Abstract: Paper No. 163

Scale Economies and Technical Efficiency in New York Public Schools

William Duncombe, Jerry Miner, and John Ruggiero

August 1993 

This paper presents the results of a detailed study of school district costs, scale economies and technical efficiency with special emphasis on rural school districts. Based on a conceptual model of education production and costs, the authors examine potential cost savings from school district consolidation, identify candidate districts for reorganization and provide estimates of the technical efficiency of school districts using Data Envelopment Analysis (DEA). The picture that emerges from the analysis cautions the use of state policy to influence district organization and efficiency. While the authors find potentially significant cost savings by expanding very small districts (under 500 pupils), the actual number of districts which are good candidates for full consolidation in New York is quite small (20 mostly suburban districts). Approximately, 50 percent of districts are rated as relatively efficient. Districts with high inefficiency ratings tend to be moderate in size, have a higher fiscal capacity and more favorable educational environment than inefficient districts. This suggests that the lower student performance in poor school districts is probably not due to above average inefficiency.

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