29 May 2024

Are Admin Overhead Costs Related to District Size?

Thanks to a June 2022 Performance Audit of Public Education Administrative Costs in Utah, we can have a much clearer picture of what admin overhead costs look like across the school districts in Utah. It can also help us more clearly see how those numbers might be affected by a district split, and raises question as to why Alpine School District is comparing a district split with other districts to estimate costs instead of using their own internal data.

The first point that needs to be made clear is that over 60% of administrative costs are at the school administration. In other words, if a district were to split, 60%+ of the admin overhead would remain the same, because a district split would not create or close schools or add any school administration.

The next major point is made with in explaining the graph below: "some of the lowest administrative costs per student are among midsize and large districts (i.e., those with student counts of 10,000 to 20,000 students)".

Each of the new districts in an Option 4 split would be well over 20,000 students. I highlighted Alpine School district in the graph below (it's the largest district in the state) as well as 4 districts that are much smaller than Alpine, but have lower admin overhead costs. Many people talk about economies of scale, but fail to acknowledge that those economies of scale are at play in districts of over 10,000, not just districts of close to 100,000 students. 

The last key finding in this report is that "Administrative cost spending per student among local education agencies (LEAs) is generally affected by the size of the LEA, and more directly, by local board decisions." In other words, really small LEAs (districts with less than 4K students or charter schools) have higher admin costs, but when it comes to large school districts (those with more than 4K students) the spending is influenced much more by local school boards, not the numbers of students.

All of this contradicts the methodology and numbers that were put out by Alpine School District at the May 14 meeting, where admin overhead costs of a split were estimated to result in massive tax increases. At a minimum, the information in this report helps us to know that the admin overhead costs we see today would stay relatively the same in a split, because most of those costs are school admin, not district admin. But it also demonstrates that mid-size districts have the potential to spend even less on admin overhead costs. So rather than assuming that any split will increase spending, we can have hope that costs could remain relatively the same, and if we have local school boards making financially prudent decisions, we could even see a reduction of admin overhead costs.

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