Ten ways to get control of costs, with examples from North Carolina school systems.
Throughout the country, tight budgets have public schools scrambling for savings. Many schools are learning to do more with less. Some schools are eliminating sports and music programs. Other schools have more serious situations. In Kalkaska, Michigan, the school year was shortened to seven months in 1993, so summer vacation began a couple of months early. One Illinois school district decided that its best alternative was to close down and disband.(1)
North Carolina schools are in better financial condition than many in the country, but they are under pressure to improve the quality of education while holding the line on expenses. One large school district in North Carolina has been experiencing enrollment growth of 5 percent to 10 percent for several years with no increase in county appropriations. That district is trying to reduce expenses by about $7 million to balance its budget.
Frequently, not-for-profit organizations reduce costs by reducing services or eliminating programs. While this approach may be appropriate in some circumstances, the practical or political realities of public school management may make this infeasible. An alternative is to develop and implement a rigorous program of cost control.
The North Carolina State Board of Education sponsors a training program designed to teach school business officials how to analyze and control costs. The training program was developed by the authors at the Belk College of Business Administration at the University of North Carolina at Charlotte. This article, based on the training program and the authors' research, suggests a number of ways to look for cost savings in the management of the school enterprise and a number of steps for effective cost control.
Ten Ways to Control Costs
Cost control in public schools begins with an understanding that schools are in the business of providing products and services to the public. Like business enterprises, schools must deliver high quality products and services efficiently to be effective. In recent times, citizen watchgroups and legislators have demanded that school systems develop a business orientation toward the management of costs and, like empowered stockholders and outside directors in the private sector, have required greater management accountability.
An effective cost control program requires planning and a continuing commitment to cost management. The sections that follow describe 10 suggestions for controlling costs. Brainstorming and enlisting creative suggestions from administrators and school personnel can facilitate the development of additional cost control practices.
Maximize Benefits from Current Costs. In some areas of school enterprise, the key to controlling costs is to get more valuable services from current expenditures. For example, unnecessary costs are incurred when employees are not properly trained, have a poor understanding of their job description or receive inadequate supervision. Poor-quality work, missed deadlines, rework and other poor performance outcomes frequently result in the addition of unnecessary personnel and high turnover rates. A new employee who has not received proper orientation and training can be more costly than not having the employee at all. To control costs, therefore, managers can remove barriers to effective employee performance through proper training, by maintaining equipment in good working order and by providing a comfortable work environment that encourages high performance.
Additional value from expenditures can be realized when facilities and equipment are fully utilized. An example is the use of multiple routes for school buses. Through creative scheduling, a school system in North Carolina operates 2,800 bus routes with only 785 buses. Another unit not only achieves multiple routes per bus through staggered starting times but also provides additional routes involving midday transfers from high schools to locations offering special programs. …