The Cranky Taxpayer

The 2006-07 data on the Education Department Web report the total disbursements for each school division.

In terms of the total disbursements and the end-of-year ADM, we spent $1,735 per student more than the state average and $2,518 more than Norfolk.

	Total Disbursements
	per ADM	v. State	v. Norfolk
Norfolk	$ 11,520	$ (784)
Richmond	$ 14,038	$ 1,735	$ 2,518
All Divisions	$ 12,303

Notes: "ADM" is educratese for "average daily membership," i.e., average daily enrollment. This report uses the end of year number. The disbursements in the table here are 2006-07 totals divided by the ADM. The "All Divisions" number is for all school divisions; it omits the Governor's schools and other regional programs.

You might well ask why, in the Summer of 2008, I am using the 2007 data. The answer is that they only recently became available. The Education Dept., if it runs true to form, will not post the 2008 data until the Spring of 2009. Please be my guest and ask them why it takes so long.

Our School Board has been told that Norfolk does not pay its debt service out of the school budget while Richmond does. Let's level the playing field by taking out the debt service:

With that adjustment, Richmond is $2,453 per student more expensive than Norfolk and $2,236 more expensive than the state average for school divisions. Multiplied by our ADM (22,770), that difference calculates to $50.9 million in disbursements above the state average (and $55.9 million above Norfolk).

Please recall that Norfolk has been producing much better SOL scores than Richmond (and SAT scores almost 100 points higher while testing almost 20% more students). Richmond's taxpayers have been paying a 30% premium for much less performance.

We can get a measure of the educational return for our expenditure from the S&P service at Schooldatadirect.org. They have two indices of return on educational spending. First, they calculate 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 is 14.4 and for Richmond, 11.8 (2007 data). They also report 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 is spending big bucks for much less bang.

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 Norfolk (and, to an extent, the State), about $34 million of excess Richmond school expense is just that: Excess. The figures (and a couple of audits) suggest that Richmond is wasting that very large amount of money.

Let's start by looking at the categories in the State report. Here are the Richmond and Norfolk expenditures by category (with debt service removed), expressed as percentages of the State average disbursement.

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

I have simplified the category names for readability. I also have combined the summer school, adult education, and "other" educational programs into a single "Other Instr." category; the "other" educational programs (predominantly Head Start and other preschool programs) are the principal cost in this category.

Richmond's costs are well above average for administration, instruction, health, and O&M; our costs (and Norfolk's) are extraordinarily high for other instructional programs, i.e., for preschool programs.

If we recast the data in terms of dollars, we see administration and health to be relatively minor players, with the excess costs of instruction, other instruction, and O&M predominating.

Most of that "Other Instr" spending is Head Start and other preschool spending. 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 sixteen million dollars.

One source of these excess costs might be instructional salaries: Ours are generally higher than Norfolk's but lower than the State average:

	Principals	Ass't Principals	Teaching Positions	All Instr. Positions	Dist. Wide Instr.
Norfolk	$ 91,758	$ 64,829	$ 45,627	$ 46,394	$ 43,621
Richmond	$ 80,169	$ 69,792	$ 47,893	$ 48,248	$ 57,728
State	$ 86,322	$ 71,337	$ 50,118	$ 50,330	$ 44,908

Versus the State, multiplication of the $2,082 difference by our 2,341 instructional positions shows a saving of $4.9 million from Richmond's lower salaries.

There is an interesting anomaly in those salary data: The "District-Wide" salary is for "division-wide technology instructors and instructors in programs such as summer school and adult education." That is, teachers. One would expect the district-wide salary to be near the average salary in the division for classroom teachers. As the table above shows, for Norfolk and the State the division-wide salaries are, in fact, lower than the average teacher salary. But in Richmond, the division-wide salary is $9,480 higher than the average for all instructional positions and $9,835 higher than than the average salary for teachers. How many of Richmond's expensive bureaucrats do you suppose are masquerading as division-wide instructors?

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

	Principals & Ass't. Principals	Teachers	Teacher Aides	Guidance Counselors and Librarians	District-Wide Instructors	Total Instructional Positions
Norfolk	3.07	80.77	16.81	7.43	8.61	116.69
Richmond	5.09	86.57	12.99	5.76	8.83	120.16
All Divisions	3.58	76.95	15	4.87	2.94	104.41

Compared to the state average, we have an extra 15.75 instructional personnel per thousand, i.e., 374.6 for the school division (up from 272 the previous year). At our average salary of $48,248, that calculates to $18.1 million in extra cost per year.

Notice that we have three times the state average number of district-wide instructors. We saw above that in Richmond those folks are being paid almost $10,000 per year more than the average teacher, while state-wide they are paid some $5,000 less. Again, how many of Richmond's expensive bureaucrats do you suppose are masquerading as division-wide instructors?

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 data service from Standard & Poors that is supported by the Gates Foundation.

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

In short, on core educational spending, SchoolDataDirect calculates that Richmond is 5.9% more expensive to run than the State average and 6.5% more expensive than Norfolk.

What we are doing here is broad-brush approximations, so let's apply the 5.9% to the total expenditures, after correction for the differences in salary and number of teachers:

Category	Excess v. State, $ Millions
Gross Excess	50.9
Salary Diff.	4.9
No. of Teachers	-18.1
Net Excess	37.7
Sp. Ed. Et al.	-2.2
Excess	35.5

After these adjustments we are left with an excess in our school budget of at least $35.5 million compared to the state average. Until the RPS can explain where 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 $35.5 million.

Richmond often claims that its infrastructure is larger than Norfolk's, reflecting Richmond's "small school" policy. Indeed, there are 121 principals and assistant principals in Richmond but only 107 in Norfolk, although Norfolk's ADM is almost 50% larger (34,853 v. 23,785). Richmond has never demonstrated any educational benefit from this relatively larger number of schools, however. Moreover, about 4% of the capacity in elementary schools and 19% in middle and high schools is excess.

Most of the $35.5 million extra spending relative to the state average must be in the categories where Richmond vastly outspends the state average: Instruction, O&M, and "Other" educational spending. The 06-07 budget (1 MB download) shows about $7.8 million in grant income for the Head Start program, which would fund just over half of the "Other" activities. There is no information to show that we are getting any value for that money or for the remaining $5.7 million excess expense of "other" 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. The (very rough) estimate here suggests there is lots more 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?

In the meantime, you can follow this link to learn about overspending on facilities. Or you can follow this link to learn about the financial disarray in the exceptional education (the local euphemism for "special education") program. Or you can follow this link to read about the dysfunctional leadership that has served to prevent reform of Richmond's dysfunctional school system.