Wednesday, July 24, 2013

State audit recommends USD 500 closing one middle school; $4.5-8.1 million could be saved

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By TRAVIS PERRY, Kansas Watchdog

KANSAS CITY, KAN. — After volunteering to put itself under the microscope last year, state auditors put a spotlight on the Kansas City, Kan., Public Schools District earlier this week.

In all, the Legislative Division of Post Audit highlighted more than a few over-expenditures and inefficiencies that, if fixed, could save millions.

Ranging from simple to substantial, auditors estimated that the district could save between $4.5-8.1 million.

Targeting everything from information technology equipment to transportation costs and even the possibility of closing one of the district’s eight middle schools, auditors pulled no punches when compiling the data that was presented to a committee of Kansas lawmakers Tuesday.

“I firmly believe in Robert Kennedy‘s admonition to ‘hang a lantern on your problems,’” superintendent Cynthia Lane said in a response included with the audit. “If there are things that we can do in order to operate more efficiently, our students will benefit from us learning about it, and determining solutions to address the challenge.”

1. Staff size and salaries

According to the report, USD 500 overpays for an overabundance of custodial staff compared to districts of similar size. A study commissioned by the district in 2011 showed custodial and maintenance salaries were 15-40 percent above average for the region; The district’s pay scale permits custodial salaries to rise as high as $59,000 annually. Auditors say the district could reasonably eliminate 49 such positions to align with peer districts.

“If the district finds it too difficult to reduce custodial and maintenance positions and salaries the district could consider outsourcing these services,” the audit said.

The Kansas City school district currently employs 160 custodians and 60 specialized maintenance positions to cover 3.7 million square feet of property.

Furthermore, auditors also recommended the district reexamine the salaries paid to certain administrative and food service positions whose pay is also above market averages.

Combined, this could save the district $2.4-4.5 million.

2. Server virtualization

State efficiency experts suggest USD 500 could save as much as 96 days of staff time by switching to virtual servers, which require less maintenance than older network devices.
Auditors also recommended the district speed up the replacement of older network servers with new equipment capable of running multiple processes at the same time. While more expensive, auditors say, they will be replaced less frequently. The district has made 13 such replacements in recent years, but auditors recommend replacing a further 48.

Doing so has the potential to save upwards of $35,000, and as much as 2,300 hours (that’s almost 96 days) of staff time.

3. Utilizing procurement cards

According to the report, district staff only used procurement cards for three percent of all purchases made last year, instead managing such transactions through the purchase order process. Auditors estimate procurement cards could be used in 75 percent of all such transactions, and that doing so has the potential to generate up to $120,000 in cash-back rebates. Last year the district only earned $2,600 such rebates.

4. Transportation costs

To put it bluntly, the Kansas City school district simply spends too much on transporting students. Auditors reported the district spends on average $725 per student, while comparable districts manage a similar feat for $525 per student. The only district to outpace USD 500 in this regard was the Wichita school district. In general, pay for district bus drivers is 30 percent above average.

While state auditors recommended the district either outsource transportation duties or reduce transportation salaries and staff, district officials expressed concern that such a move could spur unionization among the bus drivers and upset the local community.

Also, while USD 500 has recently purchased a fleet of 47 natural gas-powered buses to reduce fuel costs, the district has yet to calculate estimated cost-savings from the move.

Whichever way the district moves on this issue, auditors estimate there are as much as $2.1 million in annual savings to be had.

5. Middle school closure

One of the more extreme options state auditors recommended was for the district to close one of its eight middle schools. While the move would undoubtedly provoke a strong reaction from the surrounding community, the audit reports that Kansas City simply has more space than it needs to accommodate its middle school student populations. In the last two decades, middle school enrollment has fallen from 5,000 to 4,200, a 17 percent decline.

Auditors estimate while the move would be dramatic, it would result in a negligible increase in workload for district staff. For example, cooks at other middle schools would serve an additional 12 students per day, and class sizes would increase on average from 21 to 22 students.

“We acknowledge the potential difficulties created for a community when a school is closed,” the audit stated. “However, the district’s declining middle school enrollment no longer warrants eight middle schools.”

The district has not closed a middle school in 40 years. The move would save $1.4 million annually in reduced staff, salaries and utilities.

6. Managing efficiency

One of the biggest shortfalls highlighted by auditors was the fact that the district has no measurable way of tracking efficiencies and proper use of resources.

Auditors note the district doesn’t compare itself to peer districts, and its financials are reported in a way that is, while not uncommon for large schools, different from the system used by the Kansas Department of Education, further complicating comparisons.

“These issues significantly hinder the district’s ability to accurately compare itself to other districts, which is a critical part of the efficiency management process,” auditors said.

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