Ahnaf Tahmid: How a district found $15M to fund workforce investment

In the private sector, when a company faces a labor shortage and loses talent to competitors, the solution is clear: You must improve your value proposition or risk insolvency. You audit your operations, cut low-value overhead and reinvest those savings into your workforce.

In the public sector, however, this business logic rarely applies. When school districts face teacher shortages, the standard response is to claim poverty. The prevailing narrative is that the only way to offer competitive wages is to ask taxpayers for more money through a referendum.

In South Bend, we decided to reject that narrative and run our district with the discipline of a turnaround business.

This month, our school board unanimously approved a budget that transforms our district from one of the lowest-paying in the state to the highest-paying district in our region.

Here is the bottom line:

◗ We funded a flat, $9,000 base salary raise for teachers (a 13% average increase).

◗ We budgeted for 20% wage increases for support staff to solve our driver and custodial shortages.

◗ We did all of this while holding our total general budget growth to a standard 3% (from $206 million to $213 million).

◗ And we did it without asking Hoosier taxpayers for a single new dollar.

We achieved this by shifting our finance department from passive “scorekeepers” to proactive “strategists.” We conducted a forensic audit of our operations and found over $15 million trapped in legacy contracts, financial inertia and administrative inefficiencies.

Here is the three-part operational restructure we used to unlock that capital.

1. Strategic insourcing (the “make vs. buy” decision). For years, we outsourced facilities management to a national vendor. In the business world, outsourcing is often a cost-saver. But in our specific context, we found the opposite. We were paying a premium for management overhead that did not translate to service quality.

We made the business decision to terminate the $20 million contract and bring our 200-plus custodial and maintenance staff back in-house. By eliminating the middleman and managing our own labor force, we are projecting $3 million to $5 million in annual savings. We are getting better quality control for less money—a classic operational win.

2. Procurement aggressiveness. Like many public entities, the district had become a passive consumer of health care. We hadn’t competitively shopped our medical insurance in years, absorbing premium hikes as a “fixed cost.”

This year, we took our plan to the market. The result was a transition to a central health fund projected to save $6 million to $7 million annually. We didn’t achieve this by slashing benefits; we did it by reducing health insurance premiums for both the district and our employees through smarter procurement.

3. Overhead reduction. Finally, we looked at our internal capital allocation. Indiana law allows districts to transfer funds from instruction (Education Fund) to overhead (Operations Fund). In 2024, our transfer rate was more than 9%. We aggressively streamlined our central operations and cut that rate to just 1% for 2026. This keeps millions of dollars focused on our core “product”—student learning—rather than administration.

The return on investment? A sustainable workforce. We took 100% of these efficiency savings and reinvested them in human capital. In our 2026 budget, 82% of our general fund is now dedicated to employee wages and benefits, up from just 70.4% the year before.

The ROI was immediate. We settled our teacher contract in just four days—a process that usually takes months of costly negotiation. Our budget passed with a unanimous 7-0 vote for the first time in five years.

Most important, we are solving our labor shortage. By establishing a market-leading starting salary of $55,000, we are positioning South Bend as the employer of choice in our region.

The lesson for Indiana is clear: The public sector is not immune to the laws of economics. When we stop managing decline and start hunting for efficiency, we can solve our biggest challenges without asking the taxpayers for a bailout.•

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Tahmid is chief financial officer of the South Bend Community School Corp.