Office of Performance Evaluations

School District Administration and Oversight

Released January 2004
Report 04-03

Full report (PDF)

The executive summary of the report is provided below. The full report with exhibits is available in PDF (see above), and a limited number of printed copies are available from the Office of Performance Evaluations (OPE). Specific questions about the report should be directed to OPE. Any general questions need to be directed to the Department of Education.

Executive Summary

At the end of 2003 legislative session, the Joint Legislative Oversight Committee directed the Office of Performance Evaluations to look at the administration of Idaho school districts. The study was requested by legislative leadership and other legislators, who had been facing a serious budget crisis and were looking for ways to contain costs. Their focus on school districts stemmed from the fact that almost half of all state general fund monies, more than $900 million per year, are used to support public schools.

To gain a statewide understanding of school district administration, we visited 11 school districts: Basin, Boise, Grangeville, Lake Pend Oreille, Lewiston, Meridian, Moscow, Murtaugh, Preston, Wallace, and Wilder. These districts varied in enrollment, geographical location, expenditure levels, and other administrative characteristics. This evaluation focuses on four key areas pertinent to district administration: administrative staffing and salaries, state oversight, purchasing and contracting, and health insurance benefits.

Administrative Staff Grew More Than Instructional Staff in the Past Five Years . . .

School district administrative staffing costs are considerable, with reported salaries of $134.3 million in fiscal year 2003. For the purposes of our review, administrative staffing was broadly defined, including more than just certified administrators. We also included administrative support staff and staff that administer specific activities or programs, such as business managers and transportation supervisors.

As shown in Exhibit A, the number of administrative staff has grown more than student enrollment in the past five years. Between fiscal years 1999 and 2003, full-time equivalent administrative positions increased 8.7 percent, while statewide enrollment increased just 1.6 percent. Administrative staffing has also grown faster than the number of teachers and other non-administrative staff, which grew 3.4 and 4.9 percent, respectively, over the five-year period. While the overall number of administrative staff has grown significantly, it is worth noting that 43 districts reduced the number of administrative staff they employed during this period.

. . . And Administrative Staff Grew More at District Offices Than at Schools

As shown in Exhibit B, growth in school district administrative staffing was greatest in district offices. Between fiscal years 1999 and 2003, the number of district administration statewide increased 8.4 percent while the number of school administrators (principals and assistant principals) increased just 3.1 percent. During this same period, the number of support staff in district offices increased 21.6 percent and school support staff increased 8.5 percent.

Much of the increase in staffing at district offices was attributable to growth in computer technology staff, which increased 123.8 percent during the five-year period. The number of staff classified as business managers/district clerks increased 58.5 percent.

Better Reporting of District Administrative Staffing Information Is Needed

Statewide, administrators and administrative support staff collectively made up 12.8 percent of total district staffing. However, administrative staffing levels varied greatly from district to district. Larger districts averaged about one administrative position for every 100 students, while smaller districts averaged about one administrative position for every 20 students in fiscal year 2003. Salaries for administrative staff also varied between districts.

Administrative staffing levels are influenced by many factors including student enrollment and the number of schools in the district. Local funding and district choices also contribute to staffing differences. Some of the districts visited had taken steps to reduce the number of administrative staff or were involved in cooperative programs to minimize staffing and expand program opportunities for students.

The State Department of Education collects detailed staffing information from districts. However, department reports summarizing this information are insufficient for accountability purposes. The reports do not clearly identify the total number of full-time equivalent positions devoted to administration, or the percent of all district positions that are administrative in nature. Further, staffing reports do not provide information needed to compare administrative staffing levels among districts. Without this type of information, it is difficult for policymakers and the public to assess whether school districts are making appropriate use of public monies when making staffing choices.

State Oversight Is Insufficient to Ensure Fiscal Accountability

Idaho statutes give local school boards primary responsibility for district oversight. However, by statute, the state must ensure that districts are accountable for their use of public monies.

Districts can demonstrate that they are accountable for the public monies they receive by showing that (1) resources are managed properly and used in compliance with laws and regulations; (2) programs are achieving their objectives and desired outcomes; and (3) services are being provided efficiently, economically, and effectively.

One way the state can hold districts accountable is by requiring regular submission of revenue and expenditure information. Statutes require annual reporting of district financial information, and charge the State Department of Education with ensuring its accuracy and uniformity.¹

Our review of Idaho's fiscal data collection and reporting systems identified three problem areas:

• The financial information collected from districts is a valuable resource to policymakers and others interested in reviewing district financial performance. However, we identified a number of inconsistencies in district coding of expenditures that limit the usefulness of this information.
• The state's review of annual district audits is limited, and changes are needed to ensure these audits include a review of data districts submit to the department. Having audit firms review revenue and expenditure coding, enrollment and staffing information, and pupil transportation data districts submit to the department can help ensure the information the department receives is uniform and accurate. Accurate information is important because (1) it is used to determine funding districts receive; and (2) it can be used to hold districts accountable for their use of public monies.
• Reports and other information produced by the department to summarize district financial data are of limited value to lawmakers and others seeking to understand how district revenues and expenditures compare and assess whether districts are operating efficiently.

Better Purchasing and Contracting Procedures Are Needed

Districts spent more than $414 million to purchase routine supplies and services, acquire capital equipment, and pay for facilities construction and maintenance projects in fiscal year 2002. Sound purchasing practices are needed to ensure districts are using their fiscal resources efficiently and appropriately.

There are weaknesses in the purchasing practices in many of the 11 districts visited. Unlike state agencies, city and county governments, and highway districts, school districts are not required to seek price quotes for purchases between $5,000 and the formal bid threshold of $25,000. As a result, most districts did not have a process requiring staff to shop for the best price when making purchases in this range. In addition, staff in some districts did not consistently obtain required approvals before making purchases. Failure to obtain approvals and price quotes increases the risk of unauthorized purchases and decreases the likelihood that efficient purchasing practices are used.

While some districts are making the use of statewide purchasing contracts or participating in purchasing cooperatives, these efforts can be further expanded to help minimize district purchasing costs. Use of statewide contracts established by the Department of Administration's Division of Purchasing can help districts keep costs down. However, according to division officials, only about one-third of districts have entered into agreements authorizing them to use statewide contracts. In addition, although many districts have recently begun participating in food services purchasing cooperatives and some districts use the Idaho School District Council for selected purchases, cooperative purchasing efforts could be expanded to help control purchasing costs. Online purchasing options and expanded training of district purchasing staff may also help achieve purchasing efficiencies.

Establishing a Statewide Health Plan for School Districts Would Require Additional Study

Employee benefit costs are a significant and growing portion of district day-to-day expenditures. Like other public and private sector employers, districts are facing rapidly growing health insurance costs. Officials in the districts visited reported annual health insurance costs increases ranging from 8 percent to more than 40 percent.

Because districts and teacher associations generally negotiate employee benefits at the local level, health plan benefits and premium costs varied among districts. To help control costs, many districts have participated in an insurance pool operated by the Idaho School District Council. However, offering multiple plans to districts may offset benefits of participating in a pool. Although a statewide pool of all districts, with a limited number of plan options could potentially help contain health insurance costs, further study would be needed to address differing district needs and financial capabilities.

Recommendations

To address our evaluation findings about state oversight, administrative staffing, purchasing and contracting, and health insurance benefits, we make ten recommendations to the State Department of Education, the State Board of Education, and Idaho State Legislature. Implementation of these recommendations will allow the state to have better accountability of school district use of public monies, improve the cost-effectiveness of district purchasing and contracting, and help limit growth in the costs for district health insurance benefits.

1. To improve the uniformity and accuracy of fiscal data collected and reported by school districts, the State Department of Education should
• modify the Idaho Financial Accounting Reporting Management System (IFARMS) chart of accounts to eliminate unneeded detail and clarify the definitions for selected programs and object codes;
• expand training offered to district staff responsible for coding and reporting district expenditures; and
• review the data submitted by districts to identify instances of non-reporting and possible coding problems.
2. To enhance the value of annual school district financial audits as a tool for state oversight, the State Department of Education should
• direct districts to (1) include in their annual financial audits a review of district revenue and expenditure coding and the accuracy of district enrollment, staffing, and pupil transportation data; and (2) report the results of this review to the department;
• provide guidance and training to audit firms that conduct district financial audits regarding the standards to be used when assessing district coding of revenues and expenditures and the accuracy of district enrollment, staffing, and pupil transportation data; and
• establish a process for annual review of a small sample of district financial audits to assess the adequacy of work performed by audit firms to test the accuracy of data districts report to the department. The department should consult with Legislative Audits when developing the review process.
3. To improve the usefulness of annual school district financial information, the State Department of Education should
• provide more comparative information about district revenues and expenditures overall and in the major functional areas such as instruction, administration, and pupil transportation;
• provide information about how district revenues and expenditures compare to the nation and neighboring states;
• provide information about revenue and expenditure patterns over time;
• publish a narrative summary to help readers better understand key information and trends; and
• make revenue and expenditure information available on the department's website in ways that enable users to make comparisons between districts.
4. To ensure that adequate administrative staffing information for school districts is available for review by policymakers and the public, the State Department of Education should
• improve reporting about administrative staffing in districts by identifying the number and type of administrative staff in each district, the ratio of students to administrative staff, and changes in administrative staffing over time;
• require districts to provide information regarding the duties of staff in director, coordinator, and supervisor positions; and
• make staffing information available on the department's website in easily accessible formats.
5. To ensure school districts obtain a fair price for their purchases and only spend the amount of funds necessary
• the Legislature should consider requiring districts to seek price quotes for purchases between $5,000 and the formal bid threshold, as is currently required of state agencies and local governments. Requiring districts to document these quotations and testing a sample of these purchases in annual financial audits will help to ensure the requirement is implemented;
• the State Board of Education should consult with the State Division of Purchasing to develop requirements similar to those that call for the solicitation of formal bids when state agencies purchase services exceeding $50,000.
6. To ensure school districts have adequate purchasing procedures in place and that purchases are being appropriately reviewed and authorized, the State Department of Education should direct school districts to include a purchasing compliance review in their annual financial audits.
7. To ensure school districts can take advantage of statewide purchasing contracts available from the State Division of Purchasing
• the Legislature should consider giving specific statutory authority to districts for the use of statewide contracts to eliminate the need for an agreement with the Division of Purchasing;
• the State Department of Education should advise districts of the availability of statewide purchasing contracts during any annual training or communications;
• the State Department of Education should provide district contact information to the State Division of Purchasing so that districts will be included on the division's listserv. This listserv periodically provides information about statewide contracts to public agencies that may be able to use them.
8. To potentially achieve cost savings and to foster communication among individual school districts regarding purchasing, the State Department of Education should
• work with districts and any pertinent associations to determine the opportunities for any favorable purchasing cooperatives;
• explore opportunities to use the Internet for district purchasing activities; and
• encourage district staff to attend the State Division of Purchasing's training annually to learn about best practices.
9. To ensure school district interests are protected when procuring services, the State Department of Education should work with the State Division of Purchasing to provide guidance to school districts on the requirements and the necessary components of written contracts.
10. To address the rising costs of health insurance, the Legislature could consider authorizing further study of the potential cost savings of a statewide health insurance plan for school districts.

Acknowledgments

We appreciate the cooperation of the districts, the State Department of Education, and the State Board of Education in conducting this study. In particular, we appreciate the assistance of department staff members Tim Hill, Myrna Holgate, and Julie Oberle. We thank Ray Ineck of Legislative Audits, Jason Hancock of legislative Budget and Policy Analysis, and Jeff Shinn of the State Board of Education for providing technical assistance.

We also appreciate the input from the Department of Administration's Purchasing and Insurance Management Divisions, the Department of Insurance, the Idaho School District Council, the Idaho Association of School Administrators, the Idaho Education Association, and the Idaho School Boards Association. We thank legislative leadership, the Joint Legislative Oversight Committee, the Senate and House Education Committees, individual legislators, and the Office of the Governor for providing feedback that helped develop the scope of the study.

Chris Shoop (project lead), Ned Parrish, Brook Smith, and Jim Henderson of the Office of Performance Evaluations conducted the study, with additional assistance from three consultants: (1) the National Conference of State Legislatures' National Center on Education Finance; (2) Bob Thomas of Robert C. Thomas and Associates (Mr. Thomas is also Principal Management Auditor at the King County Auditor's Office in Seattle, Washington); and (3) Maria D. Whitsett, Ph.D., Executive Director of Accountability at the Austin Independent School District in Austin, Texas.

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¹ Idaho Code §§ 33-781 and 33-120.