Using Metrics to Drive Efficiency

1. 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

2. 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.

3. 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

4. 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

5. 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.

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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 can clean between 20-40 thousand sq ft per day

17. 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

18. 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 • Impact on service delivery • Potential shared service opportunities • Collective bargaining impacts

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