Economies of scale for large school districts: A national study with local implications

Beginning in the 1930s American school districts began to consolidate under the premise that larger school districts would achieve better performance at a lower cost due to economies of scale and specialization. Before significant evidence emerged contradicting this assumption, many American school districts had transitioned from small adaptive affiliations to large sluggish bureaucracies. The purpose of this paper is to assess the economies of scale in large school districts using cost and production functions along with linear regression. Based upon the benefits proposed by modern supporters of consolidation, the analysis assumes that larger school districts result in reduced costs per student and improved academic achievement. The analysis uses cross-sectional data from the 99 largest school districts in America for the 1999–2000 school year. The results of the analysis indicate that none of the hypotheses proposed are valid. Instead, the data indicates that significant inefficiencies exist in large districts. While the results confirm the findings of most previous research, they are unique in that they are based upon a nationwide sample.