Posted 2:06 PM by Susan Darst Williams

AUDIT SERIES #3: SEE THE WHOLE ICEBERG

It isn’t the part of the iceberg that you can see that’ll get you. It’s the bulk of it, hidden beneath the surface.

A report from the Nebraska State Auditor shows that the key spending item that most people associate with public schools -- teacher pay -- accounts for merely 24.6 percent of total public-school spending in Nebraska.

It’s startling: how can this be? Teachers are the heart of education.

Well, that’s still true. But there’s a titanic amount of other cost items bulking up those operating budgets. The teacher has now become a minority item in the overall cost of educating a child in Nebraska.

That cost reached $13,843.66 per pupil in the Cornhusker State this year, according to figures compiled by the auditor’s office.

Big items in that total include the costs of non-teaching staff, non-teaching school operations, building projects, repayment of debt, and enormous amounts of cash reserves. Gradually, over the years, these ‘’non-teacher’’ costs have greatly outstripped teacher salaries to become three-fourths of the cost of educating a child today.

Lets start with salaries for what I call ‘’The Great Non-Educational Education Workforce’’ – ‘’The Blob.’’ These are non-teachers who work in schools and associated bureaucracies but aren’t teachers. Examples: superintendents, assistants to superintendents, assistants to the assistants to the superintendents, data enterers, health aides, counselors, bouncers, techies, bus drivers, lawn mowers . . . you get the idea.

‘’The Blob’’ is gaining on the teachers. The most recent budget of the Omaha Public Schools shows total employment of 6,003 people . . . 3,600 of whom are teachers. Who ARE those other guys? Not teachers.

‘’The Blob’’ is on the increase because the philosophies and methods that are in place in our public schools -- outcome-based education, whole language, whole math, progressivism, workforce development, developmentally-appropriate practice, special education inclusion -- are much, much more labor-intensive than traditional educational models . . . not to mention the fact that they don’t work worth squat. It’s a stark reflection of the power the unions have in our schools: the more people we employ to work in them, the merrier it is for the unions.

The same OPS budget also is a stark reflection on how many things the schools spend money on that have nothing to do with serving children in the classroom.

You’ve got your $65 million in fringe benefits.

You’ve got your $5 million in electricity.

You’ve got your $1.3 million in legal work.

You’ve got your $2 million in liability insurance.

You’ve got your $33 million for building and grounds.

You’ve got your $2 million for remodeling.

You’ve got your $7.8 million in contracted transportation.

And on and on, yadda yadda yadda. All of these people are paid salaries and bennies, use tools and resources, need parking spots, pension payments, and on and on. The nickels and dimes continue to build the iceberg from the top down and the bottom up.

The perceived need for hiring more and more employees leads to increased costs that go far beyond those employees’ salaries. There’s all the money that goes to support each employee, whether they’re in the classroom teaching or not. To assess the total cost of employing someone, the rule of thumb is approximately 65 percent salary and 35 percent fringe benefits and ‘’other.’’

You can see how it adds up as school staffs grow, year after year, and that’s not necessarily reflected in the spending reports schools make to the public. Consider, for example, the taxes that went into the funding of the Omaha Public Schools’ pension fund alone. The most recent OPS budget shows a balance of $710.2 million. That’s a lot of taxpayer nickels and dimes, and it dwarfs the OPS operating budget, set at $320 million this school year.

Similarly, OPS spent $14.3 million in debt service alone the year before last, which is more money than most Nebraska school districts spent overall. OPS spent that money to retire principal and interest on its 1999 bond issue, $254 million for building projects. That’s another sizeable chunk of change affecting the overall cost of education that most people don’t think about.

In fact, Nebraska school districts requested $288.3 million in total bond fund requests this school year, according to the auditor’s report. That’s enough to hire almost a third again as many teachers as we already have across the state.

Another big sub-surface item is cash reserves -- CYA funds -- ‘’fudge factors.’’ According to the auditor’s report, Nebraska school districts were sitting on $354.6 million in cash reserves this school year, plus an additional $62 million in cash reserves for their bond funds.

If you removed the cost of having such big cash reserves and capital expenditures from the spending per pupil figure, it would cut the cost by nearly $2,500 per child. That’s because schools spent $11,362.74 per pupil without cash reserves and bond funds, and $13,843.66 per pupil with them, according to the auditor’s report.

Yes, it’s good management practice to have a cushion of available cash, should things go sour. But as one cheerfully jaded public official put it, ‘’What are they worried about -- nuclear war? That we’ll all be mad if they take too many days off after the Big One drops?’’

An even more jaded question is: ‘’Who is making money on all those cash reserves in various financial accounts, here and there?”

Whole lot of back-scratchin’ goin’ on, folks. I mean, it gets repulsive, when all those inner-city kids still can’t read, write and figure.

Look: what have we been hearing about for the past couple of years? The horrendous overspending by Nebraska units of government, which is dolled up as a horrendous ‘’tax revenue shortfall.’’ However you slice it, we’re spending more than we ‘’make.’’ It’s in the multimillions of dollars. We’ve got that huge toxic waste bill to pay, too. And yet here are our schools, squatting on a really, really, REALLY big nest egg, and still squawking for more.

That’s not a nest egg. That’s an iceberg. Do we want to crash into it? Or shrink it, maybe?

They shouldn’t sit on it for long, anyway, because taxpayers are waking up to what’s going on. And you know what happens when you sit on ice: you get yourself burned where the sun don’t shine.

So that’s what’s what. Tomorrow, we’ll look at ‘’whodunit.’’

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One in a series on Nebraska school finance issues based on a March 4, 2004, report from the office of State Auditor Kate Witek prepared for State Sen. Ronald Raikes. Data sources included the September 2003 Fall Personnel Report from the Nebraska Department of Education, and other 2003-04 statistical information reported by districts to the state.

For Nebraska public education spending reports, see statewide and individual district annual report information on:

http://ess.nde.state.ne.us/SchoolFinance/AFR/search/afr.htm

For the Omaha Public Schools budget, see:

http://www.ops.org/budget/