Academic journal article Journal of Agricultural and Applied Economics

Monitoring Inefficiency in Public Education

Academic journal article Journal of Agricultural and Applied Economics

Monitoring Inefficiency in Public Education

Article excerpt

The efficiency of public education is examined using a cost indirect output distance function. Efficiency estimates are obtained using data envelopment analysis applied to data from Georgia public schools. Georgia school districts utilize educational budgets with reasonable efficiency, achieving an overall efficiency of 98% with a range of 93%-100%. If all school districts were 100% efficient, outputs could be expanded 2%. This could be achieved by increasing funding $75.46 million state-wide in total for each of the 3 years. From the consumers' (voters') point of view, this result suggests that inefficiency costs Georgia, on average, a total of $226.38 million from 1994 to 1996.

Key Words: cost-indirect output distance function, data envelopment analysis, education, efficiency

JEL Classifications: H72, 121, 128, C60

The perceived decline in the quality and efficiency of American education has been the focus of much attention from the media, politicians, and researchers. Starting in 1963, performance on standardized tests began a steady decline in America, whereas graduation rates changed little. One can argue that school performance has contributed to lower the quality of high school graduates. Although the quality of graduates has declined, the costs of education and the quality of educational inputs has increased steadily. Both the amount of teachers' experience and expenditures per pupil have increased, and student-to-teacher ratios have declined. These phenomena foster a public opinion that educational inputs explain little about educational quality. Indeed, this issue has captured attention at the highest levels of political discourse with the passage of George W. Bush's No Child Left Behind Act (White House).

This study analyzes the cross-sectional variability of school district performance. The analysis evaluates relative school district performance based on how well educational resources are used to provide quality of education according to some uniform measures. The focus of this study is public education in the state of Georgia at the school district level, as opposed to the single school level. An efficiency study of Georgia counties' elementary and secondary education will provide a relative assessment of how well school districts achieve educational objectives. The school districts' performance has a direct impact on the quality of life and economic development for a city/county. Thus an efficiency evaluation based on performance provides information about how adequately school districts utilize tax spending for education.

The Georgia Quality Basic Education Act (QBE) was signed in April 1985 with a stated purpose of equipping "students to lead productive and satisfying lives" (Harris, p. 36). Further, "QBE identifies the basic competencies that students are expected to master by the end of high school" (Harris, p. 36). The accountability policy in QBE makes performance information available to the public. Some of the information about school districts and individual schools are now available through the Internet at the Georgia Department of Education web site. Despite the availability of this information, the data describe little about a school district's performance relative to other school districts or its performance over time.

The goal of public education is defined by Hanushek as providing students with the ability "to perform in and cope with society after they leave school" (p. 1150). This definition is very similar to the concept in QBE with a stated goal "to equip students to lead productive and satisfying lives" (Harris, p. 36). Although identifying appropriate measurable outputs is difficult, Hanushek concludes that test scores are reasonable measures to quantify educational outputs especially in early grades. The use of standardized test scores represents the broad consensus of opinion on reasonable measures of educational outputs. Thus, based on this consensus, a goal of public education (for the purposes of this study) is defined as maximizing educational value-added to students as measured by student test scores given budget constraints. …

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