Transcript Using Metrics to Drive Efficiency
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
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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 3
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 6
What metrics are relevant?
• Within each major function drill down into the associated drivers for costs – Support Services – Operations and Maintenance • 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 7
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 8
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 9
What metrics are relevant?
• Within each major function drill down into the associated drivers for costs – Support Services – Administrative Services • 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 10
What Metrics are Relevant?
• Within each major function drill down into the associated drivers for costs – Instructional Services • 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 11
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 12
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 13
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 – Operational improvements – Functional analysis – Eliminate non-core programs/services – Shared services – Outsourcing of non-core functions 14
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 15
Building A Building B Building C Building D
BUILDING Case Study – Custodial Staffing FTE Allocation
6.00 1.50 4.00 1.50
Salary and Benefit Costs - Non Overtime
418,941.00
105,680.00
255,934.00
98,031.00
Overtime Salary and Benefit Costs
17,177.00
2,747.00
7,733.00
11,830.00
Student Enrollment
459.00
232.00
351.00
160.00
Number of Classrooms Utilized
24.00
10.00
15.00
6.00
Building Square Footage
112,820.00
25,013.00
33,010.00
32,209.00
Total FTE per Square Foot
18,803.33
16,675.00
8,253.00
21,473.00
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
Total District Staffing Costs
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13.00
878,586.00
throughout buildings
39,487.00
1,202.00
55.00
203,052.00
15,619.00
764.00
16,692.00
Metrics for custodial staffing per square foot identified inconsistencies
5.00
• 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 16
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Case Study – Increase Class Size/FTE Reduction Current Allocation
Total Sections Total Students Average Class Size
Kinder garten Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Total
45 41 37 35 35 38 231 941 20.9
825 20.1
813 22.0
768 21.9
800 22.9
845 22.2
4992 21.61
Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5
Reduce 1 section 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 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
Change
6 0.6
12 1.2
18 1.8
24 2.5
30 3.2
Entry Level Salary/Beneifts Costs Per FTE
$ $ $ $ 36,792 36,792 36,792 36,792 $ 36,792
Estimated Savings
$ 220,752 $ $ $ $ 441,504 662,256 883,008 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 17
Factors to Consider When Modifying Service Delivery
• • • • • • • • • 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 18
Questions?
Presenter contact information: Nick Cavaliere [email protected]
630-645-6244 Christine Smith [email protected]
608-240-2391 19