Calculating the savings of consolidation
As a cost-saving measure, consolidation can help save a struggling district.
Consolidation can take two forms. In the first, a district grappling with declining revenues has no choice but to reduce costs or face insolvency. Declining revenues can come from a declining tax base, downturn in the economy or the loss of a major employer in the community.
In the second, a district has declining student enrollment, in which case the actual footprint shrinks. Such a decline could be attributed to population shift, or movement to non-traditional public schools and a shift to private schools.
More ways than one
Consolidation may be implemented in any number of ways. For example: Two schools consolidate into one new building; one school joins an existing school with the construction of a wing or additional buildings; or two schools may be consolidated into a vacated building.
No matter the situation, the mathematical foundation and formulas for calculating cost savings from consolidation are the same.
Two parts to figuring cost savings for a district include personnel and non-personnel. Most savings will come from reducing staff.
Calculating personnel savings
Redundancy in clerical staff often occurs when schools consolidate. There may be, for example, two bookkeepers, two attendance clerks or two secretaries when the schools merge. So it’s important to estimate the diversity components of newly consolidated schools.
If the new school has a high population of disadvantaged or homeless students, for example, you may need two social workers despite a typical allocation of one per school.
Next, calculate further savings using student-teacher ratios. Divide the number of students in a classroom by the number allocated per teacher by the district before and after consolidation, and compare the difference (if any).
For example, if the second grade at two pre-consolidation schools has 30 students per classroom, and if the district allocates one teacher for every 20 students, each school should receive two teachers for the second grade.
If those schools consolidate and 60 students are in second grade, the consolidated school should receive three teachers, one fewer than before consolidation.
While most savings will come from personnel, non-personnel costs should also be considered. Utility spending should decrease if a building closes in a consolidation. This can be calculated by subtracting the cost of utilities for a consolidated school building from the cost of utilities of the previous unconsolidated school buildings.
Personnel and non-personnel savings may be combined in some areas. Savings might exist in transportation, for example, especially if school buses had been operating at half capacity at existing schools.
At a consolidated school, fewer buses—now operating at full capacity—means fewer drivers on the clock (personnel) as well as less fuel being consumed (non-personnel) and can lead to significant cost savings. Likewise, custodial services at a consolidated school could show savings.
To determine savings, compare the cost for custodial services per square foot before and after consolidation. Cost-per-square-foot at a given school can be calculated by adding the cost for payroll (personnel) and supplies (non-personnel) and dividing that by the total number of square feet.
Political and community forces can contribute to the success or failure of a consolidation. Earn community buy-in by making every step transparent, with public meetings to address questions and demonstrate savings. This can build positive momentum in the community and district.
Jay C. Toland is the chief financial officer for Scotland County Schools in Laurinburg, North Carolina.