This document is made available electronically by the Minnesota Legislative Reference Library as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp Program Evaluation Division The Program Evaluation Division was established Topics for study are approved by the Legislative by the Legislature in 1975 as a center for Audit Commission (LAC), a 16-member bipartisan management and policy research within the Office oversight committee. The division's reports, of the Legislative Auditor. The division's mission, however; are solely the responsibility of the Legis­ as set forth in statute, is to determine the degree lative Auditor and his staff. Findings, conclusions, to which activities and programs entered into or and recommendations do not necessarily reflect funded by the state are accomplishing their goals the views of the LAC or any of its members. and objectives and utilizing resources efficiently. Reports published by the division describe state programs, analyze management problems, evaluate outcomes, and recommend alternative means of The Office of the Legislative Auditor also includes reaching program goals. A list of past reports a Financial Audit Division, which is responsible appears at the end of this document. for auditing state financial activities. Professional Staff Support Staff James Nobles, Legislative Auditor Jean Barnhill Mary Moser Roger Brooks. Deputy Legislative Auditor Theresa Wagner Joel Alter David Chein Mary Guerriero Marilyn Jackson-Beeck Daniel Jacobson Elliot Long Kathleen Vandemall Jo Vos Tom Walstrom Deborah Woodworth John Yunker SCHOOL DISTRICT SPENDING February 1990 Second Printing Program Evaluation Division Office of the Legislative Auditor State of Minnesota Veterans Service Building, Saint Paul, Minnesota 55155 • 612/296-4708 Second printing, March 1990. Revisions: Pages ix, 19, labels clarified in figure. Page 3, note added to figure. Page 81, sentence deleted and percentage changed from 1 to 50. STATE OF MINNESOTA OFFICE OF THE LEGISLATIVE AUDITOR VETERANS SERVICE BUILDING. ST. PAUL. MN 55155.6121296-4708 JAMES R. NOBLES. LEGISLATIVE AUDITOR February 22, 1990 Senator John Brandl, Chairman Legislative Audit Commission Dear Senator Brandl: In June 1989, the Legislative Audit Commission directed the Program Evaluation Division to ex­ amine school district spending. Our evaluation has two parts. The first part reviews the quality of financial data submitted to the state by school districts. The second looks at patterns in education spending. We found problems with the data, at least at the state level. The state's data collection system is too complex and difficult to use, and statewide summaries of education spending are unreliable for analysis and policymaking. We recommend ways to improve the quality of financial data on schools at the state level. We also make several suggestions on how more cost-effectiveness may be achieved in some school districts. We are grateful for the assistance of the Department of Education, State Auditor's Office, and local school districts. We also thank numerous educators and administrators for their coopera­ tion. The report was researched and written by Marilyn Jackson-Beeck (project manager), Jo Vos, and Deborah Woodworth. Assistance was provided by Kathi Vanderwall, Jim Ahrens, and Lisa Griskey. Sincerely yours, .'No~L-- Roger Brooks Deputy Legislative Auditor TABLE OF CONTENTS ~ EXECUTIVE SUMMARY iv INTRODUCTION 1 1. STATEWIDE SPENDING TRENDS 3 Minnesota's Commitment to Education National Comparisons State Spending Staffing 'fiends State Role School Districts' General Financial Condition Summary 2. DATA COLLECTION 37 Financial Data Uniform Financial Accounting and Reporting Administration and Governance UFARS Structure and the Process of Reporting Summary 3. SCHOOL DISTRICT SPENDING DATA QUALITY 65 Validity and Reliability Others' Experience with UFARS Data Reasons for Problems Data from Independent Systems District Verification of UFARS Data Recommendations Summary 4. SCHOOL DISTRICT SPENDING 105 Total Operating Expenses Instruction Administration Operations and Maintenance Food Service 'fiansportation Summary SCHOOL DISTRICT SPENDING APPENDICES 145 Appendix A: Introduction to School District Spending Verification Report Appendix B: School District Spending SELECTED PROGRAM EVALUATIONS 161 LIST OF TABLES AND FIGURES TABLES 1.1 Nonpublic Pupil Aid Programs, 1987-88 5 1.2 General Measures of U.S. and Minnesota Education Spending, 1986-87 6 1.3 General Per Capita Expenditures of State and Local Governments for Elementary and Secondary Education, 1971 through 1987 7 1.4 Current Operating Expenditures Per Student, 1971 through 1987 9 1.5 State and Local Spending for Elementary and Secondary Education Per $1,000 of Personal Income, 1971 through 1987 9 1.6 Per Capita Expenditures of State and Local Governments for Educational Capital Outlay, 1971 through 1987 10 1.7 Full-Time Equivalent Staff Per 1,000 Students, 1986-87 11 1.8 Estimated Average Number of Students Per Instructional Staff Member, 1987-88 13 1.9 Average Number of Students Per Teacher by State, 1972 through 1988 14 1.10 Changes in Operating and Non-Operating Costs Per Student, 1980 through 1988 17 1.11 Trends in Objects of School District Spending, 1980 through 1988 19 1.12 Main Objects of School District Spending 20 1.13 Licensed Elementary-Secondary Staff (in full-time equivalents), 1975-76 through 1987-88 23 1.14 Special Education Students and Teachers, 1980 through 1988 24 1.15 Average Licensed Staff Salaries, 1974 through 1988 26 1.16 Effect of Local Referendum Levies on Total Operating Expenses, 1987-88 31 1.17 Financial Condition Trends, 1982 through 1988 33 2.1 How School District Administrators Use UFARS 39 2.2 ESV Regional Statistics 50 2.3 Evaluation of ESV Regions by District Size 51 2.4 Use of ESV Services by District Size 52 2.5 Active Codes by Dimension of the UFARS Reporting System, Fall 1989 59 2.6 Data Submittal Procedures to ESVs by District Size, 1988-89 62 2.7 Average Cost of UFARS Reporting by District Size, 1988-89 63 3.1 Age of Sections in the UFARS Manual, Fall 1989 70 3.2 UFARS Problems Cited by School District Administrators 71 3.3 Effort School District Administrators Devote to UFARS Coding Issues 75 3.4 Special Education Expenses Reported to the Department of Education Compared with UFARS 79 3.5 Secondary Vocational Expenses Reported to the Department of Education Compared with UFARS 80 3.6 Pupil Transportation Expenses Reported to the Department of Education Compared with UFARS 82 3.7 Categorical Aids Program Expenditures Reported by Districts, Compared with State Payment Records 83 3.8 Reliability of Regular Instruction Expense Figures 86 3.9 Secondary Subject Expenses Tested Separately 87 3.10 Results ofUFARS Item Testing 88 3.11 Reliability and Validity of Selected UFARS Fund Items 88 3.12 Reliability and Validity of Selected UFARS Program Items 89 3.13 Reliability and Validity of Selected UFARS Finance Items 90 3.14 Reliability and Validity of Selected UFARS Object Items 90 3.15 Difference in Expenses Due to Verification ofUFARS Fund Items 92 3.16 Difference in Expenses Due to Verification of UFARS Program Items 93 3.17 Difference in Expenses Due to Verification ofUFARS Finance Items 94 3.18 Difference in Expenses Due to Verification ofUFARS Object Items 94 SCHOOL DISTRICT SPENDING TABLES, continued 4.1 Meals Served in the National Hot Lunch Program, 1981 through 1988 123 4.2 Cost Per Student Meal by Geographic Area, 1987-88 126 4.3 Hot Lunch Prices by Geographic Area, 1987-88 128 4.4 Hot Lunch Reimbursement Rates, 1987-88 130 4.5 Pupil Transportation Expenditures, 1987-88 136 4.6 Regular Transportation Costs by Bus Ownership, 1987-88 139 FIGURES 1.1 General Fund Expenditures, 1988-89 Biennium 3 1.2 Average Teacher Salaries, 1987-1988 15 1.3 Categories of Education Spending 16 1.4 Operating and Non-Operating Education Spending, 1987-88 16 1.5 Minnesota Public School Construction Contract Costs, 1950-88 18 1.6 Operating Expenditures Compared with Inflation, 1976-88 19 1.7 Licensed Staff Assignments, 1987-88 21 1.8 Percent Change in Licensed Staff and Enrollment, 1976-88 21 1.9 Change in Student-Teacher Ratios, 1975-88 22 1.10 Changes in Special Education by Disability, 1981-88 25 1.11 Public School Enrollment Trends, 1972-97 (projected) 28 1.12 District by Geographic Region 29 1.13 State Supreme Court Decisions on Education Finance Systems 32 2.1 Examples of the Range of Problems Cited by Auditors in Twenty School Districts 41 2.2 How UFARS Reporting is Governed 43 2.3 UFARS Fund Dimension (examples) 54 2.4 UFARS Organization Dimension (examples) 55 2.5 UFARS Program Dimension (examples) 55 2.6 UFARS Finance Dimension (examples) 56 2.7 UFARS Object Dimension (examples) 57 2.8 UFARS Operating Fund Expenditure Accounts 58 2.9 Example of Cross-Walking District-Defined Codes to UFARS Codes 60 3.1 Selected "Student Activity" Expense Items 73 3.2 Updates to 1987-88 UFARS Data, August 1988-November 1989 74 4.1 How Districts Spend Education Dollars, 1987-88 106 4.2 Factors Which Might Help to Explain School District Spending Variations 108 4.3 Minnesota School Districts 110 4.4 Total Operating Costs Per Student by District Size, 1987-88 112 4.5 How Districts Spend Education Dollars by District Size, 1987-88 112 4.6 Gifted-Talented Expenses Per Student by District Size, 1987-88 115 4.7 Administration Expenses Per Student by District Size, 1987-88 116 4.8 Percent of Administrators' Pay to Superintendent and Board, 1987-88 116 4.9 Excess Instruction