Enrollment decline and school reorganization—A cost efficiency analysis

Abstract

The recent enrollment decline and its cost implications are major financial concerns for many school districts. This paper presents an analytical framework enabling the examination of the cost impact of a school reorganization that specifically involves the shifting of ninth-graders to senior high school and simultaneously transferring sixth-graders to junior high schools. Main considerations pointing to the merit of such a plan are likely benefits of scale economies and increased capacity utilization, combined with the economic advantage of having the most expensive resources (vested in high schools) least underutilized. An empirical study of schools in a metropolitan suburban county suggests that there can be a major cost saving under the proposed plan.