Primer, December 2009
December 2009 Volume 4, Number 10
Editor’s note: At a time when everyone must find ways do more with less, one Ohio county has launched a pilot project aimed at helping school districts across the state make better use of their resources. The Greene County Schools Shared Service Delivery Initiative hopes to build on efforts in Ohio and nationally to identify how districts can best partner to harness buying power and economies of scale. This initiative, supported by KnowledgeWorks as well as other foundations and initiated by the governor’s office in October, holds the potential to ease budget strain on small districts while maintaining local control. Project Manager Jane Dockery explains how the initiative is different from some shared service delivery approaches and what it hopes to achieve.
Exploring ways districts can share services and remain independent
By Jane Dockery
Greene County Schools Shared Service Delivery Initiative
School districts across the country are struggling to maintain adequate funding levels to meet their students’ educational needs. Yet in most states, at least 40 percent of every dollar spent on education never makes it into the classroom. Instead it is expended on business operations: transportation, food services, information technology, building maintenance, administration and other largely support functions.[1] That makes pursuing the most cost-effective approach to obtaining these services an important strategy for any district. Small districts have less power to negotiate prices and contract terms, so this challenge can be especially difficult.
Shared service delivery (SSD), under which districts come together to purchase support services, makes it possible to direct more resources toward educating students regardless of districts’ size, giving small districts the economies of scale and buying power of a large district.[2] The Greene County Schools Shared Service Delivery is about making a grassroots effort to inventory existing shared service delivery examples in Greene County, Ohio, and US school districts and to uncover new possibilities for Greene County. Our initiative actually goes beyond a focus on non-instructional services by including Advanced Placement instruction and other curriculum areas/programs.
In so doing, Greene County school districts will identify the policies and protocols that challenge districts’ pursuit of more shared service delivery. The intent is to define models of sharing services and assess the fiscal impacts – cost reductions and the elimination of unwarranted duplicate expenses – to inform a statewide strategy.
A grassroots approach
While other states have and are making shared service delivery a priority education focus, the more typical approach is top down rather than taking a grassroots approach, as is being done here. This initiative values a grassroots approach. For example, school districts will identify the best opportunities and then request state assistance, whether policy, programmatic or otherwise, to enable access to that opportunity. This approach honors work “on the ground” and allows that work to shape the response from the state.
Gov. Ted Strickland selected Greene County for this initiative because Greene County is known for its ability to establish successful partnerships to address tough challenges and because Greene County has diverse school districts, making it an ideal site for this effort.
Districts’ participation in new possibilities should be based on self interest. The project is pursuing benefits that accrue from aggregated economies of scale or scope, the ability to negotiate from a larger base, and the adoption of streamlined, common business processes. Three examples help elucidate these benefits.
Economies of scale—the Stark County Ohio Educational Service Center hired a visiting teacher from China, who was also working for a local school district, to teach Chinese I and II to students in five local school districts impacting 22 students. SSD is a powerful way to increase access to a much greater range of courses than any small district can afford to offer by itself.
Negotiating from a larger base—In New Jersey, 23 county boards of education issued a joint request for proposals for commercial banking services. They negotiated an interest rate based on the collection of all accounts. The result? Additional revenues of $1 million in one year. It was not a pooled investment; each district’s money was kept separate.
Streamlined, common business processes—A cooperative effort to purchase electricity for public buildings among New Jersey school districts, municipalities, the county and local authorities resulted in savings on electricity of 5% in one year.
Due to the governor’s interest in this grassroots effort, Greene County School Districts can have an impactful role in shaping new policy being produced by Ohio Department of Education and will have a direct line to informing the state about what enables and what prevents partnering.
Powerful messages will also be communicated to the public about Greene County School Districts’ efforts to lower costs while maintaining and, in some cases, enhancing quality. The credibility added by the support of our sponsors—KnowledgeWorks, Morgan Family, YSI Incorporated, and Wright State University foundations—and the fact that no public dollars are funding this effort pave the way for public recognition of district efforts.
How the initiative is structured
The project is organized into committees and task forces. The advisory committee represents those directly or indirectly impacted by the project at the grassroots level. It is composed of local school board members, superintendents and treasurers, along with active and retired Greene County community education management leaders. Its roles are to meet quarterly to:
- Provide a framework for helping task forces make decisions, answering the question, “What is a promising or good shared practice?”
- Give guidance and feedback to task forces as they develop and present ideas.
- Make final recommendations pertaining to the most viable types of shared service delivery practices.
Task forces have been established to identify best shared service strategies for each of the six topics below. Guest speakers participate in task force webinars to open up the discussion to the possibilities.
- Advanced Placement instruction and other curriculum areas/programs
- Administrative and financial services
- Information technology
- Contracted services and agreements
- Special Education instruction and programs
- Transportation
Task force members are key informants and specialists from each of the school districts and other community stakeholders. The task force role is to:
- Brainstorm shared service delivery opportunities.
- Review best practices in other states, and critique those models and their components for applicability in Ohio and Greene County.
- Discuss the historic and current barriers to sharing particular services.
- Make progress reports to the advisory committee.
- Assess the potential financial savings of particular services.
- Use a rubric provided by the advisory committee to evaluate, select and report best ideas.
A sustainability panel of experts will be convened to consider how to create a culture of shared service delivery. Such a culture must define the mechanism for continuously identifying, evaluating and implementing new shared service ideas, and determine the kind of policies and pacts needed to sustain new ideas that are implemented. An evolving role for Educational Service Centers is a likely host for these efforts, given they have historically functioned as the regional or county nexus, on the condition that governance enhancements and management incentives/expectations can be attained.
Project management is performed by Wright State University’s Center for Urban and Public Affairs. That unit facilitates online meetings so that task force members don’t have to travel to meetings, provides meeting summaries, conducts other management and administrative tasks, collects and uses financial data to calculate potential cost savings of various shared service strategies, and provides research support and promising practices from elsewhere in Ohio or other states.
The process management committee’s role is solely to provide guidance to the project manager about process possibilities and has no authority about content, outcomes or decisions.
Our goals
The goal and “success hurdle” for the initiative is to identify cost savings of, minimally, 5% over time that will begin showing significant results in the 2010-2011 school year budgets of each participating Greene County school district.
This desired outcome is challenging for many reasons. One, school districts and consortia that serve them are already doing so much to share services; we’ll have to dig deep. Two, the bulk of any labor-intensive industry lies in personnel costs; identifying savings here is a real challenge as is identifying substantial savings in non-instructional services. On the other hand, residents of communities will be interested in schools’ efforts to save taxpayer money on every front.
Another important task of this initiative is to bring the powerful tool of activity-based accounting, including the approach to fixed cost allocation, to bear. The intent is to collect financial data from schools that will allow comparative dollarization of services by comprehensive high schools, the Educational Service Center, and the Career Center.
Lesson for other areas
The project’s aim is to preserve the advantages of local political and management independence for each local K-12 district by implementing alternative service delivery approaches that increase self-sufficiency and save scarce taxpayer dollars. The initiative is:
- uncovering promising practices occurring in pockets within the state as well as broadly and spottily in other states. The project will share those findings.
- developing new shared service delivery options that will be accompanied by good financial analysis, so potential cost savings information can be shared.
- documenting methods that work best to engage school districts, the consortia that support them and the broad community.
- designing a mechanism for driving a shared service delivery culture.
[1] Driving More Money into the Classroom: The Promise of Shared Services, Deloitte Research, a part of Deloitte Services LP, and the Reason Foundation, 2005
[2] Ibid
About the Author
Jane Dockery is project manager for the Greene County Schools Shared Service Delivery Initiative and associate director of the Center for Urban and Public Affairs at Wright State University. For more information about the project, contact Dockery at 937-775-2941 or jane.dockery@wright.edu.