Economies of size and implications for consolidation: a case study of Iowa school districts

Abstract

<p>The state of Iowa is currently faced with many budget difficulties. Due to the fact that education accounts for nearly half of all state appropriations and property taxes paid in the state, ways of decreasing educational costs may contribute to relieving the current fiscal stress. The aim of this paper is to develop a model from past analyses to test for the presence of economies of scale in Iowa School districts. The results reveal average benefits from a cross section of Iowa school districts that may be realized through administrative consolidation of districts with fewer than 600 students. It is recommended that school officials also consider the average costs associated with school consolidation before recommending its use. This study is the first step in evaluating the possibility of statewide benefits through consolidation efforts.</p>