PK-12 Budgeting - Per Unit Costs

Per Unit Cost Examples

The following provides an example of how the concepts described in Best Practice in School Budgeting 3A - Applying Cost Analysis to the Budget Process could be applied using a hypothetical school site.The example is only intended to enhance the reader’s understanding of the best practice concepts, not intended to dictate a particular format or method. District managers should use their judgment and experience to decide how to most effectively apply the best practice concepts in their district. This appendix illustrates per-unit costs for instructional services and per-unit costs for support services.

Per Unit Costs for Instructional Services

The table shows three teachers, the courses they instruct, information about their workload and compensation, and cost per student. Cost per student is the “per unit” cost and it shows this district is spending far more money per student on art classes than it is on the math classes. This might prompt the district to reconsider how it offers art classes. The table also shows how supplemental activities could be compared to regular classes. In this case, a teacher is offered a stipend separate from regular compensation to coach two volleyball teams. The table shows that the amount spent per student on volleyball is not too much lower than what is spent on the Algebra 1, perhaps prompting some useful conversations about how the district allocates resources.

 

Per Unit Cost for Support Services

Support services can be analyzed on a per unit basis, using metrics such as cost per invoice processed or cost per payroll check produced. The following examples come from The Council of the Great City Schools Performance Management System:

Procurement Cost per $100K Spent
Importance

Procurement cost per $100,000 spent measures the indirect cost of the procurement function compared to the total procurement dollars purchased by the district. Assuming all other things are equal, this is a relative measure of the administrative efficiency of a district’s procurement operations.

Factors that Influence Procurement Cost per $100K Spent
  • Degree of P-card utilization
  • E-procurement automation
  • Delegation of purchasing authority
  • Purchasing office professional staff grade structure, contract services, and other expenditures
  • Number of highly complex procurements, especially construction
  • Skill level of staff
  • Definition of procurement
Example Data Set

Custodial Cost per Square Foot
Importance

This measure is an important indicator of the efficiency of the custodial operations. The value is impacted not only by operational effectiveness, but also by labor costs, material and supply costs, supervisory overhead costs, and other factors. This indicator can be used as an important comparison with other districts to identify opportunities for improvement in custodial operations to reduce costs.

Factors that Influence Custodial Cost per Square Foot
  • Cost of labor
  • Collective bargaining agreements
  • Cost of supplies and materials
  • Size of school
  • Duties of custodian
Example Data Set

 

Transportation Cost per Mile Operated
Importance

This is a basic measurement of the cost efficiency of a pupil transportation program. It allows a baseline comparison across districts that will inevitably lead to further analysis. A greater than average cost per mile may be appropriate based on specific conditions or program requirements in a particular district. A less than average cost per mile may indicate a well-run program, or favorable conditions in a district.

Factors that Influence Transportation Cost per Mile Operated
  • Driver wage and benefit structure
  • Labor contracts
  • Cost of the fleet, including fleet replacement plan, facilities, fuel, insurance, and maintenance Effectiveness of the routing plan
  • Ability to use each bus for more than one route or run each morning and each afternoon
  • Bell schedule
  • Transportation department input in proposed bell schedule changes
  • Maximum riding time allowed and earliest pickup time allowed
  • Type of programs served will influence costs
  • Region/population served
Example Data Set