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 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. 2

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. 5

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

Case Study – Custodial Staffing Metrics for custodial staffing per square foot identified inconsistencies throughout buildings 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 thousand sq ft per day 16

Case Study – Increase Class Size/FTE Reduction 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 Christine Smith