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Urban School Districts Can Adapt to Enrollment Declines, Improve Educational Quality by Taking New Approaches to Cost Management

BOSTON, Jan. 16, 2013 /PRNewswire/ -- Many of the largest urban school districts in the U.S. have experienced substantial enrollment declines over the past decade and are struggling to reduce costs in proportion to the amount of lost revenue, according to a new report by The Boston Consulting Group (BCG), Adapting to Enrollment Declines in Urban School Systems: Managing Costs While Improving Educational Quality.

The report outlines five fundamental challenges that drive districts to employ budget-balancing measures that are unsustainable or that may adversely impact students: unrecovered classroom costs, higher fixed school-level costs, sticky central-office costs, more expensive student mix, and lack of advance-planning ethic.

"Across the nation, many urban school districts are facing a new reality," said J. Puckett, a senior partner and coauthor of the report. "They are confronting a declining student population and the resulting budget pressures, except these declines do not automatically trigger a reduction in fixed costs or central-office costs."

The report notes that half of the 100 largest school districts have seen enrollment decrease from 2005 through 2010, with some districts experiencing declines of nearly 33 percent. To balance their budgets, many districts are increasing class sizes without necessarily improving the effectiveness of teachers, laying off teachers, and cutting programs. Others are adopting unsustainable stopgap measures, such as drawing down reserves, increasing deferred maintenance, and cutting nonunion positions.

"Overcoming the challenges created by declining enrollment can be enormously difficult, but they can be addressed through a combination of collaborative leadership and new approaches to budget management," said Puckett, who leads BCG's global Education practice.

The report identifies eight actions districts can take to find a fiscally sustainable, educationally sound path:

  • Understand and manage classroom costs; know how classroom resources are allocated by school, grade, and course.
  • Plan in advance and take action early; create and act on multiyear plans for the district's finances.
  • Retain the best talent; ensure the best teachers remain in classrooms.
  • Close severely underutilized schools, no matter how difficult, to help schools and students gain access to more resources.
  • Enable creative staffing and teaching with technology; employ computer-based scheduling tools and provide online and blended learning opportunities.
  • Shrink fixed costs and convert to variable costs; focus on factors directly related to student achievement.
  • Build a shared-service capability by collaborating with charter and other school operators.
  • Manage charter schools as an investment and share costs fairly.

The responsibility for managing the challenges arising from declining student enrollment is not limited to school administrators. Policymakers can and should play a role. "State legislatures and education departments, employee unions, and local funding bodies also have important roles. These entities often are responsible for, or exert a strong influence over, funding amounts and formulas, class-size regulations and staffing rules, charter school authorization, and pension liabilities," the report states.

A copy of the report can be downloaded at www.bcgperspectives.com.

Patrick Riccards

SOURCE The Boston Consulting Group

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