(FB015) MARCH 2003

AMALGAMATING SCHOOL DIVISIONS WON’T INCREASE EFFICIENCY Larger is not Cheaper

Executive Summary ¨ The government recently reduced the total number of school divisions in the province from 54 to 37. Its main purpose so was to save costs on administration. ¨ The Manitoba FRAME report provides a yearly accounting of school division spending. If larger school divisions are more efficient than smaller divisions, the difference would be expected to show up in the FRAME data. ¨ Ti ny school divisions (under 1000 students) do have higher per pupil expenditure rates and administration costs. However, the vast majority of divisions (those with more than 1000 students) show very little relationship between size and rates of spending. ¨ The largest school division in the province, School Division #1, has very high per pupil costs while much smaller divisions within the city have much lower per pupil costs. ¨ Some mid-sized school divisions like Hanover and Garden Valley have very low per-pupil expenditures and administrative costs. Emulating examples like these makes more sense than simply creating larger divisions. ¨ The school board model itself, with its diffuse funding sources , lies at the heart of the problem. It is time to think about a more transparent and accountable model. Introduction The Manitoba government recently reduced the total number of school divisions from 54 to 37. Its stated purpose for doing so was to improve efficiency and save money on administrative costs. This backgrounder will compare the spending habits of school divisions and attempt to determine whether or not there is a relationship between larger size and higher efficiency. A number of school divisions and school districts are not included in this comparison. Due to their immense geographical sizes and other unique challenges, data from Frontier School Division #48 and D.S.F.M. are not applicable. For the same reasons the following remote school districts are also not included: Churchill #2264 Snow Lake #2309 #2312 Sprague Consolidated #2439 #2460 All of these school districts, except Sprague, are located in the north, have very small student populations and have only one school. Several of these towns, particularly Leaf Rapids and Lynn Lake, have experienced substantial declines in population. Since they had a small student population base to begin with, this has the effect of skewing per pupil spending estimates, and makes comparisons with other divisions less informative. The remaining 45 school divisions are included in this study. For each of these divisions, the following charts are provided1: 1) Total Number of Students and Annual Budget It is important to know how many students are enrolled in each division and what each division’s annual budget is. 2) Expenditures per Pupil Per pupil expenditures are an important gauge of how efficiently a division spends its money. They make fair comparisons among school divisions possible. 3) School Division Administration Expenditures Every school division allocates some of its budget to administration expenses. However, some divisions spend a larger percentage of their budget on this item than others. One of the key rationales for amalgamating smaller school divisions is the reduction of these costs. 4) Ranking School Divisions

1 All statistics from the 2001-2002 Frame (Financial Reporting and Accounting in Manitoba Education) Report. See http://www.edu.gov.mb.ca/ks4/finance/facts/index.html Page 1 ã2002 Published by the Frontier Centre for Public Policy, 201-63 Albert Street · Winnipeg, Manitoba CANADA R3B 1G4 ·Tel: (204) 957-1567 Fax: (204) 957-1570 · E-mail: [email protected] · Website: www.fcpp.org With these three measurements, it is possible to compare all the school divisions and attempt to determine which are the most cost efficient and which are the highest spenders. It should also be possible to determine whether or not there is any relationship between larger school divisions and higher efficiency.

Size of Division vs. Cost Per Student

Total Students and Annual Budget (2001-02) Expenditures Per Pupil (2001-02 Budget)

School Division Number of Total School Division Cost per Ranking (ranked by total Students Expenditures pupil based on size number of pupils) (full-time equivalent) Winnipeg 30,620.0 $234,944,300 Prairie Spirit $8,071 23 River East 12,643.5 82,114,69 2 Turtle River 8,063 42 St. James -Assiniboia 9,193.1 59,759,491 Antler River 7,938 43 St. Vital 8,872.0 57,328,920 Duck Mountain 7,852 44

Seven Oaks 8,671.0 60,783,966 Red River 7,803 45

Transcona-Springfield 7,724.5 53,413,216 White Horse Plain 7,792 38

Brandon 7,455.0 45,196.900 Winnipeg 7,673 1

Fort Garry 7,143.7 51,440,564 Fort la Bosse 7,465 27 Hanover 6,180.0 33,499,785 Mountain 7,397 40 St. Boniface 5,890.9 41,386,417 Swan Valley 7,356 21 Assiniboine South 5,855.0 41,620,185 Birdtail River 7,355 35 Lord Selkirk 4,629.0 31,917,173 Souris Valley 7,289 36 3,589.5 22,879,974 Turtle Mountain 7,271 34 Mystery Lake 3,525.5 24,597,241 Boundary 7,219 41 Seine River 3,419.0 23,458,540 Intermountain 7,211 37 Interlake 3,417.2 22,388,000 Fort Garry 7,201 8 Garden Valley 2,821.5 16,249,150 Rolling River 7,164 19 Agassiz 2,702.5 19,028,440 Evergreen 7,140 25 Rolling River 2,150.0 15,402,500 Assiniboine South 7,108 11 Kelsey 1,918.5 11,924,015 Pelly Trail 7,100 39 Swan Valley 1,909.1 14,042,557 Lakeshore 7,079 32 Dauphin-Ochre 1,839.5 12,982,573 Pine Creek 7,069 31 Prairie Spirit 1,808.0 14,591,600 Dauphin-Ochre 7,058 22

Morris-Macdonald 1,802.5 12,192,500 Agassiz 7,041 18 Evergreen 1,690.5 12,070,083 St. Boniface 7,025 10

Beautiful Plains 1,655.0 10,905,624 Seven Oaks 7,010 5

Fort la Bosse 1,635.5 12,208,940 6,953 28

Flin Flon 1,509.5 10,495,374 Mystery Lake 6,977 14

Midland 1,467.5 10,184,614 Midland 6,940 29 Western 1,453.0 8,985,338 Lord Selkirk 6,895 12 Lakeshore 1,432.0 10,144,188 Seine River 6,861 15 Rhineland 1,371.5 8,966,375 Morris-Macdonald 6,764 24 Pine Creek 1,326.0 9,374,112 Transcona-Springfield 6,656 6 Turtle Mountain 1,254.5 9,121,059 Beautiful Plains 6,590 26 Birdtail River 1,240.8 9,126,370 Interlake 6,552 16 Souris Valley 1,095.0 7,981,621 Rhineland 6,538 32 Intermountain 1,053.0 7,523,025 St. James -Assiniboia 6,500 3 White Horse Plain 1,004.0 7,823,505 River East 6,495 2 Pelly Trail 966.5 6,861,673 St. Vital 6,462 4 Mountain 841.5 6,224,251 Portage La Prairie 6,374 13 Boundary 824.5 5,591,712 Kelsey 6,215 20 Turtle River 816.0 6,579,337 Western 6,184 30 Antler River 792.5 6,290,890 Brandon 6,057 7 Duck Mountain 736.5 5,782,890 Garden Valley 5,759 17 Red River 525.0 4,096,616 Hanover 5,421 9

Provincial Average 3,788.3 $28,267,101 Provincial Average $7,153

The largest school division is among the most expensive divisions in Manitoba The least expensive school division is not the largest in Manitoba.

Page 2 ã2002 Published by the Frontier Centre for Public Policy, 201-63 Albert Street · Winnipeg, Manitoba CANADA R3B 1G4 ·Tel: (204) 957-1567 Fax: (204) 957-1570 · E-mail: [email protected] · Website: www.fcpp.org

Administration2

Divisional Administration Expenditures School Board Rankings

School Division Admin Percent of School Division Rank– Rank – Rank – Costs Total FTE Cost Admin Per Budget Pupil per Pupil Costs per Pupil Enroll Pupil ment Turtle River $412 5.1 Winnipeg 1 7 33 Mountain 410 5.5 River East 2 38 42 Red River 380 4.9 St. James-Assiniboia 3 37 39 Antler River 369 4.5 St. Vital 4 39 32 Flin Flon 366 5.3 Seven Oaks 5 26 30 White Horse Plain 356 4.5 Transcona- 6 33 41 Souris Valley 341 4.7 Springfield Fort Garry 337 4.7 Brandon 7 43 37 Birdtail River 335 4.6 Fort Garry 8 16 8 Duck Mountain 322 4.1 Hanover 9 45 45 Morris-Macdonald 313 4.6 St. Boniface 10 36 36 Pelly Trail 301 4.2 Assiniboine South 11 19 26 Prairie Spirit 301 3.7 Lord Selkirk 12 30 43 Rolling River 292 4.1 Portage La Prairie 13 40 40 Fort la Bosse 288 4.2 Mystery Lake 14 28 18 Turtle Mountain 287 3.8 Seine River 15 31 27 Swan Valley 284 3.9 Interlake 16 35 38 Mystery Lake 281 4.0 Garden Valley 17 44 44 Pine Creek 281 4.0 Agassiz 18 24 31 Midland 278 3.9 Rolling River 19 17 14 Boundary 275 3.8 Kelsey 20 41 25 Dauphin-Ochre 273 3.9 Swan Valley 21 10 17 Evergreen 269 3.7 Dauphin-Ochre 22 23 22 Rhineland 265 3.9 Prairie Spirit 23 1 13 Kelsey 261 4.2 Morris-Macdonald 24 32 11 Assiniboine-South 257 3.6 Evergreen 25 18 23 Seine River 254 3.7 Beautiful Plains 26 34 28 Beautiful Plains 251 3.8 Fort la Bosse 27 8 15 Western 245 3.9 Flin Flon 28 27 5 Seven Oaks 239 3.4 Midland 29 29 20 Agassiz 237 3.0 Western 30 42 29 St. Vital 236 3.6 Lakeshore 31 21 35 Winnipeg 231 2.9 Rhineland 32 36 24 Intermountain 227 3.1 Pine Creek 33 22 19 Lakeshore 225 3.2 Turtle Mountain 34 13 16 St. Boniface 215 3.1 Birdtail River 35 11 9 Brandon 213 3.5 Souris Valley 36 12 7 Interlake 206 3.1 Intermountain 37 15 34 St. James-Assiniboia 199 3.0 White Horse Plain 38 6 6 Portage La Prairie 196 3.1 Pelly Trail 39 20 12 Transcona- 180 2.7 Mountain 40 9 2 Springfield Boundary 41 14 21 River East 179 2.8 Turtle River 42 2 1 Lord Selkirk 173 2.5 Antler River 43 3 4 Garden Valley 170 2.9 Duck Mountain 44 4 10 Hanover 149 2.7 Red River 45 5 3 Provincial Average $270 3.8

2 There is reason to believe that the amounts reported for administration costs are far from transparent. Divisions often assign salaries and other expenses for personnel to a budget line called direct instruction, despite the fact that many of these employees never spend a minute in the classroom. Are costs for support staff part of administrative overheads or not? Despite this confusion, all divisions use the same rules to calculate these costs, so comparisons are still valid. Page 3 ã2002 Published by the Frontier Centre for Public Policy, 201-63 Albert Street · Winnipeg, Manitoba CANADA R3B 1G4 ·Tel: (204) 957-1567 Fax: (204) 957-1570 · E-mail: [email protected] · Website: www.fcpp.org

Overall Findings 1) Very small school divisions (with under 1000 students) ha d some of the highest overall per pupil expenditures and administrative costs. All of the school divisions with less than 1000 students (Pelly Trail, Mountain, Boundary, Turtle River, Antler River, Duck Mountain and Red River) had significantly higher than average per pupil expenditures and administrative costs. In particular, Turtle River had the second highest overall expenditures per pupil ($8,063) and the highest administrative costs per pupil ($412), despite having only 816 students. It appears that once a school division’s student population drops below 1000, inefficiency increases. 2) Among school divisions with more than 1000 students, there is little relationship between size and per pupil spending or administrative costs. The FRAME data demonstrated a broad cross-section of spending patterns among school divisions of all different sizes. The largest division in the province (Winnipeg # 1) has very high per pupil expenditures while the second largest (River East) has some of the lowest per pupil expenditures. Some smaller school divisions (Western and Rhineland) have below average administrative costs and per pupil expenditures while others (White Horse Plain and Souris Valley) are at the high end of the spectrum. Prairie Spirit falls right in the middle in size, yet has the highest per pupil expenditures in the province. 3) There is a moderate relationship between overall per pupil expenditures and per pupil administrative costs. Most school divisions with above average administrative costs also have above average per pupil expenditures. No school division spends more than 5.5% of its budget on administration, so this amount alone is not enough to make a substantial difference in a budget. However, this relationship indicates that a school division that overspends on administration is likely to overspend in other areas. 4) The largest school division in Manitoba (Winnipeg #1) also has very high per pupil expenditure rates. Winnipeg # 1 School Division is by far the largest in the province. One might expect that, if larger school divisions are naturally more efficient, this division would be an excellent example of that. However, its per pupil expenditure rates are considerably more than any other school division in the city of Winnipeg and are higher than most other school divisions in the province. In fact, River East, St. James -Assiniboia, and St. Vital are the next largest school divisions and all have substantially lower than average per pupil costs. 5) Two mid-sized school divisions (Hanover and Garden Valley) have the lowest per pupil rates and administrative costs by a significant margin. Hanover and Garden Valley budgeted $5,421 and $5,759 per pupil respectively for the 2001-2002 school year. This is considerably lower than the provincial average of $7,153 per pupil. In addition, they also had the lowest per pupil administrative costs in the province. These results are impressive and are worth emulating. Conclusion A direct relationship between low per pupil spending and school division size only occurs when a division is very small, with under 1,000 students. These small divisions have the highest per pupil expenditures and administrative costs in the province. Beyond this size, however, the relationship is almost non-existent. While there may be some benefit in amalgamating very small divisions, it might be of greater value to inquire whether less efficient divisions such as Winnipeg #1 can emulate more efficient divisions like Hanover and Garden Valley. Winnipeg #1 is over three times larger than Hanover and Garden Valley combined, yet its per pupil expenditures are about one-third higher. Amalgamation of districts is not the solution to school board inefficiencies. Spending patterns need to change in order for solutions to be found. The discrepancies in cost levels among divisions, irrespective of size, indicate that other factors are driving the escalation in public school costs. The relationship between divisions with high overall costs and those with higher administrative costs suggest that some school boards have embraced a culture of spending more than they need to accomplish their goals. The reasons for this lack of attention to the bottom line by some are unclear and possibly undiscoverable. The identity of school communities in a multicultural Manitoba varies widely, as does the value system that each community expresses. However, an obvious candidate for consideration may be weak lines of accountability to funding sources. School taxes compose more than half the weight of municipal property taxes, but pressure from the electorate to keep rates affordable is traditionally felt by municipal councillors. The school portion of the total bill is simply tagged on, and in elections for school trustees, the issue is seldom raised. When it is, school trustees justifiably respond that the lion’s share of their costs is imposed by provincial mandates, and they have little power to control them. This confusion over accountability arguably has a lot more to do with differences in school division spending than facile theories about the size of the organization. The school board model itself, with its diffuse funding sources , lies at the heart of the problem. It is time to think about a more transparent and accountable model.

The Frontier Centre for Public Policy is an independent public policy think tank whose mission is to explore options for the future by undertaking research and education that supports economic growth and opportunity. You can reach us at: 201-63 Albert Street · Winnipeg, Manitoba CANADA R3B 1G4 ·Tel: (204) 957-1567 Fax: (204) 957-1570 · E-mail: [email protected] · Website: www.fcpp.org Page 4 ã2002 Published by the Frontier Centre for Public Policy, 201-63 Albert Street · Winnipeg, Manitoba CANADA R3B 1G4 ·Tel: (204) 957-1567 Fax: (204) 957-1570 · E-mail: [email protected] · Website: www.fcpp.org