Co-authors Lori Taylor, Texas A&M associate professor and director of the Mosbacher Institute for Trade, Economics and Public Policy at the Bush School of Government and Public Service, Timothy J. Gronberg and Dennis W. Jansen, Texas A&M economics professors, and Mustafa U. Karakaplan, a researcher at Utah State University, used cost-function analysis to simulate the consolidation.
“The hope is that consolidating school districts will lower the cost of education by eliminating duplication of effort and enabling a better allocation of resources,” Taylor explains. “It is well known that the per-pupil cost of operating a small district is much higher than the per-pupil cost of operating a larger one. However, there is a trade-off. Consolidation also reduces choice, and school districts in Texas are more efficient (in the sense that they produce better outcomes for the same money) where there is more choice.”
The researchers contend that consolidating the school districts in those core counties of major metropolitan areas would lead to very large and likely very bureaucratic, countywide school districts. “The simulation strongly indicates that such consolidations would lead to higher costs, not cost savings, and therefore that consolidation would be unlikely to improve student performance,” Taylor notes.
She says there are many counties in Texas where school districts are very small and consolidation would likely save money or enable increases in quality. “But the Texas Education Code specifically called for an analysis of consolidation in these five counties, where nearly all the students attend districts that are already large enough to take full advantage of economies of scale,” she points out. “The benefits of consolidation would be larger if the consolidated school district were able to close campuses. But that is a very difficult proposition, and it is not possible to anticipate which campuses a countywide district might choose to close.”
The researchers conclude that although consolidation can work, in these particular Texas counties, the school districts that result would simply be too large. “The bureaucratic burdens associated with very large school districts would overwhelm the gains from consolidating the smallest districts in these counties,” Taylor notes. “Furthermore, we predict that by reducing the level of school choice, this policy would increase inefficiency and increase spending in the school districts that share a metropolitan area with the new, countywide districts.”
She adds that the study confirms previous analyses that show school choice has a positive impact on school district efficiency.
Taylor concludes by noting the important role universities can play in the policy process. “Too often, policymakers latch on to an idea that sounds good without being aware of all the likely consequences,” she says. “I think it’s important for the state that analyses like this be conducted, especially when the findings don’t align with conventional wisdom. I like to think that our analysis will help the state avoid a potentially costly policy mistake.”