Battling Budget Woes

The quest for quality is something everyone strives for-both on a personal and professional level. But in some cases, achieving quality is made more difficult due to outside influences that impact inside operations. For school administrators, the primary culprits often are a dwindling or static budget that increasingly is insufficient to handle growing program demands; economic influences; and aging, inefficient facilities that quickly erode available resources.

In Olathe District Schools, Kan., rapid growth also is a growing dilemma that is stretching thin available dollars. "We are growing at a rate of 500 to 1,000 kids a year, which is equivalent to about one new school a year," says Bob Hull, assistant superintendent of operations for the 20,000-student district.

In addition, Hull finds that, like in other districts, federal and state unfunded mandates and budget increases that have not kept up with inflation have challenged his district in its attempt to provide quality learning environments.

"This has put more of a squeeze to provide the same services in a growing school district with traditionally less money to operate," says Hull.

The recent state-mandated class-size-reduction program initiated in Alabama is among the budget and facility challenges impacting Mountain Brook City Schools, Birmingham.

"The state is mandating K-3 class sizes of 18, but is providing no funding to achieve it. Currently, we are at a ratio of 20 to 21 [students] per teacher, and at the lower grades we use a lot of aids," says Ken Key, facilities director for the 3,900-student district. "In addition, our new governor has a drive on to eliminate portable classrooms. So, out of the recent bond issue that was passed [prior to the governor's election], he has taken the liberty to make sure that all portable buildings are funded before anything else gets built or repaired. And in the state, some of the portable buildings are in much better shape than the permanent buildings."

A decision last month by the U.S. Supreme Court mandating that schools must pay to have individual nurses onsite to care for students qualified under the Americans with Disabilities Act (ADA) is expected to further strain district budgets. Industry experts say the estimated added costs to the nation's schools would be more than $500 million.

The perception factor

Facility conditions can have a major impact on the perception of quality. Patrick F. Quinn, executive director of plant planning and maintenance of the 46,000-student St. Paul Public Schools, Minn., has identified three primary facilities challenges faced by his district. The first is a general need for space.

"We are running at capacity at all levels of our schools right now. The secondary schools are very worrisome for us. We are solving elementary space problems to a degree with some construction, but at the secondary level we need the equivalent of another high school," says Quinn.

The second challenge involves the need for more small areas. According to Quinn, the state has special funding available that uses poverty as an indicator of student need. What this has done is give schools the ability to develop small, intensive tutoring and reading programs, as well as other programs for children.

"This has brought with it a tremendous demand for small spaces at a time when the school is otherwise full," he says. "A very sad joke here is that all of the good closets are taken-and it is absolutely true."

Quinn identifies increased building use by the community as the third major facilities concern.

"While we have welcomed the greater community into our buildings, increased use has put a real strain on maintenance and operations of our schools."

Charles L. Cohen, assistant superintendent for business services, Aptakisic-Tripp School District No. 102, Buffalo Grove, Ill., also finds increased use of facilities and the growing difficulty of trying to keep buildings maintained in a tax-cap environment particularly challenging.

"Our schools are used continuously 12 months a year," says Cohen. "In the past, we had the summer months to deep clean. Now we have to be extra creative in our staffing and [maintenance] procedures."

Funding equity is a dilemma in many states, which has forced a number of districts that receive less financial support to continually cut back spending, and curtail needed services and programs. In fact, local school funding has been challenged in 35 states and declared illegal in 18. In Pennsylvania, a number of districts have taken their case to court in an attempt to recapture their fair share of state funding. The School District of Lancaster, Pa., for example, has sued the state along with some 200 other school districts regarding inequities in funding. The case currently is being appealed to the state's highest court.

"Currently, we operate spending as much as 10-percent below neighboring districts on a per pupil basis," says Robert Schoch, business manager for the 11,500-student urban district, which has a number of its 20 buildings dating back to the turn of the century.

In an attempt to address school funding, Pennsylvania lawmakers passed the Taxpayers Local Control Act late last year. The Act (which does not include the massive Philadelphia school system) allows districts to levy an income tax to offset cuts in property taxes. While a number of districts are investigating the proposal's potential impact on revenue, so far none of the state's approximately 500 eligible systems have taken advantage of it. One of the major reasons why schools are being overly cautious is that the law is confusing and unclear, according to many administrators.

"The tax control act offers an ineffective combination of options and would be difficult, if not impossible, to implement for many districts," says Schoch. "It allows [districts] to switch from property to local income tax. But the entire increase must be taken out of the property tax. It is an insignificant shift. Growth in our earned income tax and property tax is flat. Furthermore, being an urban district with an already weakened local tax base, we are more vulnerable to a recession based on job conditions."

Stepping in to the ring

One of the primary ways schools are achieving quality in a tight fiscal environment is by improving and streamlining non-educational services. Much of the dollar savings being realized by schools revolves around improved energy efficiency, and advanced facility operations systems and procedures. Besides benefiting the bottom line, improvements also are contributing to an enhanced learning environment.

Mountain Brook City Schools has aggressively pursued facilities improvements as a way to save money and help create a quality environment.

"We have participated in federal and state energy grants with matching funds, retrofit lighting, added digital controls for HVAC, upgraded boilers, purchased advanced cleaning equipment to increase custodial productivity, and automated work orders, among other things," says Key.

"We have a very active energy-conservation program-our energy budget is the second or third largest budget we have," says Olathe's Hull. "Through conservation programs, we have been able to achieve significant cost savings, freeing up money to spend for direct services and programs that impact children."

In addition, Hull says that the district participates in a number of purchasing consortiums and co-ops with other districts and governmental agencies-everything from purchasing natural gas to supplies.

An area many educational institutions have explored as a way to fund needed building improvements is performance contracting. Olathe has contracted with an energy service company (ESCO) to replace all lighting, controls, weatherstripping, and make other building improvements. It has entered into a series of one-year leases over 10 years to fund the project, and is expecting to recoup costs at the end of the contract.

Mountain Brook City Schools also has done some performance contracting, according to Key, and will be investigating the concept for improvements to other buildings.

"The program has been very successful," says Key. "Their [ESCO] estimates on our savings were pretty conservative-we have beaten estimates by about 50 percent."

Performance contracting has been a winning situation for Aptakisic-Tripp School District, according to Cohen.

"Two years ago we looked at the concept of performance contracting. What is it? What did it entail? How could we finance what we were trying to do?" says Cohen. "We were able to come up with a project that addresses a number of issues in our district, including replacing roofs and lighting, automating HVAC controls, retrofitting three buildings with vestibules, and adding air conditioning. We have a 10-year payback and guaranteed savings.

"We were able to get the benefit of everything that you can do with negotiations and still have the safeguards and benefits of a public bidding situation," continues Cohen. "A major concern was 'how do we know that the pricing we are getting for the projects is appropriate?' What we did was break out work by project with open-book pricing. This way, if we have to take out items from the project, we know we will receive fair value and not have to worry about if the price was inflated going in and discounted going out of the contract."

Another benefit, according to Cohen, was that because everything was bid separately and all contracts then were assigned to the performance contractor, if something goes wrong it is the performance contractor's responsibility. There is no passing of blame.

Fighting for improvements

While a number of institutions have touted the merits of performance contracting, some find it is not for them. St. Paul Public Schools has looked at the concept but has rejected it.

"Performance contracting is very complicated, and you need to spend the time to really understand what you are getting in to," says Quinn.

The district has done a number of energy improvements to its schools, completing all of the one- or two-year payback items and concentrating on the longer payback items now.

"We did a lot of survey work over the past 15 years, starting with fire and life-safety problems, then accessibility, etc. As we completed the surveys, we went to the legislature and established our case for long-term funding for some of these problems," says Quinn. "We are chipping away with pretty good results at our needs and have been fairly successful."

With a plate of about 200 construction projects a year-from small improvements to building new schools-Quinn makes sure things are done in a cost-effective way, and that the long-term impact is considered. One area that is expected to impact energy operations at St. Paul, as well as at most other educational institutions, is utility deregulation.

"We have looked at selling more bonds to prepurchase energy, for instance, to take advantage of deregulation savings, but we haven't gone very far with that," says Quinn. "It is a real gamble right now because the industry obviously hasn't really settled on exactly what the costs are going to be. Maybe you will get a good deal right now; maybe if you wait you will get a better deal."

Mountain Brook City Schools currently is working with its local power company testing electric vehicles as a way to reduce costs while improving operations and helping the environment. The battery-powered pickup trucks, for use by the facilities department, would be used within a 10-mile radius of the maintenance shop.

Olathe's Hull says that while his district does a number of construction projects per year and that energy efficiencies are designed into new buildings, the district is trying to get a handle on maintenance from being reactive to proactive or preventive.

"In the long run it is cheaper than being reactive. It is a conceptual goal, and we are making progress," he says.

The knockout punch

Striving for quality operations is one thing. Actually being recognized or certified as having quality operations is another. The School District of Lancaster, Pa., has done just that. Last month it received the first-ever ISO 9001 Certification by a U.S. school district. The ISO 9000 family of standards is enforced by rigorous independent audits, widely used in business, to assure customers and suppliers that a process of quality and continuous improvement is being carried out. ISO 9001 is the most comprehensive standard. The district felt receiving certification was important for a number of reasons.

"The district has a lot of business partners, taxpayers, that have held themselves to rigorous standards of quality and accountability. This is a language that they understand. It is something that they know has discipline and rigor behind it. And by us accepting that same discipline and rigor, it indicates that we too hold ourselves to a higher standard," says Bill N. Kiefer, coordinator of quality systems and responsible for overseeing the district's quality program.

While business has strived to attain ISO 9000 certification, very few public entities have embraced the concept.

"The [ISO 9000] standard is very comprehensive. It looks at your core processes," says Kiefer. "Ours very simply are teaching and learning. It focuses you on that, then all of the support systems around that. Audits look at every process within an organization. And because ISO 9000 is a rigorous quality-management system, it forces applicants to re-evaluate every aspect of operations."

"All of the internal benefits of tighter and more streamlined procedures, a corrective action program requiring quick corrections, internal audits, document control and more have already helped clean up [district] paperwork dramatically," says district business manager Schoch.

According to Kiefer, to attain ISO 9000 certification, a quality manual that describes how requirements of the standard will be met must be developed.

"You have to take the standard and interpret it for your organization. Then, you must develop a quality manual that basically says 'this is how our organization is going to meet the requirements of the standard,' " says Kiefer. "Documenting it is just part of it. The next step involves a third-party review where an audit is done to see if you are doing what you said you were doing. Once this is done it only means you are registered. You then have to go through surveillance audits that will look at more of the organization and review if you are continuing to keep your quality system meeting the requirements of the standard."

While the ultimate goal of attaining certification is to improve student learning, both Schoch and Kiefer feel there may be other possible benefits, namely, increased funding opportunities.

"Is this a possible way to get more funding? Definitely, that is seen as a side benefit," says Schoch. "The funding potential has always been recognized, not only in terms of private and foundation funds, but also by countering the perception that public education has waste and can solve its problems by cutting expenditures further. We are incorporating [ISO certification] into all grant applications. We also would expect to be able to joint venture some things that remain to be done with some quality management companies or outside providers."

"I certainly believe there could be a funding issue here," says Kiefer. "If people are going to invest in education, I would think that they would look at a school system that is disciplined and has subjected itself to the rigor of a quality system of constantly looking for continuous improvement."

Feedback has been very positive. Schoch says that many of the district's parents work in ISO-certified organizations, "...so they already know of the value of ISO and that we have a way of forcing continuous improvement."

Other educational institutions are being recognized for quality. Mountain Brook City Schools recently received the Alabama Quality Award from Alabama's Center for Quality, an organization associated with the University of Alabama's business school. Until last year, only state businesses and industries were reviewed. This is the first year education and health care were included. Mountain Brook was the only educational institution to receive the award.

When asked if recognition that educational institutions have quality systems in place is a growing trend, most think it is.

"Total Quality Management has been in schools for a number of years. In a high percentage of the cases it has been abandoned. There was a big splash but no staying power," says Schoch. "The value of the ISO 9000 certification is that once you have it, you have periodic surveillance audits-and it would be devastating to lose the certification due to allowing things to go back to business as usual. We think it is very important for our public to understand that we are making every effort to spend their money wisely."

"I'm surprised that there hasn't been more done in this area [by educational institutions]," says Kiefer. "I believe that the way things are going, and the whole area of quality in business and the importance of quality standards, we probably are not more than a decade away from every school district having a quality system in place. It may not be ISO, but I believe there will be a lot more of this in the future."

The ISO 9000 series of international standards for quality management and assurance has been adopted in more than 90 countries, and is being implemented by thousands of public and private manufacturing and service organizations. It is one of two series among more than 11,000 international standards published by ISO since its inception in 1947.

"ISO" is not an acronym. Derived from the Greek word "isos" (meaning "equal"), ISO is the International Organization for Standardization. All of the standards developed by ISO are voluntary, and the ISO 9000 family of standards represents an international consensus on good management practice. Lancaster's ISO 9001 Certification is one of three quality-assurance models against which the quality system can be audited to ensure it complies with ISO 9000 requirements.

For more information on ISO 9000 Certification, visit www.iso9000directory. com.