Educational ROI—It's More Than Money

Story appears in the 2013 March/April issue of Capitol Ideas

Unlike other school districts across the country, Clark County, Nev., was bursting at the seams.

Over a 25-year period, the district saw an increase of 200,000 students with a rapidly changing set of demographics. Before school officials knew it, they found themselves operating the fifth-largest district in the United States. Each year, the district added as many as 16 new schools and hired thousands of new teachers and staff to meet the demands of their growing system. 

But the economic downturn and flat state funding levels left the district struggling to make acceptable gains in student achievement and success.

Superintendent Dwight Jones, who was hired in September 2010, knew things had to change.

He set forth an ambitious reform agenda that included an efficiency audit to figure out ways to do things differently. That included emphasizing performance management and accountability, strategically using data, establishing performance zones to pool resources for schools of highest need, and focusing on a return on investment to determine if the district’s strategies were producing academic success.

That’s a challenge across the country. Educational efficiency varies greatly within the states, according to Ulrich Boser, senior fellow with the Center for American Progress, which recently released a report looking at the academic achievement a school produces relative to educational spending.

“If you buy raisins and you hate raisins, then you’ve wasted money,” Boser said. “Often we don’t spend money wisely.”

In fact, the center’s report noted that education spending per pupil in the U.S. has nearly tripled over the past 40 years. While some states and school districts have seen increases in student achievement and outcomes, overall academic achievement is flat.

“A district can be more efficient fiscally, but both money and outcomes go into productivity and return on investment is still another idea to discuss,” Boser said.

More than Money

Clark County, Nev., School District officials knew they had to better target their spending to improve outcomes. The district’s budget fell $500 million from 2007 to 2012, according to Ken Turner, special assistant to the Clark County superintendent.

“Dollars are tight everywhere and (that’s) especially the case now that we must leverage scarce resources to boost productivity,” Turner said.

The study Jones commissioned in 2011 was charged with identifying the major focus areas for the district that would improve efficiency and effectiveness in the educational programs and operational services. The study also looked at expanding the school district’s empowerment zones. Nevada established these zones to allow districts to allocate resources to best meet their needs. The study also considered a growth model to measure student progress, as well as a school performance framework targeting yearly student academic growth and ways for sharing innovative ideas among staff.

“It was a matter of necessity to find efficiencies and find ways to improve academic output,” said Turner. “We were at the top of the wrong list and bottom of the right list.”

The study found the district is efficient in several areas, but could increase student success if it focused more on spending for academic strategies, implementing cost-reductions and improving management practices. It also found the district operates in organizational silos driven by the multitude of funding sources from the local, state and federal level. The lack of coordination of funding and decisions left the district open to a myriad of options in different programs that failed to foster academic success.

As a result of the study, the district focused on five key areas—data, performance management, financial management, transparency and academics.

The district has completed a data governance framework and moved to a unified data structure for human resources management and student information system. Both were outdated and obsolete requiring significant resources to manage and maintain. Turner said district officials “set up rules for the road” for the single unified system for employee management and are making significant strides in student data design.

Legislation enacted in 2009 established the state growth model to measure student academic improvement over time, rather than solely using a single test score. Clark County schools sought and received approval from the U.S. Department of Education to use a five-star system based on this longitudinal growth model that sets up signals for the schools that show what it means to be well managed as well as how to better plan student learning experiences.

The district launched a school performance framework for all schools to use information from the growth model to identify exemplary practices and programs in the district. Because of the success in Clark County, the state now uses a similar framework.

“Now the question is how to scale the work,” Turner said, referring to replicating effective practices of high-performing schools throughout the district. “The answer is not more money. The question is how are we spending the money? The expenditure is only half of the equation. Policymakers must ask, ‘What is the return on investment and does it allow us to compete internationally?’

“A state legislator must care deeply about what are we getting in return. Districts must first build credibility not by asking for money, but to ask for much more useful data, helpful tools and targeted resources. Put those schools on steroids that are doing good things.”

Better Performance

Boser, of the Center for American Progress, echoed the emphasis policymakers should place on better performance.

He said local education agencies must produce strong educational attainment and graduates who are college- and career-ready or policymakers and other stakeholders will begin to challenge their investments.

The center’s report, “Return on Educational Investment,” notes that some people might worry that a focus on efficiency might inspire policymakers to reduce already limited education budgets and further increase the inequitable distribution of school dollars. The center’s report notes that transforming schools will take both “real resources and real reform.”

One finding in the study is that districts could see a large increase in student achievement without increasing their spending if they implement strategies to use funds more productively. According to the center’s analysis, a low-productivity district in California could see a 25 percent jump in achievement, whereas an Arizona school district could see as much as a 36 percent increase in academic achievement if the system intensified efficiency from the lowest level to the highest possible.

According to the report, as much as $175 billion—or 1 percent of the national gross domestic product—is lost in the nation’s school systems yearly due to low productivity. In 16 states, more money in the system correlated to higher student achievement. Conversely, five states spent additional money on education but saw lower student achievement results. Although the results were only slightly lower, the results illustrate that without a focus on how dollars are spent simply increasing the amount spent will not automatically improve student outcomes.

One method to increase effective spending and productivity with a district is through collaborative efforts both inter- and intrastate. With the national collaboration around the Common Core State Standards, which 45 states and District of Columbia have adopted, increased productivity is at the fingertips of state and district leaders, according to Boser.

“The Common Core State Standards will play a key role,” he said. “States didn’t always agree on education outcomes, which makes it difficult to measure productivity. Now we can see if we’re all reaching the same goal.”

According to the center’s report, more than a million students are enrolled in highly inefficient districts. Based on the center’s metrics, more than 400 school districts were highly inefficient on all three of their productivity measures. The center’s analysis shows that high-spending districts often are inefficient and produce limited educational outcomes. For instance, the report found that only 17 percent of Florida’s districts in the top third in spending were also in the top third in achievement.

The report states that students coming from disadvantaged backgrounds are more likely to be enrolled in highly inefficient school districts. Those students participating in free and reduced-price lunch programs were 12 percentage points more likely to be enrolled in the least-productive districts.

When looking to increase productivity and efficiency, Boser suggests asking hard questions about where the money is being spent and compare to similar districts. These questions will help begin the discussion for policymakers. Even highly productive districts need to continually review their strategies, according to Boser.

“Don’t rest on (your) laurels; it’s not productivity nirvana.” Boser said. “They must have a willingness to think outside of the box. One district combined the district IT department with the city IT department to save dollars. You must work across departments to find new ways of saving dollars.”

Saving money through more efficient methods, he said, can increase productivity.

All across the country, schools are being asked to do more with less money. U.S. Education Secretary Arne Duncan noted as much in a 2010 speech at the American Enterprise Institute.
“It’s time to stop treating the problem of educational productivity as a grinding, eat-your-broccoli exercise,” he said. “It’s time to start treating it as an opportunity for innovation and accelerating progress.”