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SUMMARY
Pursuant to Arizona Revised Statutes (A.R.S.) §41-1279.03, the Office of the Auditor General has conducted an analysis of Arizona school districts’ percentage of dollars spent in the classroom. This report presents state-wide trends in classroom and nonclassroom spending, including a preliminary analysis of the association between the percentage of dollars spent in the classroom and student achievement. In addition, this report examines the adequacy of the districts’ performance pay plans and a potential link between the adequacy of the performance pay plans and student achievement. Lastly, for each district, the report summarizes spending trends, operational efficiency measures, academic indicators, and the district-reported use of their Classroom Site Fund monies resulting from the Proposition 301 education sales tax approved by voters in 2000.
School district spending continues to shift
away from the classroom (see pages 3 through 8)
Arizona’s state-wide percentage of dollars spent in the classroom has decreased each year for the past 5 years, falling to a new low of 56.9 percent in fiscal year 2009. Despite an average annual increase of about $300 million in Classroom Site Fund (CSF) monies, which are largely restricted for classroom purposes, the classroom dollar percentage is lower than it was prior to receipt of the first CSF monies in fiscal year 2002.
While the classroom dollar percentage should not be the sole criterion for evaluating school districts’ financial performance, it is a useful measure in several respects. First, the declining classroom dollar percentage indicates that many districts are shifting monies away from the classroom by using their CSF monies to replace, rather than add to, monies spent in the classroom, which constitutes supplanting and is a violation of A.R.S. §15-977(A). If districts had continued spending their non-CSF monies in the classroom at the same rate they did prior to receiving CSF monies, the fiscal year 2009 state-wide classroom dollar percentage would have been 59.6 percent. Second, available data indicate that in Arizona, higher classroom dollar percentages appear to be associated to some extent with higher student achievement. Auditors analyzed each district’s percentage of students that met or exceeded state standards on the AIMS’s Math, Reading, and Writing assessments overall and found that higher percentages in this academic indicator appear to be associated with higher classroom dollar percentages. This association is significant even after considering other variables, such as poverty rate, that may affect student achievement. Third, performance audits of individual districts and separate analysis of state-wide data both show that districts with high classroom dollar percentages typically operate their nonclassroom operations more efficiently than districts with lower classroom dollar percentages. For example, 15 of the 18 districts that served at least 200 students and spent at least 60 percent in the classroom had more efficient performance cost measures than their peers. However, there can be particular circumstances within a district—such as long transportation routes or a high percentage of special needs students—that require higher spending in a particular nonclassroom area but do not signal inefficiency.
Districts of all sizes, types,
and locations have identified ways to
operate more efficiently (see pages 9 through 18)
Arizona’s school districts have much to offer each other in terms of the approaches some districts have taken to monitor and reduce their nonclassroom costs. To a degree, these operational costs can be affected by a school district’s size, type, or location. However, districts can still identify ways to operate more efficiently despite these factors. For example, a small district may have higher administrative costs per pupil than larger districts because it spreads fixed costs over fewer students, but some small districts have still found ways to reduce their administrative costs, such as relying on fewer staff to manage multiple duties. Similarly, a rural district may have higher transportation costs because of its longer transportation routes, but some rural districts have still been able to reduce transportation costs by monitoring the efficiency of their bus routes.
Performance indicators, such as transportation cost per mile and bus capacity usage, are used by only a few districts, but can help districts determine whether their costs are out of line relative to similar districts. Auditors compared costs across districts of similar size, type, and location and identified both high-cost, inefficient operations and districts that are employing good practices that keep costs low. Examples of the practices some Arizona districts are using to reduce costs include minimizing staffing levels by using staffing formulas, reducing excess space by combining schools, conserving energy by using centrally programmable thermostats, and effectively managing vendor contracts by monitoring performance cost measures.
Performance pay plan quality varies widely,
but plans with strong student achievement goals
may be linked to higher student achievement (see pages 19 through 23)
While national research has yet to establish a clear link between student achievement and teacher performance pay, it has identified a number of factors that can impede a performance pay system’s success in raising student achievement. Arizona’s Proposition 301 performance pay system established in statute addresses many of these factors and provides a list of eight different performance measurement elements that districts should incorporate into their performance pay plans. However, because statute also provides a way for districts to modify the type and number of performance measurement elements upon which they base teacher performance pay, the quality of performance pay plans varies widely. For example, we identified 29 districts with strong performance pay plans that did a good job of linking teacher performance pay to student achievement and 10 weak plans that had no links to student achievement. Districts with strong performance pay plans appeared to have higher percentages of students that met or exceeded state standards on the AIMS test than the districts with weak plans. Auditors also found many other plans that did not necessarily link student achievement to teacher performance, contained goals that allowed teachers to earn performance pay for responsibilities that are a regular part of their jobs, or simply did not require performance above and beyond already expected levels. Allowing districts the freedom to determine performance pay goals can help gain district and teacher buy-in to the State’s performance pay system. However, it has also led to inconsistent performance pay plans and to situations in which teachers receive similar performance pay for significantly different levels of effort and related performance results.
Appendices (see pages a-1 through a-230)
Appendix A summarizes each district’s classroom dollar percentage for fiscal year 2009. Appendix B presents more specific one-page summaries of each district’s expenditure information, including classroom and nonclassroom spending, comparisons to peer district and state averages, academic indicators, and reported uses of CSF monies. Appendix C contains a detailed discussion of the definition of the classroom dollar percentage and the scope and methodology employed during this study.
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