Governor, Superintendent unveil new plans for school spending
Posted: Thursday, Jan 05, 2006 - 02:53:03 pm EST
Source: www.tristate-media.com

Daniels will focus money on classroom
Goal is to spend less on administration

By Lesley Stedman Weidenbener
lstedman@courier-journal.com
The Courier-Journal

INDIANAPOLIS — There's no doubt about Gov. Mitch Daniels' top education goal for the 2006 legislative session: pushing schools to spend less on administration and more in the classroom.

But the legislation that aims to make the goal a reality remains under wraps.

The administration made "virtually final decisions" about the proposals last week, Daniels said Friday, but the language is still "in draft form."

Still, over the past few weeks, he has focused on two primary areas:

School deregulation: A proposal that will eliminate some of the red tape that teachers and administrators face. It also could eliminate some of the schools' reporting requirements.

Consolidation of purchases and services: A plan that would give districts broad authority to join forces to purchase insurance, supplies, buses and services.

"There is literally hundreds of millions of dollars available to pay teachers better, to have smaller classrooms, to maintain or add new programs at the classroom level if we can reduce overhead that is unnecessarily high," Daniels said.

Education officials say schools already are doing many of the things Daniels is proposing.

The Wilson Education Service Center in Charlestown, a state-supported resource that serves 160 schools in southeastern Indiana, already negotiates cheaper prices on thousands of school supplies and provides joint opportunities for teacher training and other services.

Last week its executive director, Larry Risk, detailed the center's operations for the Indiana Education Roundtable, an advisory group whose co-chairmen are Daniels and Superintendent of Public Instruction Suellen Reed.

Catalog now online


Risk said the center now has its catalog online and developed a system that virtually eliminates the need for paper purchase orders and other administrative headaches. The joint purchasing saves schools about $5million annually, he said.

But Risk acknowledged that only about 10percent of school purchases are made through the system.

"This shows the dimension of opportunity we have here," Daniels told the roundtable. "It will help us free some dollars for our most important purpose."

There also is disagreement about whether districts can share the cost of some services. Cris Johnston, who works on government efficiency for the Indiana Office of Management and Budget, said last week that state law already allows schools to go in together to purchase health insurance.

But state law doesn't address whether schools can do the same with property and casualty insurance or workers' compensation insurance. That silence has led some to say such cooperation isn't allowed by law.

That's just the kind of thing Daniels wants to change.

"Every school district, as far as I can tell, buys school buses for instance by itself," he said last week. "In neighboring states, they are bought off a master statewide contract. The difference is thousands of dollars in price. We'd like to save that money and hire a new teacher."

Dennis Costerison, executive director of the Indiana Association of School Business Officials, said last week that administrators would be happy to have more authority to make decisions that will save their districts money.

But he said that saving money in the transportation fund or capital funds — which have their own property tax levies — won't necessarily do it. That's because schools can't transfer that money to the general fund without a change in the law. Daniels said his proposal wouldn't change that.

Also, Costerison said, the Daniels administration isn't giving schools enough credit for the steps they've already taken to save money.

"My members aren't flag-waving about their efficiency efforts," he said. "They just think they're doing their jobs."

Officials reject claim


School officials also largely reject administration arguments that Indiana districts are too heavy on administration.

John Ellis, executive director of the Indiana Association of Public School Superintendents, presented information to a legislative conference last week that shows Indiana ranks 42nd in the nation in the percentage of staff who are principals and assistant principals. Also, his report said the state ranks 38th among states in the amount of central office staff at schools.

But Daniels has said repeatedly that Indiana is spending only about 61 cents of each dollar in the classroom instead of on administration. Raising that amount to 65 cents would shift $300million annually more directly to student learning.

The numbers are based on data kept by the National Center for Education Statistics. But they are controversial because some of the numbers that count toward "classroom instruction" are debatable — coaches' salaries, for example.

Last week the governor's top adviser on education issues, Dave Shane, said that some states have "rushed right out and said let's require 65 cents and let's join the bandwagon."

But he said Indiana needs to take a far more measured approach, one that includes first defining the kinds of costs that should be classified as classroom instruction and then setting a goal for what percentage schools should strive to achieve.

"This is something the legislature needs to be talking about," he said.

Lawmakers also will be discussing the deregulation proposal. Sen. Teresa Lubbers, R-Indianapolis, said last week that she might introduce a bill to provide traditional public schools with many of the freedoms now offered to charter schools.

O'Bannon's push


It's not a new idea. In 1997, then-Gov. Frank O'Bannon held up a thick book of regulations during his State of the State Address, declaring that schools shouldn't have to follow so many rules and should be given more authority to make their own decisions.

His plan died a few months later, the victim in part of politics. But the details of deregulation also proved more controversial and difficult than he expected.

Daniels is hoping for better results. Last week he sounded a little like O'Bannon as he touted his own proposals for the legislative session.

"There's an inches-thick stack of rules and regulation that do dictate curricular decisions and things like this. Lots of reporting goes along with them — all of it well-intended," Daniels said. "But when you stack it up — as always with government regulations — it can be counterproductive."

Let’s buy regionally

School systems’ cooperative purchasing could be a model for cities and counties.

Gov. Mitch Daniels wants school districts to put more money into classrooms without spending any more. His suggested solution: more cooperative purchasing among school districts. The good news is that there’s already a mechanism in place that achieves such purchasing – it just needs more help from the state in getting the job done. Furthermore, the system in place, called the Education Service Center, could be a model for similar cooperative purchasing for cities and counties in Indiana.

Roger Smith, executive director of Region 8 for ESC (there are nine regions in the state), can coordinate purchasing of some items for 36 public and 12 private school districts in this part of the state. He can get better prices for bulk purchases of everything from paper to computers to school lunches. Furthermore, the regions can enter into purchase agreements with each other, and in some cases there are even multi-state deals. ESC represents about 85 percent of the school districts in Indiana, with 75 to 85 percent of the student population – essentially all the school districts except the urban ones such as Fort Wayne Community Schools, which are big enough to get their own price breaks.

But it is difficult – or at least legally murky – to get some cooperative purchasing done. Liability insurance is one area the state could help with, Smith says. The costs to individual districts are astronomical. Natural gas and electricity are other areas ripe for savings. “Right now, all the schools have separate meters, and they pay the residential rate.”

Northeast Indiana could probably give the state some pointers on the natural-gas front. All the school districts in Allen County, both public and private, have something called the Education Consortium, which looks at ways to cooperate in a number of areas. One of the things it has managed to accomplish, says Brian Smith, Southwest Allen County Schools superintendent, is a natural gas contract involving all the schools, the city of Fort Wayne and Allen County.

Brian Smith also believes the state could be of more help in facilitating cooperative purchasing. A local effort was made to cooperate on health insurance, but there was a stumbling block in state law. And in some areas, trying to get local education officials together without a state standard would be nearly impossible. “School buses, for example. Everyone has a different favorite. Some want 66-passenger ones, some 86-passenger ones. Some want diesel, some want gas. Some want front-wheel drive, some don’t.” Without the state coming up with a “base” bus and just telling districts they have to live with it, cooperative purchasing isn’t likely. (Some states do, in fact, buy school buses through a statewide contract.) And what about all the computer software school systems have to buy, such as programs to churn out reports on various trends in student achievement? A state puchase would result not only in substantial savings but also in statewide analyses of student performance.

All this will likely be sorted out enough to help each district get closer to the governor’s goal of 65/35 – having 65 percent of all education spending going to the classroom in the form of supplies, programs and teacher salaries. Representatives of the Education Service Center are meeting Tuesday with the Education Roundtable to talk about how the state can better help the ESC in its mission.

And there’s the lesson for cities and counties.

Cities and counties are already looking for cooperative spending wherever they can find it, says Bruce Little, Allen County purchasing director. State law could more closely address the needs of such purchasing, but there’s nothing in the law that precludes it. City and county jointly purchase or bid on everything from gasoline and vehicles to uniform rentals.

But such cooperation tends to be confined to a county. There is no system comparable to schools’ ESC for regional purchasing. That could help for purchase of such things as water-main pipe and the aggregate needed for street and road work. “We’ve looked into city and county cooperation on aggregate,” says Jim Howard, the city’s purchasing director. “But there are such a limited number of suppliers that it wasn’t worth it.” Going regional – or even statewide in some cases – could increase the number of suppliers and make bids more competitive.

Both Little and Howard say they see the value of the regional approach used by the education establishment.

It makes sense. Even people who distrust the concept of consolidated government can get behind one of the benefits of that idea: saving money by eliminating duplication. This would be a way to achieve such savings – and get greater value for the taxpayers – while we’re still debating the consolidation question.

How about it, governor? Legislators?

Purchasing by schools addressed

Daniels backs redirecting money to the classroom
By Niki Kelly

The Journal Gazette

INDIANAPOLIS – Details are slowly emerging about one of Gov. Mitch Daniels’ key 2006 legislative planks – directing more money into the classroom.

He has spoken in recent months about how Indiana spends more on the administrative side of education than the national average.

Daniels advocates a 65/35 rule, with the larger percentage going directly to the classroom in teacher salaries, programs and supplies rather than administrative costs. It is unclear whether this ratio would be a general guideline or an actual law.

And the specifics of how to do so without spending more money on education as a whole have been elusive.

Last week Daniels gave a few examples to reporters, and Tuesday’s Education Roundtable meeting focused on one major item – cooperative purchasing among school districts.

“It is principally to provide new tools and authority to local districts to combine for the purposes of reducing overhead and providing more money in the classroom where it can do the most good,” he said. “We have some structures today that allow them to go together to purchase things for instance but they are not very well used.”

He noted that some districts question their legal authority to do so and he wants legislation to clarify this power.

“I don’t know any superintendent who wants to spend money on less important things,” Daniels said. “It will be mainly in the spirit of providing new enabling assistance to help them get together on things as small as materials or as expensive as school buses.”

Cris Johnston, of the Division of Government Efficiency and Financial Planning, gave Roundtable members a perfect example Tuesday.

He said there is specific language in the law allowing schools to pool together to purchase health insurance. But the law is silent on other types of insurance, such as long-term disability and worker’s compensation.

Daniels also noted that in some states all school buses are bought off a state contract but in Indiana they are purchased one district at a time – at a cost that is more than what could be available on a volume purchase.

“It’s things like that could make more money available to keep classes smaller, have new programs, enhance teacher pay, whatever would be most effective in improving results for our kids,” he said.

Roundtable members also briefly broached the subject Tuesday of allowing school districts to co-mingle funds.

Right now schools operate different accounts, such as the General Fund, Transportation Fund and Capital Projects Fund. They are all governed by different rules and the money can’t mix.

Sometimes that means schools have money to construct schools – a total property tax liability – but not to pay teachers, said Roundtable member Patrick O’Rourke.

Daniels agrees, saying Friday he would be willing to work with lawmakers on changing state law to allow flexibility between the funds.

The Indiana Government Efficiency Commission in 2004 recommended such a change, contending it would force schools to weigh spending on buildings versus within the classroom.

Daniels said capital spending is three times more in Indiana than the national average and “if it becomes more moderate districts can reduce their tax demands for that purpose and perhaps dollar for dollar enhance their spending on the things that matter most.”