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The Biggest Expenses in Education

May 03, 2012

By E. J. McMahon

Later this month, the U.S. Census Bureau will release its rundown of K-12 public education expenditures for the school year that ended in 2010. It’s safe to predict that New York will once again rank at or near the top of the heap, as it has for decades.

As of 2009, New York’s average school spending of $18,126 per pupil was a whopping 73 percent above the national average. Our only near-rival was New Jersey -- which, not by coincidence, also imposes an exceptionally heavy state and local tax burden.

Lately, however, New York’s schools are confronting some new financial realities. Albany’s state-aid spigot has stopped gushing, and the new property tax cap will make it harder to simply squeeze homeowners for the difference. How can educators deliver more bang for the buck?

Some answers may ultimately come from a commission Gov. Andrew M. Cuomo appointed this week to undertake what he called a "soup to nuts" review of education issues. Noting that New York has 700 public school districts, each with "its own administration and back-office functions, creating duplication, waste and inefficiencies," Cuomo’s office said the commission would, among other things, look for ways to "reorganize the state’s education system."

Sounds sensible enough. After all, fewer school districts would equate to fewer high-priced superintendents, which would equate to lower administrative expenditures and savings for taxpayers -- right?

Well, maybe. But it may surprise some people to learn that the large number of school districts in New York is not the main reason our schools spend so much. In fact, when it comes to administrative overhead, New York doesn’t look far out of line from the national norm.

Central administrative costs (including district-level business offices) amounted to 5.3 percent of total K-12 operating expenditures in the United States in 2009, according to the latest available Census Bureau data. In New York State, the central administrative share came to just 4.5 percent. Excluding the huge New York City school system, administrative costs in the rest of the state averaged 5.2 percent of total school operating expenditures.

New York City’s suburbs have high school-property taxes and a hyperlocal school governance structure -- a total of 163 districts in Nassau, Suffolk and Westchester counties. Yet, as measured by census data, central administrative costs in these school systems were not unusually high as a share of total operating expenditures -- averaging 4.8 percent in Nassau, 4.7 percent in Suffolk and 5.1 percent in Westchester.

There were variations among districts within each county, of course. The biggest districts tended to spend a smaller share of their total budgets on central administration, while small districts spent a bigger share. While the overall numbers reflect some administrative fat, they don’t exactly paint a picture of bureaucratic bloat.

If New York’s public schools could cut their central administrative expenses in half -- by, say, consolidating districts at a county or regional level -- budgets could be reduced by an average of 2.6 percent. But in the next few years, the likely increase in the cost of teacher pensions alone would still be enough to eat up that savings.

By all means, districts should feel pressured to reduce overhead -- through increased sharing of services with neighboring systems, for example. But Cuomo’s commission needs to recognize that the big bucks in K-12 education are tied up in the comparatively high salaries and benefits of teachers -- and in the burgeoning ranks of other education professionals and support staff.

The commission would be wise to steer clear of district reorganization, rather than touch off a big political fight over relatively small potential savings. Instead, it should attack state mandates -- especially in the areas of collective bargaining (for example, the Triborough Amendment) and special education -- that do the most to drive up school head counts and compensation costs.

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