School Planning & Management

JAN 2013

School Planning & Management is the information resource for professionals serving the K-12 education market. Covering facilities, security, technology and business.

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BUSINESS PRACTICES | RICHARD WEEKS, RSBA Managing Hysteresis THREE CORNERSTONES TO FISCAL STABILITY. T HE EFFECTS OF THE GREAT RECESSION OF 2007−2009 continue to challenge school business officials and other education leaders as they strive to prepare students for the global workforce. Economists have borrowed a word from chemistry to describe this state of affairs: hysteresis — the lingering effects of the past on the present. Today's school business officials (SBOs) are experiencing hysteresis on the revenue and expense sides as they prepare their upcoming budgets. Revenues are expected to be elusive and dysfunctional based on how states collect and distribute funds. SBOs are in a better position to manage hysteresis with respect to expenses. The key is to focus on three cornerstones: consolidation, technology and outsourcing. Consolidation Consolidation is one means to limit the loss of money. For example, if your district has multiple leases on fax machines, phone systems, photocopiers and technology hardware, consider working with vendors to consolidate leases and eliminate older equipment, opting instead for fewer leases on new equipment. The same applies to motor vehicles. Do you fully use all of those vans, cars or trucks? Are the older vehicles still being leased? Could you downsize and cost-share some vehicles with your municipality or county? Consolidating small schools with small enrollments into larger schools may also be a productive strategy. Many states are aggressively promoting school district regionalization through financial incentives. For example, some states will pay for most of the new, consolidated school buildings, administrative and maintenance centers, and athletic facilities. Technology Private-sector companies have discovered that improved use of technology allows them to reduce their workforce and thus their payroll. Although public schools are unlikely to replace many employees with technology, technology can reduce the amount of time necessary for employees to complete tasks, thus reducing the need for additional workers or paid overtime. The introduction of the tablet computer in 2010 is affecting district finances as well. Textbook publishers are beginning to discontinue expensive hardcover books and instead are offering the content as software downloads. For example, a district may pay a licensing fee of $10 per textbook download per tablet per academic year. Outsourcing Outsourcing is the assignment of specific work to a third party for a specified length of time with an agreed-on price for performance. School districts and businesses that successfully outsource services have two things in common: cost analysis and use of consultants. Districts begin the process with a thorough cost-benefit analysis to see if a third party can deliver services more effectively and more economically than public school employees. They frequently hire an independent consultant who can provide expert advice, assist in preparing requests for proposals for public bidding, review and recommend proposals for acceptance, and evaluate the work of the outsourcing vendor during the contract period. Busing, custodial and maintenance, and food service programs are commonly outsourced. A cost-benefit analysis for each of these areas will most likely show that labor costs can be reduced by transferring employee wages and benefits to the private vendor. The purchasing power of national companies makes the basic commodities of school buses, maintenance supplies, food, beverages and paper supplies more affordable. School districts should be able to realize more savings by reducing the need for middle management to supervise these ancillary services. Realize that some people may view outsourcing as an attack on your district's employees. Many states have statutes that require school districts interested in outsourcing to negotiate contract concessions with unions before the privatizing occurs. No matter how cost-effective your outsourcing proposal sounds, your constituents may find it not worth the grim prospect of laying off single-parent special-education paraprofessionals, senior citizen cafeteria workers and recently discharged Afghanistan War veteran bus drivers. Use your consultant as your spokesperson and direct the media and angry employees his or her way. New Outlooks With hysteresis at play, the past affects the present. Our prerecession ways of doing business are not sustainable today. Good luck with these cornerstones for bringing stability to your district. SPM — This article is excerpted with permission from the November 2012 issue of School Business Affairs, published by the Association of School Business Officials International — >> Richard Weeks, RSBA, is Business manager at Northeast Metro Tech Regional Vocational School in Wakefield, Mass., and past president of Massachusetts Association of School Business Officials. His email is JANUARY 2013 / SCHOOL PLANNING & MANAGEMENT 9

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