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Does School District Consolidation Cut Costs?

Author

Listed:
  • William Duncombe

    (Center for Policy Research, Maxwell School, Syracuse University)

  • John Yinger

    (Center for Policy Research, Maxwell School, Syracuse University)

Abstract

Consolidation has dramatically reduced the number of school districts in the United States. Using data from rural school districts in New York, this article provides the first direct estimation of consolidation's cost impacts. We find economies of size in operating spending: all else equal, doubling enrollment cuts operating costs per pupil by 61.7 percent for a 300-pupil district and by 49.6 percent for a 1,500-pupil district. Consolidation also involves large adjustment costs, however. These adjustment costs, which are particularly large for capital spending, lower net cost savings to 31.5 percent and 14.4 percent for a 300-pupil and a 1,500-pupil district, respectively. Overall, consolidation makes fiscal sense, particularly for very small districts, but states should avoid subsidizing unwarranted capital projects. © 2007 American Education Finance Association

Suggested Citation

  • William Duncombe & John Yinger, 2007. "Does School District Consolidation Cut Costs?," Education Finance and Policy, MIT Press, vol. 2(4), pages 341-375, September.
    • Handle: RePEc:tpr:edfpol:v:2:y:2007:i:4:p:341-375
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    Citations

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    Cited by:

    1. Phuong Nguyen-Hoang, 2012. "Fiscal effects of budget referendums: evidence from New York school districts," Public Choice, Springer, vol. 150(1), pages 77-95, January.
    2. Blesse, Sebastian & Roesel, Felix, 2019. "Merging county administrations – cross-national evidence of fiscal and political effects," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 45(5), pages 611-631.
    3. repec:ces:ifodre:v:24:y:2016:i:04:p:45-49 is not listed on IDEAS
    4. Bo Zhao, 2020. "How to Design a State Education Aid Formula That Is Equitable, Adequate, and Politically Feasible: The Case of Connecticut," Working Papers 21-1, Federal Reserve Bank of Boston.
    5. Bo Zhao, 2023. "Estimating the cost function of connecticut public K–12 education: implications for inequity and inadequacy in school spending," Education Economics, Taylor & Francis Journals, vol. 31(4), pages 439-470, July.
    6. Mustafa U. Karakaplan & Levent Kutlu, 2019. "School district consolidation policies: endogenous cost inefficiency and saving reversals," Empirical Economics, Springer, vol. 56(5), pages 1729-1768, May.
    7. Juan Luis Gómez-Reino & Santiago Lago-Peñas & Jorge Martinez-Vazquez, 2021. "Evidence on Economies of Scale in Local Public Service Provision: A Meta-Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper2116, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Nguyen-Hoang, Phuong, 2013. "Tax Limit Repeal and School Spending," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(1), pages 117-148, March.
    9. Alcaíno, Manuel & Jaimovich, Analia & Méndez, Carolina & Vásquez, Diana, 2022. "Government fragmentation and educational outcomes: evidence on the creation of municipalities in Chile," IDB Publications (Working Papers) 11987, Inter-American Development Bank.
    10. Acton, Riley & Orr, Cody & Rogers, Salem, 2023. "Returns to School Spending in Rural America: Evidence from Wisconsin's Sparsity Aid Program," IZA Discussion Papers 15915, Institute of Labor Economics (IZA).
    11. Gronberg, Timothy J. & Jansen, Dennis W. & Taylor, Lori L., 2011. "The Impact of Facilities on the Cost of Education," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(1), pages 193-218, March.
    12. Takeshi Miyazaki, 2014. "Municipal consolidation and local government behavior: evidence from Japanese voting data on merger referenda," Economics of Governance, Springer, vol. 15(4), pages 387-410, November.
    13. Phuong Nguyen-Hoang & Ryan Yeung & Alexander Bogin, 2014. "No Base Left Behind," Public Finance Review, , vol. 42(4), pages 439-465, July.
    14. Roesel, Felix, 2017. "Do mergers of large local governments reduce expenditures? – Evidence from Germany using the synthetic control method," European Journal of Political Economy, Elsevier, vol. 50(C), pages 22-36.
    15. Jill Hamm & Kimberly Dadisman & Kathleen Day & Charlotte Agger & Thomas Farmer, 2014. "The Move to Middle School: Parents’ Expectations and Early Adolescents’ Adjustment in Rural Communities," Journal of Educational and Developmental Psychology, Canadian Center of Science and Education, vol. 4(1), pages 1-46, May.
    16. TANAKA Ryuichi & Eric WEESE, 2023. "Inefficiency in School Consolidation Decisions," Discussion papers 23002, Research Institute of Economy, Trade and Industry (RIETI).
    17. Pengju Zhang & Phuong Nguyen‐Hoang, 2023. "Home rule and municipal revenue stability: New evidence from Texas," Public Budgeting & Finance, Wiley Blackwell, vol. 43(1), pages 38-60, March.
    18. Pengju Zhang, 2023. "The fiscal and economic impacts of municipal dissolution: evidence from New York," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 948-1001, August.
    19. Astrid Marie Jorde Sandsør & Torberg Falch & Bjarne Strøm, 2022. "Long‐run Effects of Local Government Mergers on Educational Attainment and Income," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(1), pages 185-213, February.
    20. William D. Duncombe & John Yinger & Pengju Zhang, 2016. "How Does School District Consolidation Affect Property Values? A Case Study of New York," Public Finance Review, , vol. 44(1), pages 52-79, January.
    21. Felix Rösel, 2016. "Sparen Gebietsreformen Geld? – Ein Überblick über aktuelle Studien," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 23(04), pages 45-49, August.
    22. Phuong Nguyen-Hoang, 2014. "Tax Increment Financing and Education Expenditures: The Case of Iowa," Education Finance and Policy, MIT Press, vol. 9(4), pages 515-540, October.
    23. Yilin Hou & Yusun Kim & John Yinger, 2019. "Does Coordination Among Assessing Units Generate Returns to Scale? Evidence from New York State," CESifo Working Paper Series 7931, CESifo.
    24. Timothy J. Gronberg & Dennis W. Jansen & Mustafa U. Karakaplan & Lori L. Taylor, 2015. "School district consolidation: Market concentration and the scale‐efficiency tradeoff," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 580-597, October.

    More about this item

    Keywords

    school district consolidation;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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