News From Terre Haute, Indiana

Indiana Legislature

May 29, 2011

School corporations to undergo operational efficiency reviews

Legislation calls for examination of how schools are spending their cash

INDIANAPOLIS — Tucked inside legislation that rewrites the rules for how Indiana public school teachers are evaluated and paid is a requirement that school districts be evaluated on how they’re spending their money.

Under the new law that links teacher pay and promotions to quantifiable measures of student achievement, school corporations will undergo “operational efficiency reviews” aimed at finding cost savings that can be redirected toward classroom needs.

Exactly how those reviews will be conducted has yet to be determined; state education officials have until Oct. 1 to come up with a plan. But the aim is to push school administrators into taking a more business-like approach to how they dole out their dwindling dollars.

That push may be hard for some, said Bill Jensen, an Indiana school administrator who predicts some resistance to the kind of efficiency reviews that are commonplace in manufacturing settings. “Schools aren’t making widgets,” Jensen said.

Yet it was Jensen who spoke in favor of adding the efficiency review provision to Senate Bill 1, which requires schools to institute a performance-pay system for teachers. 

Jensen, an administrator with the Bartholomew Consolidated School Corp., testified about the partnership his district forged with Cummins, Inc., a Fortune 500 company headquartered in Bartholomew County. 

Cummins volunteered their efficiency experts to work with district officials to conduct a top-to-bottom operational efficiency review. That effort resulted in some significant cost savings in purchasing, energy use, and information technology, Jensen said.

It also lead to the launch of an early childhood education program that promises to reduce the high costs of remediating students who are lagging behind. That program, funded in part with seed money from Cummins, was created after the operational efficiency review showed the Bartholomew schools were spending 15 percent of their budget on remedial instruction, Jensen said.

The Cummins’ efficiency experts, trained in a rigorous method of business analysis known as Six Sigma, are convinced that by front-loading more resources into early childhood education, the district will see long-term cost savings.

Those savings are critical at a time when many Indiana schools are seeing less dollars due to property tax caps passed two years ago and reduced funding from the state.

Also testifying in favor of the efficiency reviews was Mark Gerstle, Cummins’ chief administrative officer. Gerstle said businesses like Cummins have a direct stake in K-12  education. “At Cummins, we recognize that there is a strong link between the health of our communities and the quality of our schools,” Gerstle said. “Without an excellent education system, the ability of a business like ours to grow and thrive is in jeopardy.”

Cummins has offered to lend their efficiency experts to help train other school districts around the state, and company officials have encouraged other business to lend their expertise to their community schools. Under the new law, the Indiana Department of Education has authority to use outside experts to help them come up with a program to train and evaluate schools in operational efficiency. That includes developing partnerships like the one between Cummins and the Bartholomew County schools.

Cummins officials have some advice on how business can help. “We don’t go in pretending to have all the answers,” said Gwen Langley, Cummins’ director of state government relations. “This is not about big business telling schools what to do.” Jensen concurred. “We have a true partnership with Cummins,” Jensen said. “There’s mutual trust and respect there.”

How school districts will respond to the state-ordered efficiency reviews will vary, predicted Dennis Costerison, executive director of the Indiana Association of Business Officials.

“Many already feel like they’ve cut to the bone,” he said.

The new law that requires the efficiency reviews gives the state more power to see if that’s so. The law requires all school corporations to submit to the state Department of Education “any information the department deems necessary” to evaluate the corporations’ current operations.

Maureen Hayden is statehouse bureau chief for the Tribune-Star and CNHI Indiana newspapers. She can be reached at maureen.hayden@indianam

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