8. |
ADMINISTRATIVE COST RATIOS |
In 1996, the Texas Education Agency (TEA) conducted the third examination of administrative cost limits for Texas school districts as mandated by Section 42.201 of the Texas Education Code. The following report will summarize the procedures used to determine a district's administrative cost ratio and analyze actual district performance for school years 1992-93 and 1994-95.
The administrative cost ratio for a school district is determined by dividing non-federal operating expenditures in general administration and instructional leadership by expenditures in instruction, instructional resources, curriculum, and guidance and counseling functions. These ratios are compared to target standards set by commissioner rule for districts within one of six average daily attendance (ADA) groups. These standards have remained constant for three years and are based on historical administrative costs. Table 8.1 shows the statewide mean administrative cost ratio for the years 1988-1995.
Districts exceeding their standard are required to either request a waiver from the commissioner or submit a plan to reach compliance during the next full school year. The commissioner has authorized six waivers to districts that have justified costs beyond their control. Two such waivers were granted for 1994-95. These waiver districts are allowed a higher ratio than their ADA group standard, but are not exempt from exceeding a limit established in their waiver. Districts that again exceed the applicable standard in the subsequent school year have the excess amount withheld from future state funding.
During the 1992-93 school year, 121 districts exceeded the administrative cost standard. Seven of the original 121 exceeded the standard again in 1994-95. TEA withheld $512,439 of state aid from these seven districts. Of this amount, $476,469 was withheld from one district. A total of 42 districts exceeded the standard in 1994-95 and will be again examined after the 1996-97 school year. Table 8.2 shows ADA groups, the standards set by the commissioner, and the distribution of districts that have exceeded the standard for the last three years.
| 5 | 3 | 0 | 7% | 4% | 0% | ||||
| 11 | 0 | 1 | 22% | 0% | 2% | ||||
| 52 | 16 | 17 | 16% | 5% | 5% | ||||
| 22 | 6 | 12 | 11% | 3% | 6% | ||||
| 20 | 10 | 4 | 6% | 3% | 1% | ||||
| 11 | 4 | 8 | 12% | 4% | 10% | ||||
| 121 | 39 | 42 | 12% | 4% | 4% | ||||
For information on administrative cost ratios, Scott Lewis in the Department of School Finance and Fiscal Analysis at 512-463-8994.