Study: Sharing Services Could Save US Schools $9 Billion Annually

Districts can increase purchasing power by joining together on orders

Los Angeles (November 1, 2005) — U.S. public schools could save an estimated $9 billion — the equivalent of funding for 900 new schools or more than 150,000 new teachers — by combining just a quarter of their non-instructional service costs with other school districts, according to a new study by Reason Foundation and Deloitte Research.

In many school districts 40 to 50 percent of education funding never makes it into the classroom because it goes to administration and business operations like transportation, food services, building maintenance, and other support functions.

"Non-instructional services are vital to the success of American schools, but too often take money away from the ultimate goal — educating children," said William Eggers, Deloitte Research's Global Director-Public Sector. "Instead of forcing painful consolidation choices, state leaders should encourage school districts to work cooperatively to make sure education dollars are being used as effectively and efficiently as possible."

"School funding and per-pupil spending are always hot-button issues," said Lisa Snell, co-author of the report and director of education at Reason Foundation. "Sharing services gives schools and districts a great opportunity to send a lot more money straight to classrooms, where it belongs. With much of the education world facing tough budget decisions, sharing services is a dramatically under-used option that can yield significant results."

The report finds that sharing services is normally a better option than consolidation, which is politically unpopular, reduces local control, and often negatively impacts educational outcomes. The study demonstrates how districts can join together to share everything from transportation services to human resources departments, giving them the purchasing power of larger districts.

Sharing services is regularly utilized by both the private and public sectors, and is growing in popularity because of its proven ability to reduce costs. The U.S. Postal Service saves $25 million a year by using shared services for accounting. Companies such as Ford, General Electric, Hewlett Packard, Pfizer and British Petroleum have all realized significant cost savings from shared services.

Full Study Online

Driving More Money into the Classroom: The Promise of Shared Services is available online at http://www.reason.org/ps339.pdf. Reason's education research and commentary can be found at www.reason.org/education.

About Reason and Deloitte

Reason Foundation is a nonprofit think tank dedicated to advancing free minds and free markets. Reason produces respected public policy research and publishes the critically acclaimed magazine, Reason. For more information, please visit www.reason.org.

Deloitte, one of the nation's leading professional services firms, provides audit, tax, financial advisory services and consulting through nearly 30,000 people in more than 80 U.S. cities. Known as an employer of choice for innovative human resources programs, the firm is dedicated to helping its clients and its people excel. "Deloitte" refers to the associated partnerships of Deloitte & Touche USA LLP (Deloitte & Touche LLP and Deloitte Consulting LLP) and subsidiaries. For more information, please visit Deloitte's web site at www.deloitte.com/us.

Contacts

William Eggers, Director, Deloitte Research, (202) 378-5292
Lisa Snell, Director of Education, Reason Foundation, (951) 780-9519
Adrian Moore, Vice President of Research, Reason Foundation, (661) 477-3107
Chris Mitchell, Media Relations, Reason Foundation, (800) 582-2245 ext. 3037




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