V. Cost Reduction Opportunities

Given the magnitude of the financial and administrative challenges arising from this proposal, cost-savings initiatives are essential. There are significant opportunities for the State, local schools districts, school boards and library trustees to minimize program costs. School districts can negotiate discounts on hardware and software by aggregating purchases within or among districts; previously budgeted funds may be reallocated when technology replaces an existing function or need; technology support can be obtained from vocational schools, community colleges, and the state university and local volunteers; building additions can make provision for tomorrow's needs.

Although the full extent of savings resulting from each of these cost reduction opportunities will vary based upon the vigor with which they are undertaken, it is believed that more than $325 million can be saved, with an optimum $585 million savings opportunity.

A full list of revenue and cost-reduction initiatives that the State and individual school districts may wish to consider, potentially totaling $585 million, is included as Appendix D. Highlights include:

• Encouraging schools and public libraries to jointly plan and utilize local telecommunication facilities. Possible savings are $20 million.
  
• Encouraging the use of community colleges, vocational schools and the State University system to develop a program whereby technical students can provide support to K-12 schools for the installation and maintenance of the technology system. Possible savings are $5000 per year per school, for a five year total of $57 million.
  
• In the context of the New Jersey BPU proceeding to investigate local telecommunications competition, seek approval of preferential rates and/or discounted tariff rates from all telecommunication providers for services offered to schools and libraries. Plan assumes a 15% reduction in overall tariff network charges.
  
• Introduction of a technology equipment repair program at various vocational schools throughout the State, and negotiating reduced repair rates for schools and libraries. This will lower costs and provide student training in a growth industry. Possible savings are $17 million.
  
• Actively encouraging the use of leasing and lease-purchase options in lieu of product purchase. A life cycle reduction of two percent or about $40 million is anticipated.
  
• Encouraging the use of local residents as volunteers in all areas related to technology based systems. Assuming a saving of 50 hours per year per school, at $40 per hour this equates to a saving of $23 million.
  
• Seeking to combine district level installation, maintenance and support operations of the technology system under one contract. Savings could be $20 million.

As stated earlier in this report, the cost model described herein requires an investment for public and not-for-profit schools and public libraries of $2.860 billion over a five year period; but concludes that $1.377 billion in new funding is required for public schools alone. This report also concludes that cost reduction initiatives and use of state and federal technology funds can reduce that funding requirement for public schools by $1.099 billion.

Approximately $325 million in savings with an optimum from the initiatives listed herein with;

$187 million in savings from negotiation of discounts -- which could total 20% -- from list prices for products and services;

$545 million from business and local citizens, grants, federal funds and gifts of equipment;

$140 million estimated as the value of current equipment installed in New Jersey's schools (Note that the value of existing equipment in schools and libraries has been discounted based on expected replacement needs over a period of five years.);

Approximately $60 million from the sale and/or transfer of unnecessary equipment to New Jersey residents or state governmental agencies.

VI. Some Immediate Steps To Be Taken

Since New Jersey's K-12 schools and public libraries must have access to increased funds if they are to deliver on the promise of technology and connection to the Internet, it is essential for the state to obtain the support of all its residents when it undertakes this initiative. Technology must not be viewed as an end unto itself, but rather as a catalyst for change and an agent for discovery. Successful implementation of a technology program requires planning, continuity, continual measurement against goals, a willingness to make adjustment in direction, a management team of knowledgeable and committed personnel, and a recognition that this program will take many years to reach all its goals.

For New Jersey school districts and libraries to become networked and reap significant benefits before 2000, we suggest the following immediate steps to accomplish these goals.

Identify the real costs.

The cost of computer networks within schools and libraries, as well as the cost of connecting to the Internet, is small relative to overall technology costs, and the costs of providing support staff and teacher training and maintenance.

Focus on the real benefits.

The benefits of network technology are substantial, both in terms of increasing access to information and reducing system costs by allowing resources to be shared among computers. Continue to educate stakeholders about creative ways that New Jersey educators are finding to integrate new technologies into K-12 curriculum.

Designate a state technology coordinator for schools and libraries.

To reduce the costs of providing schools and public libraries with technology, it is crucial that an individual or group of individuals coordinate public and private efforts and ensure that New Jersey takes advantage of all available federal technology funds.

Share information on technology purchases, curriculum development, and teacher training at the state level. Encourage group purchasing and/or leasing to maximize savings.

State-wide, district-wide, and coordinated local school and library planning can reduce costs. For example, large scale purchasing of equipment can significantly limit expenditures. Some state-wide planning may help New Jersey school districts adopt effective technology for schools and libraries. While the state will not buy equipment, the state could issue a list of preferred vendors to help insure significant discounts. Furthermore, DOE should consider how the new regional technology training centers could provide opportunities for group purchasing, as well as teacher training.

Encourage leasing.

A school district should calculate both the costs of leasing and buying, as part of its routine technology planning. The former could be an attractive option for many New Jersey communities, and information regarding leasing opportunities should be made accessible to school superintendents and district technology coordinators.

Encourage schools and libraries to share resources whenever possible.

Within a town, the library particularly can save money by sharing Internet access costs with the schools, while schools may benefit, improving access for their students to all the resources of the local public libraries - including the human resources.

Work with local universities and businesses to expand Internet access.

Sharing access costs can bring the school and library costs closer to wholesale rates.

Develop partnerships with vocational schools and universities to provide teacher training and technology support in areas related to the operation and support of equipment.

This is an area ripe for local experimentation and initiative.

Continue to build public-private partnerships .

New Jersey enjoys a depth of business expertise and companies that can provide direct and indirect funding support to education and libraries. Every effort should be made to maximize these resources.

Make continual training of administrators and staff the highest priority.

Educators need ongoing training to ensure that they and their students make the most advantageous use of technology.

Build for tomorrow.

Put an infrastructure (including power, networking and building modification) in place that will serve as the long term foundations for growth.

Commit to quality.

Any compromise in product procurement or personnel training will result in significantly increased long-term costs.

Be realistic about how much effort is involved in reorienting schools and libraries towards networked education and lifelong learning.

Recognize that the need to upgrade physical facilities, provide teacher training, and integrate the technology into curricula may prevent some schools and libraries from purchasing all systems within a five year period, as this plan proposes.

Be realistic about the rate of technological change and the impact of change on ongoing costs.

Long-term technology plans for schools and libraries should include the cost of replacing equipment periodically to keep it up-to-date. Schools and libraries may need to replace computers every five years, creating a need for predictable long-term funding.

Solicit resident comment at all stages of program planning and implementation.

Long-term funding can only be assured with the knowledge and understanding of the state's residents, Department of Education, the New Jersey Library Association, and Parent Teacher Organizations.

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