Saving education money with better monitoring
Decentralizing the state Department of Education means giving schools discretionary control over a higher percentage of funds. Without control over expenditures, schools' decision-making capabilities will be in name only.
In a report titled "Audit of the Decentralization Efforts of the Department of Education (1998)," the Hawaii state auditor found that surveyed schools had discretionary control over just 4 percent of their expenditures. In 2003, the DOE estimated principals had discretionary control over about 15 percent.
Starting in the 2006-'07 school year, the DOE says schools will have discretionary control over 48 percent of its $1.6 billion budget. This figure includes salaries and fringe benefits. The 4 percent and 15 percent numbers cited above do not include salaries and fringe benefits. If we subtract salaries and fringe benefits from the 48 percent, there appears to be little difference in the percentage of funds principals now have discretionary control over and the percentage they will control next year.
So what can be done to accelerate decentralization by giving individual schools control over a greater percentage of funds and the ability to use these funds as they see fit?
There are three ways to get more discretionary funds into the hands of principals.
» One way is for the Legislature to increase the $1.7 billion it appropriates for secondary education. While some say our schools are underfunded, others say the problem is not the amount of funding, but rather how effectively funds are used by the DOE. Will more funds increase the pot of money going to schools? The answer is unclear.
» The Legislature could stop telling the DOE how it must spend money. Categorical funds, amounting to 24 percent of the DOE's budget, are earmarked primarily by the Legislature for specific programs. The state auditor, the DOE and some legislators have called for abolishing categorical funding.
» The DOE could provide increased oversight of its own programs and better fiscal monitoring and accountability.
Numerous reports by the state auditor have questioned the adequacy of the DOE's data collection and monitoring. Now a recently released review of DOE programs by PriceWaterhouseCoopers, an independent auditing/consulting firm, confirms the auditor's observations.
The report says the DOE "is challenged to maintain and improve its internal control environment to achieve more effective and efficient operations, reliable financial reporting and regulatory compliance." It points out DOE program managers are failing to provide this oversight for the most part. The report recommends the DOE strengthen organizational accountability at all levels.
Over time, large organizations become filled with silos -- offices and programs disconnected from one another. This leads to duplication of effort, overlap of programs, blurred lines of responsibility and accountability, and, ultimately, waste and inefficiency. The organization falls prey to structural confusion but has little time to improve its own systems and structure because of the heavy demands and responsibilities on it.
I can think of few other groups as hard working and dedicated as Schools Superintendent Pat Hamamoto and her leadership team. Hopefully, the Legislature, the Board of Education, the Hawaii Business Roundtable, the Chamber of Commerce and others in our community will act quickly to help the DOE revamp its infrastructure so it can operate more efficiently and effectively.
Money saved is money that can increase the pot of discretionary funds available to schools.
Ruth Tschumy is a consultant to the Hawaii Educational Policy Center, a nonpartisan research organization.