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The central problem with US public schools is often characterized as an efficiency problem. We spend a lot and don’t get much for it; and over time we’ve spent more and more but our outcomes have remained virtually flat. Yet rarely are these claims accompanied by thorough analysis or empirical evidence of cost-effectiveness or efficiency.[i]

We must not get too caught up in the possibility of identifying the perfectly efficient school or district or the absolute minimum that might possibly be spent to achieve a given level of outcomes with x children under y conditions. Measuring such hypothetical extremes is impractical. That said, much can be learned by better understanding the average efficiency at which existing schools and districts produce certain outcome measures for their students and the deviations around those averages.

Some basic definitions are in order:

• productivity: The output of our system of schooling, measured in terms of quantity of output or quality of output, or both. Quantity measures often include total numbers of students served or graduated; quality measures are often reduced to measures derived from standardized tests, usually of reading and mathematics achievement between grades 3 and 8. Increasingly, the quality of outcomes produced is measured in terms of changes in assessment scores over time associated with students’ time of attendance in a particular school or district (value-added estimates). Outcomes may also include longer-term outcomes, such as income or civic participation.
• spending: Expenses (current and deferred) associated with the provision of educational programs and services and related supports (food, transportation, overhead), regardless of outcomes
• cost: The minimum amount that would need to be spent to achieve a specific level of student outcomes, given the backgrounds of the students served and other potential contextual constraints (variations in the competitive wages for qualified employees, remoteness and population sparsity, economies scale, etc.). Cost necessarily connects spending with outcomes.
• efficiency: Given the previous two definitions it is possible to spend more than would be needed to achieve a given level of outcomes. That margin of difference is inefficiency.

spending – inefficiency = cost

or

cost + inefficiency = spending

The margin of spending above cost is labeled inefficiency; but when we discuss measurable inefficiency of schools, the term takes on broad meaning, including spending on programs and services that may be valued but not measured as primary goals/objectives. For example, institutional expenditures may include expenditures on community-based programs and events, athletics, and arts that may marginally, if at all, contribute to student test scores. This is not to suggest, however, that these expenditures are unnecessary or inappropriate. Rather, they are simply not captured by the outcomes being measured because they serve a different, but still valued, purpose.

Often, when pundits talk about “cost-cutting” measures, they are really talking about spending reductions, whether they result in declining outcomes or whether outcomes remain constant. Actual cost cutting that holds outcomes constant—doing the same with less—would, theoretically, be efficiency improvement. By contrast, less spending leading to lower outcomes is a break-even on efficiency.

[i] Bruce D. Baker and Kevin G. Welner, “Evidence and Rigor: Scrutinizing the Rhetorical Embrace of Evidence-Based Decision Making,” Educational Researcher 41, no. 3 (2012): 98–101; Bruce D. Baker and K. G. Welner, Productivity Research, the US Department of Education, and High-Quality Evidence (Boulder, CO: National Education Policy Center, 2011), http://nepc.colorado.edu/publication/productivity-research.