Week+4+Part+2-EDLD+5342

The concept of economy of scale is evident by reviewing the snapshots of the sample District 1 and District 2. District 2 is much more populous, perhaps in a suburban area of Texas with over 30,000 students and 45 campuses. District 1, however, has less than 1000 students and 3 campuses, located in a much smaller town possibly or even in a rural area of the state. Having personal experience is rural, suburban, and large urban districts, I have found that differences are vast. Just as the economic concept of supply and demand, volume often causes prices to go down. In schools while our ‘profits’ are not tangible, it does take resources to effectively instruct, educate, and provide safe environments for our students. Compliance requirements and safety concerns are true in both large and small schools, and the two sample districts are good indicators of how each district in Texas has very unique circumstances. Per pupil revenue in District 1 is over 10,529 while District 2 is 10,316 The property tax value in both districts is very similar, and without doing extensive calculations, one can conclude that the WADA for District 2 is much larger due to a more diverse population, i.e., students who are identified as LEP, served by Special Education, and economically disadvantaged. Most of the revenue generated in District 2 originates from local funds, while state funding is the source for the majority of District 1’s revenue.
 * __Week 4 Part 2- EDLD 5342__**


 * || //**District 1 **// || //**District 2 **// ||
 * //**Total Revenue/Pupil **// || //$10,529 // || //$10,316 // ||
 * //**Operating Expense/Pupil **// || //$8,611 // || //$8,908 // ||
 * //**Average Teacher Salary **// || //**$39,771 **// || //**$50,307 **// ||

As is the case with total revenue per pupil, operating expenditures per pupil in both districts, though, is very comparable, 8908 and 8,611. There is a notable difference in the average teacher salary, though. While there is a similarity in the percentage of teachers with 5 or fewer years experience, there is only a slight difference in the number of teachers with advanced degrees, and this may account for a portion of the disparity in average salaries, it is most likely due to the difference yielded by economy of scale, having so many more students in District 2. Because the cost of other expenditures actually decreases, there are more funds available to provide for a higher base salary and salary increases.

//**Analysis **// //The major disparity in our comparison falls in the area of teacher salary. This is where the economy of scale rears its head. Analysis indicates that teachers in District 2 make (on average) more than 20% more than comparable teachers in District 1. Additionally, the average level of experience is considerably higher in District 1, which indicates an even larger disparity when salary steps are taken into consideration. Central administration is the most disproportionate example, with District 2 making a 45% higher salary. Our particular district uses close to 85% of funding in salaries. The salary disparity due to economy of scale is very evident in this particular case. //

//In my opinion the adage “money isn’t everything” may well hold true here. There are a number of reasons that teachers choose to stay at the lower paying district (locale, school and/or community conditions, cost-of-living, etc.). Whatever the case may be, turnover at each is comparable. Unfortunately still, advantage to the bigger district. If the two were side by side, the larger would be in a much better position to hire (or steal away), and retain the better quality staff. //

*Rob's in italics. Feel free to manipulate at your discretion.

*

From Rob: <span style="font-family: 'Arial','sans-serif';">Our district is one that does not allow transfers. In some respects this is a double-edged sword. Not only are we constantly running around using resources to determine if “suspect” students don’t actually live in the district, but we are overlooking the merits of the added financial benefits of increased ADA. With that being said, I am COMPLETELY in support of our position as it bests suites our particular situation in the area in which we are located.

<span style="font-family: 'Arial','sans-serif';">Previously I was at another district that benefitted from allowing transfers. The concept was a simple one. It was a rural, somewhat-isolated district with a low teacher/student ratio. Quite simply, any admission of additional students that didn’t 1) cause you to require additional staffing, or 2) didn’t push your class numbers to unreasonable heights, would simply benefit the district through increased ADA. It was a slippery slope, but manageable due to size and location.

<span style="font-family: 'Arial','sans-serif';">Our case study is a more enhanced example of two such districts. District 1 could very easily be the former, small district I mentioned above. When comparing the two, we can actually see that the two are proportionate in regards to both their total revenue per pupil and their operating expenditures. Below is a quick reference table:


 * || **<span style="font-family: 'Arial','sans-serif';">District 1 ** || **<span style="font-family: 'Arial','sans-serif';">District 2 ** ||
 * **<span style="font-family: 'Arial','sans-serif';">Total Revenue/Pupil ** || <span style="font-family: 'Arial','sans-serif';">$10,529 || <span style="font-family: 'Arial','sans-serif';">$10,316 ||
 * **<span style="font-family: 'Arial','sans-serif';">Operating Expense/Pupil ** || <span style="font-family: 'Arial','sans-serif';">$8,611 || <span style="font-family: 'Arial','sans-serif';">$8,908 ||
 * **<span style="font-family: 'Arial','sans-serif';">Average Teacher Salary ** || **<span style="color: red; font-family: 'Arial','sans-serif';">$39,771 ** || **<span style="color: #00b050; font-family: 'Arial','sans-serif';">$50,307 ** ||

<span style="font-family: 'Arial','sans-serif';">In terms of revenue, District 1 receives the bulk of their funding from state revenues (61%) whereas District 2 relies largely on local tax revenue (62%). So proportionately, both district funding breakdowns are very similar, with the exception of the differing funding sources each relies on.

<span style="font-family: 'Arial','sans-serif';">The major disparity in our comparison falls in the area of teacher salary. This is where the economy of scale rears its head. Analysis indicates that teachers in District 2 make (on average) more than 20% more than comparable teachers in District 1. Additionally, the average level of experience is considerably higher in District 1, which indicates an even larger disparity when salary steps are taken into consideration. Central administration is the most disproportionate example, with District 2 making a 45% higher salary. Our particular district uses close to 85% of funding in salaries. The salary disparity due to economy of scale is very evident in this particular case.
 * <span style="font-family: 'Arial','sans-serif';">Analysis **

<span style="font-family: 'Arial','sans-serif';">In my opinion the adage “money isn’t everything” holds true here. There are a number of reasons that teachers choose to stay at the lower paying district (locale, school and/or community conditions, cost-of-living, etc.). Whatever the case may be, turnover at each is comparable. Unfortunately still, advantage to the bigger district. If the two were side by side, the larger would be in a much better position to hire (or steal away), and retain the better quality staff.

<span style="font-family: 'Arial','sans-serif';">This is posted on my wiki along with our group consensus statement. Additionally, it will appear on the faculty blog along with my comments from other wikis.

<span style="font-family: 'Arial','sans-serif';">From Jeff

Number of Students

Dist. 1 – 830 Dist. 2 - 32,326

Total Revenue per Pupil

Dist. 1 - $10,529 Dist. 2 - $10,316

Total Revenue (2007-2008)

Dist. 1 - $8,823,250 Dist. 2 - $329,638,930

Taxable Value per Pupil

Dist. 1 - $162,892 Dist. 2 - $567,521

Total Operating Expenditures per Pupil

Dist. 1 - $8,611 Dist. 2 - $8,908

Total Instructional Expenditures per Pupil

Dist. 1 - $4,619 Dist. 2 - $5,494

Average Teacher Salary

Dist. 1 - $39,771 Dist. 2 - $50,307

<span style="background-color: white; font-family: Arial,sans-serif; font-size: 10pt;">District 1 is significantly smaller than District 2 (830 students vs. 32,326 students). Although the two have many similarities, District 1 expends 54% of their budget on instructional expenditures (teachers), while District 2 expends 62% on same. District 1 expends 34% of its budget on Plant Services and Other Operating expenditures, while District 2 expends only 28% on same. This is a good example of “economy of scale.” Because District 2 is larger, their Plant and Other Operating expenses require a smaller piece of the revenue pie, therefore leaving more money available to increase the instructional/teacher salary piece of the pie…more funds available to enable District 2 to be able to pay higher salaries than District 1.