1

Schools getting creative to save cash

April 3, 2007

BY LORI HIGGINS

FREE PRESS EDUCATION WRITER

http://www.freep.com/apps/pbcs.dll/article?AID=/20070403/NEWS05/704030312/1001

2

To save money … • To save money, Oakland County school districts are

studying teaming up on bus service.• In Macomb County, school districts could create a county-

wide pool of substitute teachers.• And in Garden City, the same people could be employed

by the schools and the city to fix their computers. If the internal pressure from skyrocketing costs for big-ticket items such as health care and retirement weren't enough, a nudge from the governor's office is leading school districts to find ways to coordinate, share and consolidate services with each other to save money.

• In many ways, districts have been doing this for years. Schools often band together -- with the help of intermediate school districts -- to make major purchases, provide training and schedule bus routes.

3

Teaming up to save• Sometimes, saving money is a matter of joining together with

other districts.• On March 1, Trenton Public Schools and two other districts

Downriver began contracting on their substitute teaching services with Professional Educational Services Group of Caledonia. The move is expected to save Trenton about $30,000 this school year.

• "We've had to cut well over a million from our budget each year," Superintendent John Savel said. "This is one way we can save a substantial amount of money and not have to directly impact kids and programs."

• Garden City Public Schools and Garden City officials have had discussions about how to work together and save money. They've discussed everything from garbage pickup, snowplowing, grass cutting, and even merging their information technology departments.

4

Oakland County

• In Oakland County, a committee is looking at ways to consolidate bus transportation, Moore said.

• Already, 15 districts are finding that by removing boundaries, they can operate transportation for special education buses -- which take students to programs throughout the county -- in the most efficient way. And, they've saved more than $1 million each year for each district.

• The plan -- which uses Oakland Schools' bus routing software to determine how students are picked up and dropped off -- eliminates some bus routes and keeps buses closer to capacity. Fewer buses means less money spent.

• The question now is "whether we can extend that model more broadly across the county," Moore said.

5

Nothing too radical

• Districts are unlikely to take drastic steps, some of which may save much larger sums of money -- such as consolidating districts or sharing a superintendent.

• Michigan has far fewer school districts now -- with 552 -- than it did in 1904, when there were 579 traditional K-12 districts and another 6,688 non-K-12 districts.

• The last attempt at consolidating districts failed in 2001, when voters rejected a ballot initiative that would have merged the three districts located in St. Clair Shores in Macomb County. And while a growing number of districts have considered sharing their top leader, there are few examples of it happening.

6

The Economics• There’s nothing

automatic about certain activities getting to efficient scales.

• If there are fixed costs to getting activities running, you would get a U-shaped average cost curve.

$

Size of activity, S

AC

S1 = S2

• If you could consolidate activities to S1 + S2, you get lower average cost.

S1 +S2

AC1

AC2

7

Most Efficient Scale• Most efficient scale is at

minimum average cost, at point S*

$

Size of activity, S

AC

S1 = S2

• Suppose that this requires much larger transportation costs (which may not be in the budget). This would suggest that you have more locations, closer to people, that suggested by pure cost minimization.

S1 +S2

AC1

AC2

S*

AC*