The Cranky Taxpayer

Costly Bureaucrats


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We have heard two attempted explanations for the very high administrative cost of the Richmond schools ($84 per kid above the state average, for a total of about $2 million per year).

Economies of Scale

The first explanation is that the comparison to other divisions might be inappropriate because the larger divisions could enjoy economies of scale that would lower their costs per ADM.

To explore that idea, I revisited the 1999-2000 data from the Education Department and computed the Administrative disbursement per ADM (ADM is "average daily membership," which is educratese for average enrollment) for every division in the Table. Here is the result:

Richmond is the gold square.  As you see, we were spending an unusual amount of money for "administration."

The ADM in Fairfax is so large that it crushes most of the divisions into a small area at the left side of this graph. If we expand the abscissa to cut off just beyond Virginia Beach, the graph looks like this:

 

The least squares fit shows an intercept at $266, which is intriguingly close to the $254 division average. The nearly flat slope ($1.40 per 1000 ADM) contradicts the notion of economies of scale, at least on the entire dataset, and the very low R2 further suggests that size of the division has very little to do with administrative expense.

By eyeball, the very small divisions do appear to show a decreasing administrative cost per ADM. We are not a small division, however. To see how things stand among our peers, I recalculated the graph after eliminating the divisions with an ADM <10,000. Here is the result:

The average administrative expense per ADM among these divisions is $218. As you see, there are no economies of scale apparent in these data.

Among our peers, our administrative expense that year ($288) is 32% above the average. Our excess expense of $70 per student multiplied by an enrollment of 23,803 students computes out to an excess administrative expense of $1.7 million.

That is a large amount of tax money. The expense (I would say the "superfluous" expense, except that I am helping to pay it) certainly is not buying superior SOL scores.

Loosey-Goosey Accounting

I also hear that the elasticity of the expense categories might argue against comparing these costs between divisions. That is, the State is so imprecise about what is an administrative expense vs. what is an educational expense that we can't believe the numbers.

I will rely on the good sense of Virginia’s school finance people to refute that notion: No school division wants to have high administrative expenses.  The alert divisions, when faced with a close call between administrative and educational expenses, have enough sense to call the expenses "educational."

Conclusion

We have the third-worst SOL scores in the state.  We spend about $2,500 per kid more than average for those awful results.  Some of that excess is going to "administration" that, for sure, is not helping our kids.  Why do we put up with this?

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Last updated 04/01/12
Please send questions or comments to John Butcher