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HomeMy WebLinkAboutAgenda - 09-21-2004-10aORANGEGOUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 21, 2004 Action Agenda Item No. -~~'a_ SUBJECT: Parameters for Possible School Efficiency Study DEPARTMENT: Manager/Finance/Budget PUBLIC HEARING: (YIN) No ATTACHMENT(S): INFORMATION CONTACT: Report on School Efficiency Measures Rod Visser, ext 2300 4/26/04 Robert Segal CPA Letter Ken Chavious, ext 2453 Donna Dean, ext 2151 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To receive a report from staff on efficiency measures implemented to date by the Orange County and Chapel Hill-Carrboro City school systems, and to discuss possible next steps related to school efficiency. BACKGROUND: In Fall 2003, during the discussions on the "Analysis of Potential Impacts Resulting from a Possible Merger of the Orange County Schools and the Chapel Hill Carrboro City Schools", the Board of Commissioners expressed the desire to pursue three separate tiers of analysis and discussion prior to undertaking any further decisions related to possible school merger or funding equity. The first of these, school collaboration, has been the subject of an ongoing series of facilitated meetings since early 2004 involving leaders of the County and both school systems, The second initiative, an "educational excellence" assessment, is underway and is being conducted under a contract between the County and the University of North Carolina's School of Educatian. The third approach, an examination of possible measures that both school systems might pursue to increase operational efficiency, is the focus of discussion for this agenda item, The County Manager and School Superintendents met in August 2004 and concluded that the mast effective way to proceed with the efficiency initiative was to first outline for the Board of Commissioners measures already planned or implemented by both school districts and to outline other potential areas that could be examined within certain parameters expressed by the Board. Of particular note is the work done in recent years for the County and both school systems by the Robert Segal CPA firm. The Segal firm identified hundreds of thousands of dollars in both revenue enhancement and expenditure reduction for all three entities. Commissioners Jacobs and Halkiotis, the County Manager, and staff met recently with Mr.. Segal and concluded that there are probably additional dollar savings to be achieved by both school systems and the County. They recommend that the topic of school efficiency be included on the agenda for the September 27, 2004 joint work session of the County Commissioners and the two Boards of Education.. Mr, Segal is prepared to attend that work session to discuss with all three boards areas of potential savings that his firm would be willing to research, including cost sharing and reduction that might be achieved through collabdratiort among all three entities. Assuming all three boards agree to pursue further investigation by the Segal firm of potential revenue enhancement and cost reduction, staff would bring a proposed contract with the Segal firm for the Board's consideration at their October 5, 2004 regular meeting, FINANCIAL IMPACT: There is no financial impact associated directly with the discussion of this agenda item. There would be costs associated with conducting an efficiency study, but if the Segal firm were chosen to carry out that work, it is likely that they would be remunerated by retaining a percentage of any cost savings identified and accepted by the Board. RECOMMENDATION(S): The Manager recommends that the Board receive the report as information and provide direction to the Manager and staff on next steps related to school efficiency, Prepared: 09/76/04 3 REPORT ON SCHOOL EFFICIENCY MEASl1RE5 Efficiency Measures Taken to Date Orange County Schools (OCS) Hired Robert Segal in, CPA, expense reduction and revenue enhance specialist, in 2001 to review several areas of operations., The Segal company's findings for the OCS are summarized as follows. 1. Sales tax refunds were reviewed and analyzed for the potential for additional funds due the school system from the State and other counties. This work resulted in the school system receiving an additional refund of approximately $130,107 which covered a three year period 1998-2001. The OCS has agreed to allow the Segal company to review additional sales tax information for 2002 and 2003. 2. Contracts for copying services were also reviewed and analyzed by the Segal company, The end result was a formal request for proposal for this service which according to the Segal study could potentially save $220,000 over a three year period, 3, The Segal company reviewed other potential areas of additional revenue as well as operating expenditures, Approximately $24,500 in additional revenue was discovered and requested from the Department of Public instruction related to students housed in group homes, 4. Other items review by the Segal Company included expenses such as banking services, electricity, gasoline and diesel fuels, maintenance contracts, paging services, telecommunications and waste disposal. Segal noted that these areas appeared to be well managed. Prepared: 09/16/04 `T Energy Management Program -The OCS has adopted and energy management program, that includes staffing with an energy manager position. It is expected by the school system that this program will reduce utility expenses significantly through education of staff and system-wide oversight. Custodial Services - OCS has implemented pilot program for privatized custodial services and has redistributed existing custodial staff around the district to increase efficiency, In addition school staff have been trained in the cleaning and maintenance of HVAC systems which is expected to also reduce costs, • Telecommunications - OCS used Spitler Consultants to review phone bills for potential erroneous charges,. The Company's work resulted in savings of $1,392.21 in federal excise tax elimination, • Program Elimination - OCS eliminated ayear-round middle school program when it was determined that the program was not self supporting as originally planned. • Banking services are consolidated with one bank for improved interest rate and no service charges, Banking services include free checks for local funds, • Benefits are managed by Colonial Life, These included a Flexible Spending Account with a debit card that alleviates filing claims. The savings included reduced dental, vision, a disability plan, cancer policies and various riders. • Program Funds Transfer - OCS transferred $400,000 from the enterprise fund (School Community Relations) in 04-05 and $55,684 in 03-04. • E-rate has been utilized by the district since 1999 to ensure that the district is receiving the maximum discount for telecommunications and internet services. This resulted in an average savings of $140,000 yearly. Prepared: 09/16/04 Chapel Hill Carrboro City Schools (CHCCS) Audits and Reviews • Hired Robert Segal, CPA, expense reduction and revenue enhancement specialist, in 2001 to review sales tax refunds. Similar to OCS, tax refunds were reviewed and analyzed for the potential for additional funds due the school system from the State and other counties, This work resulted in the school system receiving an additional refund of approximately $380,477, which covered the three-year period 1998-2001. • Telecommunications -CHCCS hired Tele Adjust to review phone bills for potential erroneous charges, The Company's work resulted in $15,372 in credits and reduced monthly costs going forward, Had an electrical rate audit completed to ensure that each meter used by the District was at the lowest available rate. The District had the lowest rates available, During the past three years utilized an E-rate consultant to ensure that the district is receiving the maximum discount for telecommunication services within the district, Educational Consortium for Telecommunications Savings (ECTS) works with our staff throughout the complex E-rate process and follows up with our telecommunications service providers to make sure that we receive the appropriate discounts or reimbursements. During the past year, this association resulted in $188,522 in savings, OWASA is conducting spot water audits to determine water use efficiency. • The Finance Office plans to engage in a no-cost accounts payable audit later in the fall. Services Private custodial services are provided at two high schools, one middle school, two elementary schools and Lincoln Center, Payroll savings are generated at the high school level. New schools are added to the contract as they are completed, Savings extend to reduced payroll responsibilities and benefits. High school savings are estimated at $90,000 per year,. Prepared: 09/16/04 Banking services were changed to lower fees and allow consolidation of funds to get an improved interest rate on school- based funds. Savings have exceeded $50,000. • Cafeteria Services are managed by Sodexho. The corporation manages and pays new employees thus generating labor savings for the District, The labor savings this year will exceed $40,000, Copier services were consolidated under one district wide contract, thus guaranteeing price stability for afive-year period. Savings have been substantial. Overage charges alone have been reduced by over $8,000 per month and price increase stability has resulted in a two to three percent savings per year, Benefits were put out for bid and companies forced to compete. While District savings would be minimal, employee casts were reduced, These savings include reduced dental costs, guaranteed issue term life and a new vision plan. • The District joined NC Secure, a food buying cooperative expressly for schools to reduce food casts in the school lunch program. The initial year projected savings exceeds $70,000. Construction and Renovation Board Policy 9040 address issues including day lighting, water use, and utility efficiency. The policy is the foundation of the new construction program in the district. The last two buildings built are considered some of the most energy efficient buildings in the country, A study completed by Innovative Design confirms the overall savings and can be provided upon request, The window replacement program uses double glazed high e- panes that reduce heating and cooling loads and increase classroom comfort, These have been completed at Glenwood, Carrboro and Estes Hills, All new schools are built with the energy efficient glass. HVAC replacements have used high efficiency units that use less electricity and reduce maintenance costs, Computerized HVAC controls at 8 of the 15 schools allows the central office to control thermostat ranges and HVAC setbacks thus generating utility savings. Prepared: 09/16/04 • All irrigation systems have rainfall-monitoring units that reduce over watering of fields and comply with new OWASA guidelines for irrigation, • Gray water reuse at Smith and Rashkis uses rainwater collected from the roof to irrigate fields, landscaping and to flush toilets. Water savings for the past year were 700,000 + gallons. • Both Smith and Rashkis are outfitted with photovoltaic units to provide for nighttime lighting or to provide electricity to the grid. • Solar hot water collectors are used at several schools to preheat water thus reducing natural gas demands, Budaet Reallocations • Reduced teacher assistant contracts by two days to generate a savings of $87,096. Funds were used to offset impact of state budget reductions. • Reduced Central Office administrative supplies and travel budgets by $50,000 to offset impact of state budget reductions. • Reduced the Board of Education's contingency fund by $83,274 for unfunded budget priorities. • Reduced substitute teacher budget by $50,000 for unfunded budget priorities. Procedural improvements in the payroll assignment of substitute teachers will generate the savings, Potential Additional Areas for efficiency improvements. • Joint Food Service Contracts. • Joint maintenance/software enhancement agreements with financial software vendor (Both districts use Isis Software) • Bid Audit Services Jointly. • Combine contracts for copier services, • Banking services ROBERT S. SEGAL, CPA PA _ _ ~ EXPENSE REDUCTION & REVENUE ENHANCEMENT 1912 EASTCHESTER DRIVE SUITE 206 HIGH POINT, NC 27265 336.886.2100 FAX 336.886-2101 wwwsagalcpacom April 26, 2004 Mr. Ken Chavious Director of Finance, Orange County P.O. Box 8181 Hillsborough, NC 27278-8181 Dear Ken: You have recently requested my thoughts about opportunities far savings if two school districts were to collaborative purchasing. Please remember that Robert S, Segal, CPA PA does not perform personnel related analysis. It is our understanding that school districts are required to purchase all products and services off of State Contracts unless the district can document that the alternative vendor has equivalent quality and service. Because of the documentation, many districts concentrate their purchase through State Contract. However, we believe there are some opportunities to reduce the expenses by collaborative purchasing in the following areas: Copying services -This is a volume driven expense (more copies, lower cost) and we would assume that a larger the contract with more volume/copies would have a lower cost per copy. Waste disposal - If the waste is picked up by independent contractors (and not the municipality), this is also a volume driven expense. A larger volume of business would entice more bidders and should result in a lower cost. Wireless phone services -This is also volume driven and may be an opportunity under an aggregate minute plan. I Audit fees - It seems that if both districts made the audit a package deal (one auditor would get both audits); the total audit fees may be lower, Outside services - If both districts were using different outside service providers for the same service, a competitive bid process in which the number of vendors was reduced, could result in a lower cost, For example: If both districts were using outside yard maintenance contractors and the district decided to reduce the number from two to one, it seems that the combined cost should be lower. Neither current vendor would want to lose the business, and hopefully, bath would bid aggressively for the larger contract, Telephone and computer hardware maintenance - It would seem that the price for two districts doing a combined request for proposal would be less than for two separate proposals. Outside printing expenses -More volume should reduce the costs. Banking services - It seems that if both districts made banking services a package deal (one bank would get both accounts), the total banking services expense may be lower. Internet Service Provider (ISP) expense - If the two districts agreed to access the internet through one ISP, the second expense could be eliminated or reduced. I hope this list of opportunities helps you evaluate collaborative purchasing for the school districts. We would be pleased to help in any way that sense, If you request, we could perform a detailed review of paid invoices and make a better list and a projected dollar saving. If you have any questions, do not hesitate to contact me at 336-886-2100 or at bob@segalcpa.com Si Robert S. Segal, C President