What is the most cost effective enrollment size for a school?

Why is this question important? The trend over the past 75 years is for schools in the United States to grow in average enrollment This growth was partially the result of the urbanization of the country as well as a response to economic theory. The theory of “economy of scale” was rapidly adopted beginning in the 1960’s. The theory postulates that as units of operation grow the units become more cost effective to operate. The search for an optimum unit size offering the lowest cost per unit led to ever increasing school enrollments. It would be wonder if a straightforward solution, such as school size, could be found to reducing the cost of education. Can school size save the education system the cost of educating each child?

See further discussion below.

Optimum School Size - Economies of Scale
(Cohn, 1975)

Source:

Graph #1: Average Enrollment – 2006 Digest of Education Statistics, Education Statistics, National Center for Education Statistics, U.S. Department of Education Statistics -http://nces.ed.gov/programs/digest/d06/tables_2.asp#Ch2Sub4

Cost Per Pupil: 2008 Digest of Education Statistics, National Center for Education Statistics, U.S. Department of Education - http://nces.ed.gov/programs/digest/d08/tables/dt08_185.asp

Graph #2: Optimum School Size – Economies of Scale, School Reform and the No-Man's-Land of High School Size, Tom Gregory, 2000

Wing Institute Literature Review: The Wing Institute conducted an analysis of 16 studies on the relationship between school size and cost.

Nine studies were relevant to the topic of size and cost and were included in the review
All of the eight major studies conducted since 1980
The papers are as follows:
- five of the studies consisted of literature reviews
- one study identified as meta-analyses
- one study examined size and fiscal performance of 121 schools in New York City

Cost Studies of School Size Reviewed for this Analysis

Study	Type of Study	Variables/methods	Findings	Limitations	Links
Andrews, 2002 - Revisiting Economies of Size in American Education: Are We Closer to a Consensus?	Literature Review	A review of the 10 best cost studies & 12 best production studies	Moderately sized elementary schools 300-500 and high schools 600-900 my optimally balance costs and benefit	Many of the studies had methodological problems regarding cost.	go to article
Fox, 1980 – Relationship Between Size of Schools and School Districts and the Cost of Education	Literature Review	Cost-benefit studies	A curvilinear effect was found with smallest and largest schools costing the most.	Transport and quality of education provided may confound the issue.	go to article
Gregory, 2000 – School Reform and the No-Man's-Land of High School Size	Literature Review	Examination of the dominant trends in the effects of school size on the cost of education.	High schools continue to grow in size, a large body of evidence indicates moving away from large schools, the earlier the research the more likely it favors larger sizes, and recent studies fail to support the fact larger schools are cost effective.	The paper’s spends only a limited amount of time reviewing the input issue of cost.	go to article
Steifel, Berne, Iatarola, & Frucher, 2000 - The Effects of Size of Student Body on School Costs and Performance in New York City High Schools	A study of 121 New York City high schools	Dependent variables: 4-year graduation rates, budget/graduate. Independent: size, SES, English language proficiency, and special education rates, and Regents Exam pass rates.	Small high schools defined as <600, medium 600-2000 & large as >2000. Small and large schools had similar budgets per graduation, while medium schools had the largest budgets per graduation	Urban focus may have skewed the results, the ave. 4-year graduation of study was only 50%, and the poverty rate was 45%. Sample was small with only 19 small schools included.	go to article
John Slate & Craig Jones, 2005 - Effects of School Size: A review of the Literature with Recommendations	Literature Review	The review focused on studies examining the effects of size on costs, diversity of curriculum, achievement, and related variables.	The assumption that larger schools are most cost effective is flawed. It appears a curvilinear relationship best represents small and larger schools as the most expensive. The research did not support a curricular advantage for either size model. A curvilinear relationship best represented the relationship between achievement and school size based on SES.	Many of the studies had methodological problems.	go to article
Lindsay Page, Carolyn Layzer, Jennifer Schimmenti, Lawrence Bernstein, and Leslie Horst 2002 - National Evaluation of Smaller Learning Communities	Literature Review	This is a review of 55 studies. Included in the review were: 3 cost studies, 25 case studies, and 27 outcome based studies (2 experimental designed and 3 quasi-experimental). They were able to establish effect sizes for nine studies.	Small size positively correlated higher achievement to low-SES students. Larger schools showed positive achievement for student of high-SES status. Smaller schools had lower drop out rates, better attendance, and higher graduation rates. Small and large schools were determined to be equally costly effective.	The effect size data could not be obtained through the organization, ABT Associates who sponsored the research.	go to article
Walberg, J & Walberg J III 1994 - Losing Local Control	Literature Review	This study is a review of the history of economies of scale and quality of education. The authors build a correlation between student achievement and school size. 34 studies were included in this paper.	American schools over the past 70 years has shown increasing expenditures and reduced performance. The theory, "economy of scale", fueled this trend for schools to grow larger. The study does not fully support the trend and they contend value output is inversely related to size, the larger the organization the lower the results.	The type of data used in this study cannot be used to establish cause and effect.	go to article
Gooding & Wagner, 1985 - A Meta-Analytic Review of the Relationship between Size and Performance: The Productivity and Efficiency of Organizations and Their Subunits.	A Meta- analysis	A meta-analysis of 31 studies in which correlational coefficients are aggregated to correct for statistical artifacts. Three steps: 1. Estimation of population mean, correlations, and variance. 2. Correction for statistical artifacts. 3. Analysis of moderating effects	This study challenges the notion that economies of size exist. The study determined that diseconomies offset previously identified benefits, thus diminishing the positive effects of growth.	The organizations studied make it difficult to make generalizations to schools.	go to article
Robert Tholkes and Charles Sederberg, 1990 - Economies of Scale and Rural Schools	Literature Review	23 studies were included in this review. A summary of the studies and the history of economies of scale in educational	The study contends economy of scale can be achieved to reduce educational costs and improve student achievement. Unfortunately, this does not hold for rural schools because of transportation costs.	The study was not specific in detailing the process utilized for the inclusion and rejection of studies.	go to article

Results:

For the past fifty years the number of elementary and secondary schools in the United States has declined and the average size of school have grown by more than 35%.
Between the 1950 and 1980 the prevailing assumption was that economies of scale inevitably result in lower costs to educate each student.
As the average school size grew during the sixties and seventies research began to challenge the long held belief that larger was cheaper.
By the 1990’s the prevailing wisdom shifted favor from larger schools to smaller. This trend is observed in the stabilizing of the average elementary and secondary school size since 2000.
The review of nine studies offers the following conclusions on the subject of cost per pupil and school size.
Not one of the nine studies found support for larger schools as a cost savings strategy.
Three studies identified a curvilinear relationship as regards school size and cost. These studies found smallest and largest schools to be the most expensive. They suggest the existence of a sweet spot between the two extremes that results in medium sized schools offering the lowest cost per student.
The Wing Institute analysis of Department of Education data comparing average school size and the average cost per student by state appears to show a small relationship between economies of scale favoring both smaller and larger schools.
This seems to contradict the recent studies indicating smaller and larger schools are the most expensive.
It is important to note that The Wing Institute analysis does not meet the standards of rigor needed to establish a causal relationship, but it does suggest that this issue is complex and is susceptible to many factors.

Implications:

The data strongly suggest economy of scale does not exist for schools. (Larger schools are not the most cost effective option.)
The data suggest many factors influence per pupil cost, with size playing a minor role. (Schools of all sizes can be cost effective)
School size is not a universal remedy for reducing the cost of education.

Authors:

Graph #1: IES National Center for Educational Services

Graph #2: Tom Gregory

Literature Review: See Literature Review spreadsheet

Publishers:

Graph #1: U.S. Department of Education Institute of Education Sciences - IES National Center for Educational Services

Graph #2: Unpublished paper, School Size, School Reform, and the Moral Conversation, delivered at the Journal of Curriculum Theorizing Conference held in Bloomington, Indiana, October 18, 1997

Literature Review: See Literature Review spreadsheet

Study Description:

Graph #1: The analysis compares data obtained from the National Center for Education Statistics (NCES) Digest of Education Statistics. Data compared data for the school year 2005-06 for average elementary school size and the average cost per pupil for all schools. This data was used to produce a scatter-gram of school size for each state versus per pupil funding level.

Graph #2: The study was a review of the literature examining the way research and practice has shaped the average size of schools in the United States since 1970.

Literature Review: This literature review looked at studies of the cost and the average school size conducted since 1980. The review was completed utilizing EBSCO publishing and Google Scholar.

Related Research: Is the Average Enrollment of Schools Growing? and School Size vs. Student Achievement

Citations:

Andrews, M., Duncombe, W., & Yinger, J. (2002). Revisiting Economies of Size in American Education: Are We Any Closer to a Consensus? Economics of Education Review, 21(3), 245-262

Fox, W. F. (1980). Relationships between Size of Schools and School Districts and the Cost of Education. Technical Bulletin No. 1621. (ED187029). Retrieved November 30, 2009 from ERIC database.

Gooding, R. Z. & Wagner, J. A. (1985). A Meta-Analytic Review of the Relationship between Size and Performance: The Productivity and Efficiency of Organizations and Their Subunits. (EJ335697). Retrieved November 30, 2009 from ERIC database.

Gregory, T. (2000). School Reform and the No-Man's-Land of High School Size. (ED451981). Retrieved November 30, 2009 from ERIC database.

Page, L., Layzer, C., Schimmenti, J., Bernstein, L., & Horst, L. (2002, February). National evaluation of smaller learning communities: Literature review. Retrieved from http://www.abtassociates.com/reports/SMALLER.pdf

Slate, J. R. & Jones, C. H. (2005). Effects of School Size: A Review of the Literature with Recommendations. Essays In Education, 13 Retrieved from http://www.usca.edu/essays/vol132005/slate.pdf

Stiefel, L., Iatarola, P., Fruchter, N., & Berne, R. (1998). The Effects of Size of Student Body on School Costs and Performance in New York City High Schools. (ED420464). Retrieved November 30, 2009 from ERIC database.

Tholkes, R. J. & Sederberg, C. H. (1990). Economies of Scale and Rural Schools. (EJ418887). Retrieved November 30, 2009 from ERIC database.

Walberg, H. J. & Walberg, H. J. (1994). Losing Local Control. (EJ490373). Retrieved November 30, 2009 from ERIC database.