Schools Should Share Services to Save, Study Says

Published January 1, 2006

School districts across the country are constantly calling for more funds, but additional money might be available in their existing budgets if they’d take advantage of opportunities to share services with other districts, according to an October 2005 study jointly produced by Deloitte Research and the Reason Foundation.

“School districts are regularly complaining about the need for more money, and so they need to systematically go though their budgets and consider privatization and sharing services,” said coauthor Lisa Snell, who directs the education program at Reason Foundation in Los Angeles and is a frequent contributor to School Reform News.

The 28-page study, “Driving More Money in the Classroom: The Promise of Shared Services,” was coauthored by Snell, William Eggers, Robert Wavra, and Adrian Moore.

Eggers is a director at Deloitte Research and author of Governing by Network (Brookings Institution Press, 2004) and Government 2.0 (Rowman and Littlefield, 2005), which considers technology’s role in improving public services. Wavra is a consultant for Deloitte on process improvement and performance management. Moore, Reason’s vice president of research, has written extensively on government management and finance.

Non-Instructional Expenses

The study first shows U.S. schools spend more than schools in other countries on non-instructional costs. According to the report, “in many states, teachers make up a little more than half of all school district staff” … but in Europe, “teachers account for 60 to 80 percent of all school staffing.”

The authors then consider existing research concerning school district size. Research suggests children in small school districts tend to perform better on standardized test scores than do students in larger districts. However, small districts also tend to have higher-than-average costs on non-instructional expenses such as administration, facilities, and support services. Larger-than-average districts also have high non-instructional expenses.

Because of their relatively high non-instructional costs, there is “strong pressure for consolidation” of smaller school districts, says Eggers, despite the evidence that large districts are similarly afflicted with high costs.

Small Districts Can Gain Most

Rather than consolidating small districts, which would not solve their budget problems, the study provides an alternative: sharing services among districts. The authors note businesses and many local governments already make use of shared services.

Service-sharing can also take place in large districts, and some already have done so successfully. In Texas, the Dallas and Houston school districts have “entered into a five-year partnership to increase their buying power for health insurance and reduce duplicative administration by pooling their assets,” the authors note.

But sharing of services is particularly suited for small districts. The authors cite the example of two Wisconsin districts that share a single superintendent. Snell noted most of the nation’s nearly 18,000 school districts have fewer than 10,000 students and should “certainly investigate sharing services.”

“Any kind of cooperative agreement which can produce economies of scale should be pursued,” said John Stephens, Ph.D., former superintendent of the Mercer Area School District in Pennsylvania. “Sharing services for general items common to school districts is a superb idea. I did it when I was superintendent, and it saved our district money.

“For example,” Stephens continued, “we had a cooperative agreement with school districts in our area for buying paper, and we saved. Some superintendents do not put enough emphasis on saving money, and [agreements for sharing services] is certainly one way to save money.”

Many Opportunities Available

The authors then examine opportunities for sharing both direct and indirect services to students. Direct services include transportation, food service, health services, security services, and instruction. There are opportunities for sharing services in all of those areas.

There are also many opportunities for sharing indirect services, particularly in purchasing, finance, payroll, facilities, and human resources.

“This is the low-hanging fruit when it comes to saving money,” said Snell.

The study also contains a section summarizing the financial and political benefits of sharing services. Eggers said these benefits–such as saving money, standardizing processes, attracting more qualified staff members, and avoiding political opposition–are so strong he hasn’t “heard any reasons why this shouldn’t be done.”

Important for Charter Schools

The authors conclude with a brief, step-by-step guide to sharing services, and they also consider incentives for doing so.

“If the state could incentivize sharing services, that would be the way to get more efficient spending of tax dollars,” Snell said.

Charter schools may have more reasons than other schools to share services, Eggers said.

“From the standpoint of charter schools and a whole variety of public schools, this also becomes more important, to shore up the business operations of charters,” Eggers explained. “Charters could join up with each other or with other school districts and then have schools focus on the different means and emphases of educating students.”

Michael Coulter ([email protected]) teaches political science at Grove City College in Pennsylvania.

For more information …

The complete Reason Foundation report, “Driving More Money in the Classroom: The Promise of Shared Services,” is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to, click on the PolicyBot™ button, and search for document #17994.