Afton supports districts in sustainably implementing strategic initiatives
The School District of Philadelphia (SDP) has been experiencing significant enrollment reductions over time, from a high of 184,000 in 2005 to 135,000 in 2014. SDP’s leadership knew that it “cost” the district money when students left to go to charters. SDP’s leadership was interested in understanding a full picture – what did charter school enrollment “cost” the district (for example, what costs must the district absorb when enrollment shifts), why, and what could be done so that the district could afford to authorize quality schools when possible. Concurrently, SDP’s leadership wanted to understand what value both charters and the district could get for every dollar of spent. In other words, were charters getting ‘more for their money’ and if so, how?
To address these questions, Afton developed two deliverables: a “Stranded Cost” Model, and a Per Pupil Analysis (Funding Equity and Purchasing Power). The Stranded Cost Model sought to understand the level of burden the district felt at various projections of enrollment migrations to charters. Afton built a 15-year financial forecast incorporating school-by-school, grade-by-grade enrollment, staffing, and expenditures. The detailed analysis allowed SDP to understand when, where, and why costs per student would increase when enrollment migrated. The district was also able to evaluate the likely financial impact of policy decisions, including class size and staffing guideline adjustments and school consolidations – which could offset the financial burden from enrollment migrations.
The Per Pupil Analysis sought to answer two questions: 1) How equitable is funding between the district and charters, and 2) what can the district and charters purchase for the same amount of money? These analyses were completed by sampling Philadelphia charters and comparing revenue and expense data on an absolute and student-needs-adjusted basis. The results informed the district and charters on the comparability of funding, which was relatively equitable once adjustments were completed, and highlighted areas where charters were able to be more flexible with their use of funding.
These analyses, together, aim to provide a more nuanced understanding of the implications of future charter authorizations, as well as provide insight into what the District can do to mitigate the costs of any current and future migration of students from district to charter schools.
The School District of Philadelphia publicly released Afton’s report in March 2017. The full report can be accessed here and media coverage of the report is listed below.
- Students leaving Philly schools for charters less costly than once thought (whyy.org, 3/9/17)
When charter schools expand, and more kids leave classrooms run by the School District of Philadelphia, it’s not as costly as previously estimated, although the total remains significant. That’s according to a much-anticipated report commissioned by the district in 2015, completed by the consultancy Afton Partners.
- Press release: School District of Philadelphia releases report on the stranded costs of charter schools (Philadelphia Public Schools, 3/9/17)
Uri Monson, Chief Financial Officer for the School District of Philadelphia says in the district’s press release, “Some of the constraints that lead to stranded costs are partially controllable and can be mitigated with action by SDP, albeit via difficult actions such as layoffs and school closures. Continuing to grow and improve district-managed schools, and attracting students back to great schools near where they live, would also mitigate these fiscal challenges for the district.”
The District can change its cost structure to make authorization of new quality charters financially possible, though not completely painless. We often hear that charters “hurt” districts financially. Through this action-oriented work, we were able to pinpoint how much, why, and what can be done to mitigate this. Options to mitigate financial impact involve difficult decisions such as staffing alignment and school consolidations.
Long-term financial planning is critical when enrollment is unstable or uncertain. Evaluating potential enrollment scenarios allows a district to be proactive rather than reactive to enrollment declines. Without action by the district, stranded costs will increase as enrollment continues to decline. However, long-term financial plans can help a district develop a ‘menu of options’ – actions it can be prepared to take when necessary – to remain financially stable.
Transparency in data and best-practice sharing can enable all schools in the system to become more efficient and effective with their resources. The results of our analyses indicated that the district and charters were funded rather equitably, but both had areas of non-instructional spending that were higher than others. Sharing of best practices can help with efficiency on both sides.
Additionally, by being transparent with the outcomes of these analyses, charters can understand the impact they have on district finances, and see where the district truly does not have control over spending decisions (for example, outplacements for special needs and historical debt). This transparency can help make more equitable decisions in the future.