Schools as a Business?

We hear many calls from the public that school districts–including Jeffco Schools–should be run “more like a business.” It’s easy to be sympathetic to that view. Those of us that have served in roles as business managers and owners have had to balance budgets, live with cash projection forecasts, make difficult personnel decisions, and sort through tough spending priorities.

Take a step back

Let’s take a step back for a moment first and look at Jeffco Schools as a business. While comparing a school district to a business has merit, there are some obvious and very important differences between a large public school district and, let’s say, a large company. Some of those differences truly limit the applicability of the “run it as a business!” model. Perhaps, most notably, businesses exist to make money for owners and shareholders, and thus decisions are ultimately based on a profit motive. Furthermore, businesses can in large measure define their own customer base. Unlike public schools, they can market to particular demographics of their choice, can refuse to serve customers on most grounds, and aren’t required by law to serve customers largely for free or to raise a high proportion of their funding through taxing authority or dependency on funding from other government entities.

Public schools like Jeffco Schools, on the other hand, have extremely limited marketing budgets and must take all “customers,” despite wide variation in their readiness to learn. Finally, while public schools do charge some fees to help offset specific expenses, or to generate small, restricted revenue streams, they cannot raise enough revenue through their customers to a degree that influences systemic changes.

What are our expectations?

Even with these limitations, the call for districts like Jeffco Schools to be run as businesses is reasonable in some meaningful ways. Despite the differences, taxpayers bear a relation to corporate shareholders, and all shareholders want their investments used efficiently and without waste. In addition, shareholders rightfully demand appropriate transparency and a business model that maximizes the corporation’s special niche. Though not the end to an exhaustive list, shareholders also expect corporations to have sound structure and organization so that products are produced and delivered reliably and efficiently. At the same time, shareholders expect corporations to remain flexible enough to respond to changing customer demands and business climates. Businesses walk the line between implementing large-scale, organized, structured processes on the one hand, and fluidity, resiliency and responsiveness on the other — but only those that do so survive in the long run. Investors expect it, and we must expect no less of Jeffco Schools.

Should we run Jeffco Schools as a business?

How do these observations relate to Jeffco Schools’ performance? Can or should we expect school administrators to run Jeffco Schools as a successful business?

Jeffco Schools as a Business – The Details

 

Efficiency and Central Administration

Some criticize the district’s central administration costs. However, central administration at large school districts was actually patterned after business models for similarly sized corporations. While larger districts have more central administrators than smaller districts, central administration at large school districts provide efficiencies based on economies of scale that smaller school districts cannot match. If Jeffco Schools were to be broken into, say, five separate districts, there would be more total administrators than there are now.  That is far less than typical corporations of similar size, and far less than smaller school districts. That’s efficient.

Transparency Exceeding the Norm

Jeffco Schools is leading the way in being transparent–much more so than a typical corporation! The Independence Institute has praised Jeffco’s transparency efforts. With a robust website, a staff responsive to reasonable public requests, and comprehensive, voluminous audits from top auditing firms, Jeffco Schools as a business or as a school district could hardly be more transparent. Jeffco Schools has even developed a state of the art online transparency project so that citizens can access and understand Jeffco Schools’ financial expenditures to a degree that most business would likely be hesitant to emulate.  The Independence Institute has heartily applauded Jeffco Schools for its commitment to transparency, noting that “it’s getting a lot of attention nationally…as a project worth replicating” and that “the State of Colorado could learn a lot from what Jeffco [Schools] is doing.”

Financial Oversight Exceeding the Norm

Jeffco Schools has several oversight committees that are comprised of independent community members, mostly fiscally conservative business people. Their position as public watchdogs allow them to be critical–on a micro and a macro level–of the district’s decisions. Although their recommendations are only advisory, the Jeffco Schools’ Board of Education must regularly follow their advice or risk delegitimizing the committee and alienating the entire community. Most large corporations do not make way for such a consistent, high level of scrutiny among their shareholders.  Jeffco Schools’ oversight committee is continually combing through every expenditure to identify waste.

Extremely Little Waste

Identifying waste and inefficiencies in a business is always a primary concern, but these issues must be considered in the context of the overall business model and practices.  First, it’s helpful to note that many charges of “waste” relate to what are PTA purchases of items, such as food for evening meetings. These are essentially goods that are privately purchased. Other “waste” criticisms are directed at purchases such as improved technology, infrastructure upgrades, and modest employee morale expenditures–common expenses for any business.  In a district of 14,000 staff, well over 86,000 students, thousands of computers, and hundreds of buildings, expenditures need to be reviewed in terms of scope and scale.  There’s no consistency in, on the one hand, demanding that the district be run like a business, and then on the other hand critiquing reasonable business expenses like standard technology and infrastructure upgrades, and modest employee morale budgets.  Budgets for these kinds of expenditures simply reflect good business practices, and when viewed on the scale the size of Jeffco Schools, these line items are more frugal than in typical corporate settings.

Specific instances of actual waste are, of course, serious and need to be dealt with. However, any business with 14,000 employees will always have a few folks that do something wasteful despite policies, procedures, and oversight. Expenditures of a few dollars per employee on morale-related items, and periodic upgrades to keep current with technology or our buildings for our kids isn’t wasteful; when real waste occurs, Jeffco Schools has a strong track record of addressing such instances in a businesslike fashion.

Productivity

Large school districts have requirements and challenges all their own; Jeffco Schools are extraordinarily competitive with sister districts, even when relevant poverty measurements or income levels are considered.  The district that Jeffco Schools tied with just a few years ago, Fairfax County, Virginia, has a median income of over $100,000 per year, much higher than Jeffco.  Of course, income level and poverty rates are not absolutely determinative of school districts’ success, but there is a strong correlation across the country between these income factors and academic achievement.

Jeffco Schools as a Business – In Conclusion

Perhaps the ultimate sign that Jeffco shareholders are receiving a great return on investment, is the “Best” rating awarded to Jeffco Schools in the massive “Return on Investment” study by the Center for American Progress.  The study ranked thousands of school districts across the country in terms of productivity, which was defined as how much learning a district produces for every dollar spent, after controlling for factors such as cost of living and poverty. Jeffco Schools was one of the few districts in Colorado awarded the highest ranking.

There are countless examples of Jeffco Schools being managed like a large, well-run business. There are also problems and issues that any business of such size faces. How do we, as shareholders, know which way the balance tips when deciding how to vote? Remember those financial oversight committees, largely conservative business people who aren’t afraid to criticize the district when necessary?

Business leaders know a well-run business when they see one. They see clearly that Jeffco Schools is run with top-flight business practices, nearly to the greatest extent possible for a large school district.  Jeffco Schools is exceptionally transparent, accountable to its shareholders, addresses waste, and delivers fantastic results.  It’s time to invest, because in every possible business criteria, Jeffco Schools performs.