Abstract
In many countries, the provision of primary education is among the core responsibilities of local governments. One of the main questions local governments face concerns the optimal configuration of school boards and size of schools. In this paper we analyse the relation between cost and scale in school boards and in schools. The influence of both the governing layer (board) and the operational layer (school) on average cost are jointly modelled. Board cost is modelled as an aggregation of individual school cost functions so that individual school cost data are not required in order to estimate the model. The results indicate that small schools (<60) pupils are operating under sizable economies of scale. The optimum school size is estimated at roughly 450 pupils, but average cost remains roughly constant with regard to size. In contrast to school size, the effect of board size (in terms of the number of schools governed) on average cost is limited. The policy recommendation is that municipalities should create at least three schoolboards within their jurisdiction and take measures in case individual school size declines below 60 pupils.
Highlights
In many countries, providing education is a core task of local and/or state governments
While results differ across countries and methodologies, the smallest of schools and school districts are generally found to operate under economies of scale [2,3,8,9], the tipping point varies
This paper develops and estimate a model that allows for the simultaneous analysis of economies of scale at both the governing and operational level
Summary
In many countries, providing (primary) education is a core task of local and/or state governments. One of the main channels through which policy makers in amongst others the U.S and Netherlands have sought to increase the efficiency of educational spending is through the consolidation of schools and/or school districts [1,2]. An important motivation of consolidation is the notion of economies of scale, i.e. that idea that bigger units have lower average (per-pupil) cost. While results differ across countries and methodologies, the smallest of schools and school districts are generally found to operate under economies of scale [2,3,8,9], the tipping point (optimal size) varies. One issue with regards to economies of scale that has attracted less attention of empirical researchers is the distinction between the governing layer of school districts (U.S.) or boards (Netherlands) and the operational layer (schools). In the Netherlands, one board may govern up to thousands of pupils and tens of schools, while other boards govern only one school and
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