The Cranky Taxpayer

The Cranky Taxpayer

Cost


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The 2012-13 data on the Education Department Web report the total disbursements for each school division.

In terms of the total disbursements (corrected to remove payments to and from reserves, payments to upgrade or construct facilities, and debt service, the latter of which we are told Norfolk does not pay from the school budget) and the end-of-year ADM, we spent $2,889 per student more than the state division average and $2,491 more than Norfolk.

Division $/ADM v. State v. Norfolk
Charles City  $ 14,364  $   2,881  $   2,483
Hampton  $ 10,442  $  (1,040)  $  (1,439)
Newport News  $ 11,326  $    (157)  $    (555)
Norfolk  $ 11,881  $     398  
Richmond  $ 14,371  $   2,889  $   2,491
Divisions  $ 11,482    

These differences are down by over $1,000 from 2012:

$/ADM v. State v. Norfolk
Norfolk  $    11,365  $        177
Richmond  $    15,090  $    3,903  $    3,726
Divisions  $    11,187

after being up by about $1,000 in 2012 from 2011.

 Notes: "ADM" is "average daily membership," which is educratese for the daily average enrollment.  This VDOE report uses the end of year number.  The disbursements in the table here are 2012-13 totals divided by the ADM.  The "Divisions" number is for all school divisions; it omits the Governor's schools and special and regional programs.

Multiplied by our ADM (21,701), the 2013 difference calculates to $62.7 million in disbursements above the state average (and $54 million more than Norfolk).
 

Explanations Please!

How shall we explain the very high cost of the Richmond system?  It turns out that, even if we correct for all major differences between Richmond and the State, about $55 million of excess Richmond school expense is just that: Excess.  The data (and a string of audits) suggest that Richmond is wasting that very large amount of money.

 

Follow the Money

Let's start by looking at the categories in the State report.

Note: The total disbursements are the day school expenditures (administration, instruction, attendance & health, pupil transportation, and O&M) + food service + summer school + adult education + preK + other educational + facilities + debt service + contingency reserve, if any.  See the footnotes to the State's Table 13 for the details about these categories.  The numbers above omit facilities, debt service, and contingency reserve.

In terms of dollars, we see the excess costs of instruction, O&M, pre-K, and "other" ed. predominating (and, even among those four, instruction and pre-K take the big bucks).

Or, in terms of total dollars

The Big Bucks are going to "instruction."

Most of that "pre-K" category is Head Start.  In the context of the current debate about funding public preschool education, it would be interesting to find out what, if anything, Richmond is getting for the extra 11.2 million dollars (plus the other $4.1 million for "other" education).  For sure, a major study suggests that Head Start doesn't do much good.

 

Salary Differences

One source of these excess costs might be instructional salaries.  Ours, however, are lower than the state average.

  All Instructional Positions
Richmond City  $          50,449
Divisions  $          54,273

Note: The State defines (fn 3) "all instructional positions" to include "classroom teachers, guidance counselors, librarians, principals, and assistant principals."

Versus the State, multiplication of the $3,823 difference by our 2,095 instructional positions shows a saving of $8.01 million from Richmond's lower salaries. 

 

Number of Teachers

As to the state average, another source of excess cost is number of teachers.  Here are the State's numbers per 1,000 kids (from Table 17):

  Instr. Positions per 1000
Richmond City 108.9
Divisions 101.4

Compared to the division average, we have an extra 7.5 instructional personnel per thousand, i.e., 174 for the school division.  At our average salary of $50,449, that calculates to $8.8 million in extra cost per year. 

That's $8.8 million extra cost we can account for.  These numbers do not tell us whether the Richmond taxpayers are getting anything for that money.

 

Corrected for Salary Difference and Number of Teachers

Applying these corrections to the cost differences, we obtain (in millions of dollars):

Category XS v. State
Gross Excess 62.7
Salary Diff. 8.0
No.Teachers -8.8
Net Excess 61.9

That leaves $61.9 million in excess spending unaccounted for (presuming there is an explanation for all those extra teachers; for sure, they are not doing anything for the SOL scores).

 

Special Education, Poverty, and Geography

We often hear that special education and poverty are major contributors to Richmond's higher costs.  It is difficult to come by numbers to quantify that so I turn to SchoolDataDirect, the now defunct data service from Standard & Poors that was supported by the Gates Foundation.

S&P calculated adjustments to spending on core operating activities to account for poverty, special education, and geographic factors.  On the 2006 data, here are their numbers

Core Spending, $/kid Core Spending Adjusted Factor, % v. State
Richmond  $     11,181  $        5,927 53% -5.8%
State  $       8,598  $        5,059 59%

The difference in the adjustments is 5.8%, or 9.9% of the State correction.  In short, on core educational spending, SchoolDataDirect calculates that Richmond is 9.9% more expensive to run than the State average.

What we are doing here is broad-brush approximations, so let's apply the 9.9% to the total excess expenditures, before correction for the differences in salary and number of teachers:

Category XS v. State
Gross Excess 62.7
Salary Diff. 8
No.Teachers -8.8
Net Excess 61.9
Cost Adj. -6.2
Corr'd XS 55.7

After these adjustments we are left with an excess in our school budget of some 55 million compared to the state average (recall that this does not account for disbursements for facilities, debt, or contingency).  Until the RPS can explain where all that money is going and what we are getting for it, there is no reason at all to increase the school budget.  To the contrary, these data make a good case to cut the budget by at least $55 million.

To the good, I notice that our new Superintendent is promising (see slide 10) a zero-based budget for the next fiscal year.  He also promises "[a] climate of high expectations."  Any of these would be a first puff of fresh air into the fetid environment of our school system. 
 

O&M

Richmond often claims that its infrastructure is larger than Norfolk's, reflecting Richmond's "small school" policy.  Indeed, there are 47 principals in Richmond but only 49 in Norfolk, although Norfolk's ADM is almost 50% larger (30,318 v. 21,701).  Richmond has never demonstrated any educational benefit from this relatively larger number of schools, however.  Indeed, in light of the SOL scores, the "small schools" operation looks to be a failed experiment.  And the School Board has been right slow to do anything about the excess 4% of the capacity in elementary schools and 19% in middle and high schools

The empty seats in the Richmond system suggest that much of Richmond's extra infrastructure is wasted space.  Thus, much of Richmond's extra cost for infrastructure probably is wasted money.

In any event, Richmond's excess expenditure for O&M is $2.9 million.  Even if all that is justified, Richmond is spending an excess $52.8 million (plus the salaries of a surplus of teachers who are not contributing anything toward educating our kids).

 

The Bottom Line:  $50+ Million Gone Missing

Most of the $55.7 (or $52.8) million extra spending relative to the state average must be in those categories where Richmond vastly outspends the state average: Instruction and pre-K (gross excess $62.1 million).  The (proposed) 2012 budget (pdf, ~1 MB download)(latest budget on their Web site as of 5/24/14) shows about $5.9 million in grant income for the Head Start program, which would fund about half of the excess in pre-K activities.  There is no information to show that we are getting any value for that money or for the remaining $9.4 million excess expense of "other" and pre-K instruction that apparently comes out of local and state taxes.  In any event, the largest pools of unexplained expenditures are in the instructional budgets and those should be the first places to look for savings. 

Without a zero based budget, it probably is impossible to find the waste in the instructional categories.  Doubtless that is the reason that the City Auditor's forays into the RPS budget have targeted the low-hanging fruit in the administrative operation: In June, 2007, the City Auditor released an audit that identified potential savings of $16.7 to $19.8 million.  About 20% of that ($3.4 to $5.3 million) was in non-teacher instructional staffing; most of the rest was non-instructional categories (notably custodial outsourcing and vehicle replacements).  In April, 2008, the City Auditor released an audit that found a further $6.7 million of waste in the RPS' purchasing and accounts payable operation.  A December 2008 audit concluded that RPS fleet maintenance contract lacked provisions that would allow RPS to make necessary cost control and other operational decisions.  A February, 2009 audit contains a four-page list of deficiencies in the Schools' IT program, including an absence of monitoring procedures that would assure that RPS was receiving proper value for its IT budget.  An August, 2009 audit of RPS's grants administration found that the lack of proper monitoring of grants poses a "major risk."  An October, 2013 audit of the payroll operation complained of circumvention of the hiring process and reported that "RPS staff was not able to provide basic information such as the total number of RPS employees."   A November, 2013 audit reported that CIGNA is providing medical claims administration under parts of a proposed contract whose terms are in dispute and that has not been signed.  An April, 2014 audit reports that RPS end users circumvent purchasing procedures, purchasing oversight is lacking, and compliance and effectiveness of the purchasing operation cannot be verified.  A May, 2014 audit identified opportunities to save ca. $2 million in the transportation operation.  If the auditor would look at the incompetent (or worse) expenditures for ADA compliance (see the discussions here and here), he would find still more waste. 

Even so, the (very rough) estimate here suggests there is lots more waste to be found and that the instruction budget is the place to find it.

Before Council gives any more money to the schools, don't you think they should demand to know exactly where all of that extra money is going and what we are getting back for it?

The now defunct S&P website at Schooldatadirect.org had two measures of the educational return for expenditure.   First, they calculated the average test performance per $1,000 expenditure.  Their "RoSI" index, adjusted for geographic costs and for student needs (populations of economically disadvantaged, special education, and English language learners) for Norfolk was 14.4 and for Richmond, 11.8 (2007 data).  They also reported the index the other way, as cost per unit of performance.  Again adjusted for geography and student needs, Norfolk has a "PCI" of 70 while Richmond is 21% more costly at 85.  Here are those data, including the State:
 

  RoSI PCI
Norfolk 14.4 70
Richmond 11.8 85
All Divisions 15.8 65

In short, Richmond, on the '07 data, was spending big bucks for much less bang.  My own bang/buck analysis is here.

In the meantime, you can follow this link to read about the dysfunctional leadership that has served to prevent reform of Richmond's dysfunctional school system.  Or you can follow this link to read about incompetence, or worse, in the procurement operation.  Or you can follow this link to read about the disabled parking money fountain.

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Last updated 05/26/14
Please send questions or comments to John Butcher