Using Metrics to Drive Efficiency Moderator Ali Mehanti

Using Metrics to Drive Efficiency Moderator: Ali Mehanti. Business Manager, J. Sterling Morton High School District 201 Presented by: Christine Smith, Principal, Baker Tilly Virchow Krause LLP Nick Cavaliere CPA, CFE, Manager, Baker Tilly Virchow Krause LLP

Metrics and Benchmarking • What are Metrics? – A process of aggregating information that drives a specific output and associated costs. – A way of measuring performance, service delivery, and a broad array of other relevant factors. – Benchmarking is the process of comparing metrics across organizations. 2

Common Metrics in IL Public Schools High Level Financial Metrics Applied to All K-12 Districts • Financial Profile Score – AFR – Fund Balance to Revenue Ratio – Expenditures to Revenue Ratio – Days of Cash on Hand • Operating Expense Per Pupil (OEPP) - AFR • Per Capita Tuition Charge (PCTC) - AFR 3

Why the Need for Efficiency? Limited State funding Increased mandates Increased expectations relative to achievement Limited ability to generate additional revenue sources • Rising health insurance and pension costs • • 4

How do you know you are cost efficient? • You will need to create metrics for specific functional areas the data may identify areas that appear out of balance. • Compare District metrics to industry standards or similar sized Districts to determine if efficiencies can be gained. • Create specific benchmarks for various metrics that are achievable and continuously monitor performance results. 5

What Metrics are Relevant? • Identify key functions within the District and identify areas for additional analysis. – Instructional Services – Support Services • Operations and Maintenance Services • Transportation Services • Administrative Services – Payments to Other Districts & Governments • Tuition 6

What metrics are relevant? • Within each major function drill down into the associated drivers for costs – Support Services – Operations and Maintenance • • • Square foot maintained per full time equivalent Utility costs per square foot of building Capital outlay costs per square foot % of Benefits paid by employer Supply costs per square foot Supply costs per student 7

What Metrics are Relevant? • Within each major function drill down into the associated drivers for costs – Payments to other Districts & Governments - Tuition Cost per student serviced Types of programs outsourced and associated enrollment Costs of program outsourced per student Per major program outsourced identify total hours of specialized services purchased • Total student enrollment/number of students attending outsourced programs • • 8

What metrics are relevant? • Within each major function drill down into the associated drivers for costs – Support Services – Transportation • Fleet management costs per mile – Purchased Services – Supplies – Capital Outlay • Students transported per bus route • Special education transportation costs per student • Transportation Fees charged for after school programs compared to costs incurred 9

What metrics are relevant? • Within each major function drill down into the associated drivers for costs – Support Services – Administrative Services • • • Administrator/student ratio per building Support staff per student by building Support staff per administrator by building % of Benefits paid by employer Supply costs per student Purchased service costs per student 10

What Metrics are Relevant? • Within each major function drill down into the associated drivers for costs – Instructional Services • • Student/Teacher Ratios Cost of program/student served Caseload/Teacher % of Benefits paid by employer Substitute Costs per Student Substitute Costs compared to total salary expense Supply costs per student 11

Efficient vs. Effective • Efficiency and Effectiveness are not synonymous • Should not choose efficiency over effectiveness – Student/teacher ratio of 35 to 1 maybe efficient but not effective for achieving learning objectives • Best value service = Service at required level for most reasonable cost 12

Alternative Approaches to Drive Cost Take Out & Improved Responsiveness • Optimization of Resources – Ensure that your budget allocations align with strategic priorities • Ways to Enhance the Use of Resources – Operational Improvements • • Technology Staffing Approach Process Reengineering LEAN concepts 13

Alternative Approaches to Drive Cost Take Out & Improved Responsiveness • Reallocation to priority programs/functions • Expand non-traditional approaches – Online – Team Teaching • Ways to Reduce Costs – – Operational improvements Functional analysis – Eliminate non-core programs/services Shared services Outsourcing of non-core functions 14

Alternative Approaches to Drive Cost Take Out & Improved Responsiveness • Ways to enhance responsiveness/expertise – Functional analysis – eliminate non-core programs/services – Third party arrangements • Shared services • Outsourcing 15

Case Study – Custodial Staffing • Metrics for custodial staffing per square foot identified inconsistencies throughout buildings • Metrics for custodial staffing costs identified inconsistencies per classroom throughout buildings • Metrics for custodial staffing costs identified inconsistencies based upon student enrollment throughout buildings • Benchmark set by the International Sanitary Supply Association estimates that an average custodian clean between 20 -40 thousand sq ft per day 16

Case Study – Increase Class Size/FTE Reduction • Nominal increases in class sizes could yield significant cost savings • Union agreement in effect limited classroom sizes to 27. 5 students without additional overload costs paid to teachers • Classroom space should be considered as well as perception of the community regarding acceptable student/teacher ratios 17

Factors to Consider When Modifying Service Delivery • • • Barriers to change relating to mandated compliance Potential FTE modifications Potential impacts on current/future revenues Anticipated savings Student Impact Staff Impact on service delivery Potential shared service opportunities Collective bargaining impacts 18

Questions? Presenter contact information: Nick Cavaliere n. cavaliere@bakertilly. com 630 -645 -6244 Christine Smith Christine. smith@bakertilly. com 608 -240 -2391 19