Size Matters

In the course of my career I have occasionally heard some unsavory “us versus them” talk.

  • Teachers versus non teachers
  • Certificated versus classified
  • Management versus non-management
  • School versus district
  • Parents versus school administration
Source: theemotionmachine.com

Source: theemotionmachine.com

Some discussions of the Local Control Funding Formula (LCFF) resort to this rhetoric, most notably the “school versus district” polarity.  I have previously mentioned the inflammatory video issued by fairshare4kids.org.  This plays on a perceived divide between the saintly school and demonic district.

We who have spent our professional lives at district offices rather than at school sites, generally go about our work as faithfully as we can and don’t get drawn into debates about this false dichotomy.  However, I feel obliged to provide you with a particular set of facts that you might find interesting.

A school district’s indirect cost rate measures the percentage of expenditures that are considered district overhead. Here’s data based on 2011-12 financial and attendance (ADA) reports.  ADA was used to weight the calculation based on size (which, yes, causes LA Unified to dominate the “largest twenty” results below).

  • Twenty largest school districts (547,488 to 33,576 ADA):  3.89% weighted average indirect cost rate (4.21% if LA Unified is excluded)
  • All districts in the range 10,000 to 30,000 ADA:  5.06% weighted average indirect cost rate
  • Twenty smallest school districts (5 to 15 ADA): 8.07% weighted average indirect cost rate

Most small school districts are single schools.  So let’s look at all districts of 500 ADA or less to view the likely administrative efficiency of single schools.  The result:  6.44%

Clearly there are economies of scale when one central administration operates a group of schools, and I feel I am belaboring the obvious.  Except I doubt that most members of the general public know how low school district overhead costs actually are. From a purely financial perspective, larger districts with (perceived) large central administrations actually provide a greater return on the taxpayers’ investment.  Even the much-reviled behemoth, LA Unified.

But wait!  I can hear the argument that it is about the kids, and that focusing on finances causes sub-optimal instructional decisions to be made (or something like that).  This is another false polarity:  instruction versus business.  I would urge you to think of financial health as the necessary foundation upon which sound instructional programs are built.  If we are not first going to ensure that a district remains a going concern, then let’s stop all that talk about running schools more like “a business”.

Post Script:  the highest and the lowest indirect cost rates are in that 500 ADA or less group (21.41% and 0.42%).  I would wager that the cause is incorrectly classifying expenses, rather than exceptionally high or low actual overhead costs.

Data Sourcewww.cde.ca.gov

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