 12 duties given to the 2010 Commission include words like determine, evaluate, monitor, review and ensure the Kansas system is efficient and effective. All of these words and duties are meaningless without a system that will capture information in a comprehensive, methodical, orderly and consistent fashion.”

So far only four of the state’s 293 districts have requested the voluntary LPA audits.

• Derby (completed) full audit report here (pdf)
• Ellinwood (in progress, should be ready in late January or early February)
• Renwick (scheduled to begin following Ellinwood)
• Winfield (scheduled to begin in March)

Other LPA school audits in process:

• School district reorganization (should be ready in late January)
• District health insurance (should be ready in March)

Other KansasWatchdog reports

http://kansas.watchdog.org/2009/08/02/minority-report-majority-opinion/

http://kansas.watchdog.org/2009/07/23/lack-of-data-oversight-raises-questions-on-school-spending/