Executive Summary

Times and Situations Change

In 1896, the Dow Jones Industrial Average was created. The twelve companies that made up the original DJIA were the industrial giants[1]. Today, only one of the original twelve companies remains in the DJIA – General Electric. The others have either gone out of business or have been absorbed by other companies and/or bear little resemblance to the original company.

In 1885[2], the Constitution of the State of Florida mandated a free K-12 Public Education System (“K-12”). Its role was simple - teach children math, reading, writing and history, etc. Since that time, K-12 has grown unchecked into an entity which is top heavy, burdened with non educational tasks, hamstrung with mandates sent down by Tallahassee and Washington and in some cases somewhat controlled by the courts. Its behemoth size consumes an incredible portion of the public treasury and when compared globally largely delivers an inferior product. It did not grow to its current size with one bite. It grew “one bite at a time”. The pictorial on page 5 shows the progression from 1885 to 2008.

Comparing Business and Government Solutions

From time to time, businesses must “restructure” or “reinvent themselves” stripping away unnecessary departments, functions and waste or face going out of business or being bought by someone else who can and will restructure the company.

K-12 (government), on the other hand, can just raise more tax revenues to cover waste and unnecessary departments and functions.

Sobering Statistics

The following statistics should give you pause.

Class Size Amendment (“CSA”)

The taxpayers of the State of Florida have been led to believe that there is a need to continue to build classrooms to meet the requirements of the Class Size Amendment. It will probably come as a great shock to most to find out that currently statewide:

There is one existing teacher for every 14.6 Students[3].
There is one existing classroom for every 17.7 students.
The state budget for 2007 – 2008 would add approximately 6,918 more classrooms which would result in one classroom for every 16.9 students.

A puzzling question is, “Why, if there are more than enough classrooms are students sitting in classrooms with far greater numbers of students than required by the CSA?”

Global Performance

Our children will have to be prepared to compete in a global economy. In studies comparing the academic performance of students of difference countries, the U.S. does not fair well. In one study cited in this document, the U.S. came in at 11^th in science and 15^th in math.

In a second cited study, the U.S. came in 21^st out of 26. The U.S. academic performance exceeded only Spain, Portugal, Italy, Greece and Mexico, even though the U.S. outspends every other country in this study when adjusted for purchasing power parity - in one case, as much as 5 times more!

Burden to Taxpayers

The tax burden of the ballooning government has become so great[4], that it is crushing Florida taxpayers. Education is by far the largest sector of the state budget[5] – 34%. And, K-12 spends 57% of the 34% or 19.4% of the total state budget. It is largely funded through property tax and K-12 spends the majority of the public funds spent at the county level. Further, the majority of ALL K-12 education is funded by property taxes[6] - both “local” and through the “Required Local Effort” of the Florida Education Finance Program.

Without further classroom construction (except in a few cases), the taxpayers of the state would breathe a collective sigh of relief!

Reinvention

Just as businesses must be reinvented from time to time, government in the State of Florida must be reinvented before it brings the entire state to its knees[7]. Taking a “worst first” approach, K-12 should be the starting place. It is a monumental task, but it can and must be done.

Goal

The reinvented K-12 must strip away as much overhead, undo unnecessary mandates and remove as many non educational functions as possible providing the funds to put the focus on the classroom, where education is occurring. In the process, the tax burden on the taxpayers will be reduced. In order to accomplish this goal, a K-12 Reinvention Task Force must be created.

Fear and Reassurance

Education has been seen as “off limits” for politicians. They are simply afraid of the educational lobby and the backlash from the teachers. As a group, teachers believe that there is not enough money for education. What they do not understand is the huge amount of money that is spent in the school districts. There is more than enough, but a huge portion is being spent to fund new classrooms and a sizable portion is being spent as overhead in the county office rather than in the classroom. When teachers understand that the reinvention would focus resources in the classroom and that, along with the children, they will be the biggest beneficiaries, they should enthusiastically endorse the commissioning of the Task Force.

Teachers would be a major resource for this task force. They are where “the action is”. They would be so very important in identifying the onerous mandates and non educational issues which keep them from teaching and the students from learning. Their voices would be heard and their input would be invaluable.

Task Force Make Up

The Task Force needs the leadership of business executives who are used to making tough decisions. The final product of the Task Force would be a Transition Plan. Most likely, the Transition Plan would require some major legislative and judicial, as well as administrative changes. Therefore, the make up of the Task Force should include key leaders from government and representation from education – from the classroom to Tallahassee.

The Next Step

This draft plan provides background information on K-12 to support the above claims and a logical “high level” approach to reinventing K-12. It is not the final product, but one to get leaders engaged in an intellectual discussion. The discussion should be quickly followed by a modified Task Force Plan. The Task Force should be quickly commissioned so that work can begin shortly. The goal should be to have a report within a year.

Reinventing the K-12 Public Education System is a monumental task, but it must be done. When completed, it could become the model for all of the United States.

Background

Expenditures for Education – State and Local

In Florida today, there is an outcry concerning the tax burden with which our citizens are saddled which has jumped to the 12^th highest in the nation among the 50 states[8].

What is the largest consumer of tax dollars in Florida?

· 34% of our state budget[9] is spent on education and it is growing[10]. 57% of the state education budget is spent on K-12. Therefore, K-12 accounts for roughly 19.4% of the total state budget.

· In many or most counties, the school system has a budget larger than the county government.

o For the 2006 – 2007 budget year, roughly 59%[11] of the total dollars spent through the combined budgets of the County Government and School Board in Manatee County were spent by the School Board[12].

o To put this expenditure in perspective, if every man, woman and child (babies, children, teens, the elderly and the infirmed) in Manatee County worked a 40 hour week and the county government and school system were funded through payroll taxes, everyone would have $2.30 per hour deducted from their pay checks. Education would account for $1.37 per hour of that deduction[13].

In business, working on issues on a “worst first” approach can result in the biggest benefits the quickest. Following that approach, the first area of the budget to be studied should be education. Since K-12 accounts for 57% of the state education budget, analyzing it first makes sense. Interestingly, analyzing K-12 is “reasonably” easy at the macro level size since we know what it costs and it hypothetically produces essentially one product – our “educated” children.

School Districts – Economic Size

The economic size of a local school district is difficult to fathom. However to try to gain perspective, understand that in most counties, the School District employs more people and has a larger budget than any other entity in the county – public or private.

School Board budgets are so very large that few people can understand numbers of that magnitude. And even fewer people, including most school board members, have taken the time to REALLY investigate school budgets. They just accept whatever the budget director produces as the budget.

Interestingly, some budgets are very difficult to understand. With a common format including data which must be known within the district, it would be much easier to make a high level analysis of the different school board budgets[14].

A Quick and Simple Analysis of the Manatee County School District

The following numbers are the numbers for the Manatee County School District[15] for 2006 - 2007:

“Operational” Budget

· Total Budget - $889,900,000 (including $16 M to be carried forward to 2007 – 2008)

· Number of Students - 42,000

· Expenditure per Student - $21,188

For the sake of discussion, the $379 Million for NEW SCHOOLS of the $426.1 Million[16] Capital Budget will be removed.

· Budget including “Normal Capital Items” - $510,000,000

· Number of Students - 42,000

· Expenditure per Student - $12,143

School Level	Elementary	Middle	Senior
"Operating Expenditure per Student"	$12,143	$12,143	$12,143
Students per Teacher per “CSA”	X 18	X 22	X 25
Total Amount per Classroom	$218,574	$267,146	$303,575
On average, the cost of the CLASSROOM teacher is:
Average Teacher's Salary	44,440	44,440	44,440
Teacher's Benefits (Budget 25% of Salary)	11,110	11,110	11,110
Total Teacher Expense	55,550	55,550	55,550
% Teacher of Operating Expenses	25%	21%	18%
After paying the teacher, how much is consumed by overhead?
*Overhead*	$163,024	$211,596	$248,025
% Overhead of "Operating Expenses"	75%	79%	82%

Of the $218,574 - $303,575 spend on each classroom:

Teachers and their benefits accounts for just 18% – 25%
Overhead accounts for the other 75% - 82%

Clearly, there are other operational expenses, but you have to ask, “Where does the money go?”

The school board staff will probably not like this simplistic approach and argue that there are expenditures included other than strictly “Operational Expenses”. However, in Florida households or businesses, everyone has to look at both TOTAL revenue (income) and TOTAL expenses.[17]

Capital Budgets

· For the most recent 8 year period (budget years of 2000 – 2001 through 2007 – 2008), the capital expenditures (things that are supposed to LAST) for the Manatee County School District totaled approximately $1,958,000,000 or roughly $46,600 per student based on current enrollment.

· If there are 20 students in a classroom, that would equate to roughly $932,000 per classroom.

Where does the money go?

Class Size Amendment – The Disconnect

In 2002, the Class Size Amendment passed (“CSA”). The implementation of this amendment requires that by 2010 - 2011, there be a specified maximum number of students per classroom as shown in the table below.

Manatee County

With the cover of the CSA, within a very short period of time, Manatee County began an unprecedented construction program. Along the way though, it was determined that renovation was largely not acceptable – some new schools were built and old schools torn down. The new schools are of a VERY high quality.

An analysis of the Manatee County budget information which was available by grade level by school revealed some interesting information:

Type School	CSA Requirement	CURRENT Students per Teacher	CURRENT Students per Classrooms
Elementary School	18	14	15
Middle School	22	17	15
High School	25	19	19

Statewide

The Florida Department of Education’s web site has a number of reports containing important information which were combined into a spreadsheet contained herein as Exhibit 1. The results are county by county and the state as a whole.

An analysis of the results indicates the following information for the K-12 school system statewide:

	Students per EXISTING Teacher	Students per Existing Classroom	Students/Total Student Stations	% Capacity
Statewide	14.6	17.7	0.84	88%

Based on this data, we find that on a gross basis, we have more than enough classrooms to meet the CSA.

Fixed Capital Outlay

On August 15, 2006, apparently there was a presentation concerning an analysis done by the State Board of Education looking at the “Fixed Capital Outlay” requirements for 2007- 2008. Exhibit 2 The request was for $2,876,352,301 to apparently build 6,918 classrooms[18]. In fact, the Governor’s budget proposed for new classrooms was $2,764,545,105 which is reasonably close to the $2.876 Billion requested.

With the addition of classrooms paid for by these additional funds, the above table would now look like this:

	Students per EXISTING Teacher	Students per Classroom	Students/Total Student Stations	% Capacity
Statewide	14.6	16.9	0.76	83%

Interestingly, the funding envisioned here accounts for ONLY the classrooms paid for in full. It does not account for the classrooms that are paid for through bonding by the local districts!

Clearly, there is a “disconnect” between what we have been told and what the numbers say.

In addition, using the numbers from the Fixed Capital Outlay from above, we can determine for the new classroom to be built:

o Cost per Classroom

Dividing $2.876 Billion for classrooms by 6,918 classrooms yields an average of $415,778 per classroom

o Cost per Student

Dividing $415,778 for a classroom by an average of 20 students per classroom yields an average of $20,789 per student

Those numbers seem somewhat high! All of the above begs the question - What is going on?

Cost and Results - The Disconnect

Prior to the implementation of the FCAT[19], Florida educational results lagged behind many other states. Since the implementation of the FCAT, Florida are academic results are rising when compared to the rest of the nation. Globally, however, we are way behind.

Global Comparison

According to the International Association for the Evaluation of Educational Achievement[20], in 2003, 13 year olds in the U.S. ranked 15^th in Math[21] and 11^th in Science[22].

A second group - Organization for Economic Co-Operation and Development – conducts an internationally standardized assessment that was jointly developed by participating countries and administered to 15-year-olds in schools called “The Program for International Student Assessment” and is abbreviated as “PISA”. The survey was implemented in 43 countries in the 1st assessment in 2000, in 41 countries in the 2nd assessment in 2003[23], in 57 countries in the 3rd assessment in 2006 and 62 countries have signed up to participate in the 4th assessment in 2009. Tests are typically administered to between 4,500 and 10,000 students in each country.

The results that are currently available are those of the 2003 testing and are summarized in a 471 page report “Learning for Tomorrow’s World - First Results from PISA 2003[24]”. Combining the results for math, reading and science and comparing, it is easy to rank the overall results by country. Also included in the PISA report was the spending per student in equivalent U.S. dollars using purchasing power parities. The results are revealing. Consider the graph:

The blue series indicates the performance of the students taking the PISA. The red line indicates the U.S. Student performance. Note that every country to left of the red line performed better than students in the U.S. The green series shows the Spending per Student in equivalent U.S. Dollars using purchasing power parities.

The U.S. spending per student is greater than all other nations that participated – Switzerland and Austria are close. However, even though the U.S. spends more than any other country in this study (in some cases more than 5 times countries that performed better academically - The Slovak Republic), the U.S. academic performance exceeded only Spain, Portugal, Italy, Greece and Mexico!

This graph suggests that there is little or no correlation between how much money is spent on education and the results.

Clearly, there is a “disconnect” between the spending per student and academic performance. How do you deal with this disconnect?

Dealing with the Disconnects

The Metamorphosis

Over the years, K-12 systems have grown from the original mission of teaching children math, reading, writing and history, etc., to trying to perform an incredible number of functions that may or may not be educational related and have morphed into gargantuan amalgamations[25]. Again, K-12 systems did not start at their current sizes. They grew a “bite” at a time. The reasons for this morphing are most likely many and varied. But, each must be investigated and studied. Most likely, many solutions would require “outside the box” thinking.