Are Utah schools getting their money’s worth for $665 million they spend on administrative costs?

By Logan Stefanich

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    SALT LAKE CITY (KSL) — Are Utah schools getting their money’s worth for the $665 million they spend on administrative costs?

The Utah State Board of Education said Tuesday that it needs to update and improve its performance measures to accurately determine the value that comes from those expenses, in a response to a new legislative audit.

Failure by local educational agencies to comply with financial reporting requirements can have a significant impact, as evidenced by one Utah school district having to repay $2.8 million for what the audit deemed “questionable” special education spending.

This was one of multiple key findings presented to the Utah Legislature on Tuesday during a Legislative Audit Subcommittee meeting.

The audit, “Performance Audit of Public Education Administrative Costs,” stated that local administrators are responsible for administering policy and implementing key objectives of the Legislature, Utah State Board of Education and local school boards.

“Numerous audits have identified extensive noncompliance with state statutes and rules,” the audit said.

This noncompliance, the audit stated, calls into question the value of administrative costs — which account for $665 million annually for Utah school districts and charter schools — in public education.

These costs, made up of the oversight, management and support that constitute K-12 classroom learning and administrative services, are crucial in supporting classroom instruction.

“Various supports, including administrative services, facilitate this core function by managing the policy, finances and infrastructure required to provide a learning environment,” the audit said.

Administrative services are divided into three categories:

School administration (the day-to-day school activities overseen by principals and their office staff) District administration (the local school board and coordination of the operations and reporting for the local education agency) Central administration (accounting, human resources, and information technology services) Despite the total administrative cost of $665 million, Utah is on the lower end of administrative costs — ninth-lowest in the nation — when compared to other states.

Audit supervisor Tim Bereece said that one of the questions asked in the audit request letter was whether administrative costs are reasonable.

“To make that distinction, we tried to look at this as like, ‘Are we getting a value for what we’re spending?'” Bereece said. “Ultimately, our primary objective… has to do with some kind of form of student proficiency and student growth. That’s really what we’re striving to do here.”

With that in mind, Bereece said the guiding question of the audit was whether the functions that administrators are providing are yielding results and educational outcomes that warrant the $665 million tab.

Another focus of the audit report was examining the driving force of administrative costs across different local educational agencies.

“Administrative cost spending per student among local education agencies is generally affected by the size of the (local education agency) and more directly, by local board decisions,” the audit said.

The audit process identified the following factors that drive differences in levels of administrative spending:

Outlier spending highlights the impact of local decisions. Hiring management companies for charter schools does not drive costs. Small districts apply tactics to minimize district administration costs. Administrative spending is a product of available funding and allocation. Thus, the audit recommended that the “Legislature consider making a requirement to track administrative spending trends in public education as a performance measure and link those measures to student proficiency and growth to identify best practices.”

“We feel like this is an important topic to understand the compliance and what we’re getting for the dollars that are spent on administration (and) determine whether administrative costs represent a reasonable value,” Bereece said. “Hopefully we start to understand the need for these performance measures so we can understand that value that’s being delivered on the cost and the investment that we’re making.”

The Utah State Board of Education agreed with the audit’s conclusion that it needs to update and improve its performance measures to determine the value of administrative costs.

“We’re happy with the fact that you agree that we need to change and update our performance measures,” said Sydnee Dickson, Utah state superintendent of public instruction. “We were not competent in the prior measures that we had that were sometimes imposed upon us, and we didn’t feel like we were getting what we needed from those nor were you getting what you needed to make decisions.”

Dickson also pointed out that for the money Utah receives for education, the state spends about 63.6% on classroom instruction as opposed to the national average of around 60%.

“That’s important to note, that we are, for the money that we receive, spending the bulk of it on instruction as compared to other states,” Dickson said.

Deputy Superintendent of Operations Scott Jones encouraged auditors that the board will work to “get to what right is.”

“System-wise and resource-wise, we’ll get there,” Jones said. “To get to the level of detail that these gentlemen are recommending as part of their audit will take more resources and more time and we’re willing to spend that with them because we have seen the benefits of that.”

The full audit and its recommendations can be found here.

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