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Inefficient Education Spending in Public School Districts: A Case for Consolidation?
Author(s) -
Dodson Marvin E.,
Garrett Thomas A.
Publication year - 2004
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1093/cep/byh019
Subject(s) - consolidation (business) , salary , economies of scale , economics , school district , agricultural economics , demographic economics , finance , sociology , market economy , microeconomics , pedagogy
This article estimates scale economies for Arkansas school districts. Large economies of scale exist in teacher salary and supply costs, as well as total costs. The results suggest that districts, especially rural districts, would experience measurable cost savings from consolidation. The authors simulate a hypothetical rural school district consolidation to obtain cost‐saving estimates from consolidation. Simulations indicate that districts could save an average of 34% in average variable costs. At the state level, consolidation of rural districts in Arkansas could annually save $40 million. However, consolidation of school districts may increase various implicit costs to students and local communities. (JEL I22 , I28 )