The Issue
In the spring of 2018, Indianapolis Public Schools (IPS) District and the Indianapolis Chamber of Commerce sought to develop a strategic financial and operational plan that would eliminate IPS’s substantial operating deficit while also driving more dollars to the classroom in the form of teacher and principal pay increases. The project took place as part of an IPS effort to seek additional funding from voters to address operational and capital needs. Specifically, IPS had announced its intent to pursue more than $900 million in additional funding from voters over eight years.
The Team
IPS and the Indy Chamber engaged our firm's Consulting team to develop a financial and operational efficiency plan. The team came to the project with years of experience leading strategic operations and efficiency projects for public sector institutions. To accomplish IPS’s goals, the firm team worked closely with IPS employees, Indy Chamber executives and sponsors, and local financial analysts.
The Strategy
The plan was designed to identify solutions that balanced the need to improve IPS’ educational outcomes while protecting taxpayers who would face sharp property tax increases if the originally proposed referenda went forward. Far from being an austerity exercise, the intent was to find operational efficiencies while also substantially increasing teacher and principal compensation. The team conducted more than 50 interviews, requested and reviewed more than 100 documents, assessed best practices information, analyzed data, and drafted detailed efficiency options in about 20 core areas of focus. With IPS personnel and the financial analysts, the team modeled the budget impact of a variety of combinations of efficiency improvements to develop scenarios from “least aggressive” to “most aggressive.” In the end, the work enabled IPS and the Indy Chamber to reach agreement on a range of significant efficiency projects designed to deliver $328 million in savings over eight years. This allowed for both a much smaller referenda package and substantial future increases to teacher and principal pay.
The Impact
Since IPS and the Indy Chamber reached agreement on the efficiency projects in late July 2018:
- IPS voters supported IPS’ revised capital and operational referenda amounts that were 70% less than the original proposed value.
- IPS teachers received, on average, 5% pay increases for 2018-19, with similar or greater amounts envisioned for the future.
- Most IPS principals and other school leaders received raises of 6-10% as of July 1, 2019, with similar or greater amounts envisioned in the following years.
- IPS is off to a solid start in capturing the $328 million in savings it committed to achieve over the next eight years; it is approximately $12 million ahead of its Years 1 and 2 cost savings commitments.
- Substantial challenges remain in the form of meaningful transportation and facilities projects necessary to bring IPS’s budget into long-term balance.