School Productivity. ERIC Digest.
by Hadderman, Margaret
The current debate over the cost-effectiveness of America's schools
is sparked by the public's desire for increased accountability and efficiency
in public education, now a $300 billion enterprise. Taxpayers want to know
where their money is going and whether additional funds are justified.
Researchers are themselves divided. Some find that dramatic increases in
funding over recent decades have brought little or no advancement in student
achievement. Others are more optimistic, claiming that some expenditures
are tied to improved achievement. Experts do agree on three points: resources
are shrinking; research should examine how funds are actually spent; and
schools must discover more cost-effective ways to allocate and utilize
IS THERE A RELATIONSHIP BETWEEN EDUCATIONAL FUNDING AND STUDENT OUTCOMES?
Early production-function research, modeled on classical economic theory,
tried to correlate a set of educational "inputs" to a single "output."
Most of these studies were inconclusive. Because of the complexity of the
schooling process and factors (like child poverty) outside schools' control,
it has been difficult to isolate statistically significant one-to-one correlations
between inputs and student learning.
The most common outcomes measured in such studies are standardized test
results, graduation rates, dropout rates, college attendance patterns,
and labor-market outcomes. Inputs usually include per-pupil expenditures;
student-teacher ratios; teacher education, experience, and salary; school
facilities; and administrative factors (Lawrence Picus 1995). The most
famous production-function study was the U.S. Department of Education's
1966 "Coleman Report." This massive survey of 600,000 students in 3,000
schools concluded that socioeconomic background influenced student success
more than various school and teacher characteristics (Picus 1995).
This type of research culminated in Eric Hanushek's 1989 study, which
analyzed results of 187 production studies published during the previous
20 years. Using a simple vote-counting method to compare data, Hanushek
found no systematic, positive relationship between student achievement
and seven inputs.
Hanushek's findings have been challenged by recent studies using more
sophisticated research techniques. When Larry Hedges (1994) and associates
reanalyzed Hanushek's syntheses using meta-analysis, they discovered that
a $500 (roughly 10 percent) increase in average spending per pupil would
significantly increase student achievement. Likewise, Faith Crampton's
comprehensive analysis (1995) of inputs affecting achievement in New York
State schools found that expenditures seemed to matter when they bought
smaller classes and more experienced, highly educated teachers.
WHAT ARE SOME REASONS FOR SCHOOLS PRODUCTIVITY PROBLEMS?
Although low student performance can be blamed partly on deteriorating
social and economic conditions, lack of student effort, and diminishing
parental involvement, several factors are controllable by schools.
Allan Odden and William Clune (1995) point to poor resource distribution
across states, districts, schools, and students; unimaginative use of existing
funds; schools' bureaucratic structure; and focus on services and labor-intensive
practices that drive up costs.
A report from the Consortium on Productivity in the Schools (1995) attributes
flat productivity to schools' "unstable governance, lack of incentives
to leverage productivity improvement, structures favoring continuity over
continuous improvement, and inadequate quality controls on innovations."
Students' time could also be used more effectively.
School-district budgeting practices are also at fault. Educators' inability
to obtain accurate school-level spending data is a "major impediment to
efficient planning, equitable distribution, and client choice," says James
A study of teacher compensation between 1970 and 1994 discovered another
inefficient practice - paying disproportionately high salaries to veteran
teachers. This practice obviates districts' expressed goals to attract
and retain the best and brightest new teachers (Lankford and Wyckoff 1997).
Some researchers claim that regardless of available funding, "school
districts tend to utilize their resources in the same basic proportions,"
with 60 percent earmarked for direct instruction and about 40 percent going
for support services (Picus 1995). Others have shown that most new funding
dollars over the past 30 years have gone for specialists and services,
not the core instructional program (Odden 1997).
WHAT WOULD PRODUCTIVE SCHOOLS LOOK LIKE?
Combing the productivity, systems-analysis, and social-organizations
literature, the Consortium on Productivity in the Schools (1995) discovered
that clear focus, responsive internal and external adaptation mechanisms,
intrinsic and extrinsic incentives, and continuous improvement were essential
Employing the "x-efficiency" concept, which holds that dramatic organizational
changes will produce greater efficiency gains than reallocation of resources,
Henry Levin (1997) identifies five dimensions of productive firms. X-efficient
schools would have a clear, objective function with measurable outcomes;
incentives linked to success; efficient access to information; adaptability;
and use of the most productive, cost-effective technologies. These characteristics
resemble those identified in the literature on effective schools and total
WHAT ARE SOME PROMISING RESEARCH AND POLICY DIRECTIONS?
Some research, like Crampton's study of New York schools, has isolated
the types of expenditures that matter in the school-productivity equation.
A good example is Harold Weglinsky's study (1997), which found that fourth-
and eighth-graders' math achievement was positively associated with lower
student-teacher ratios and with expenditures on instruction and school-district
administration. Expenditures on facilities, recruitment of highly educated
teachers, or school-level administration were not significantly related.
Another kind of efficiency research explores schools' resource-allocation
practices. David H. Monk (1996) examined how teacher resources are distributed
and utilized at various levels of the New York State K-12 system. The study
found a 55 percent increase in secondary-level special-education instructional
resources between 1983 and 1992, alongside modest increases in allocations
of science and math teachers. Of course, legal mandates may prevent an
"efficient" distribution of teacher resources across different subject
In another cost-allocation study, Bruce S. Cooper and associates (1994)
developed and applied a microfinancial measure, the School Site Allocation
Model, to track financial resources through school systems. Test-site data
from twenty-five school districts were analyzed to provide indicators of
cost ranges required to operate central offices and schools. The model
effectively reported schools' usage of funds by function (administration,
operations, staff development, student support, and instruction), level,
and type in a "user-friendly" manner.
A third research area takes an organizational-development or restructuring
approach to improving school productivity. An example is Levin's "x-efficiency"
study of schools using the Accelerated Schools model to improve efficiency
along five dimensions.
WHAT ARE SOME PRACTICAL STRATEGIES AND IMPLICATIONS FOR SCHOOLS?
One obvious strategy is to reduce noninstructional expenditures through
such means as conserving energy and restructuring food-service programs.
Another strategy is to restructure the instructional program. Odden
(1997) points to Karen Miles and Linda Darlington-Hammond's work with five
"high-performance" urban schools. By imaginatively reallocating existing
teaching staff, these schools reduced class size, personalized the learning
environment, and expanded staff development. Ready-made high-performance
models like New American Schools, Accelerated Schools, and the Edison Project
can also aid schools' redesigning process.
Odden and Clune (1995) recommend that schools focus on clear outcomes
(such as the 1990 National Education Goals), change teacher compensation
to make beginners' salaries more competitive and veterans' remuneration
more knowledge-based; make educational management more decentralized and
participatory; and restructure school financing to be more equitable and
Some states' funding systems link schools' expenditures and outcomes
into their funding systems, and several other states provide financial
rewards for raising student achievement.
Consortium on Productivity in The Schools. "Using What We Have: A Productivity
Focus for American Education." New York: Author, 1995. 103 pages.
Cooper, Bruce S., and others. "Making Money Matter in Education: A Micro-Financial
Model for Determining School-Level Allocations, Efficiency,and Productivity."
Journal of Education Finance 20 (Summer 1994): 66-87.
Crampton, Faith E. "Is the Production Function Dead? An Analysis of
the Relationship of Educational Inputs on School Outcomes." A presentation
to the Annual Conference of the American Education Finance Association,
Guthrie, James W. "Implications for Policy: What Might Happen in American
Education If It Were Known How Money Actually Is Spent?" In Where Does
the Money Go? Resource Allocation in Elementary and Secondary Schools,
edited by Lawrence O. Picus and James L. Wattenbarger. Thousand Oaks, CA:
Corwin Press, 1996. Pages 253-68. ED 403 659.
Hanushek, Eric A. "The Impact of Differential Expenditures on School
Performance." Educational Researcher 18, 4 (May 1989): 45-51, 62. EJ 390
Hedges, Larry V.; Richard D. Laine; and Rob Greenwald. "Does Money Matter?
A Meta-Analysis of the Effects of Differential School Inputs on Student
Outcomes." Educational Researcher 23, 3 (April 1994): 5-14. EJ 484 418.
Lankford, Hamilton, and James Wyckoff. "The Changing Structure of Teacher
Compensation, 1970-1994." Economics of Education Review 16, 4 (1997): 371-84.
Levin, Henry M. "Raising School Efficiency: An X-Efficiency Approach."
Economics of Education Review 16, 3 (1997): 303-11. EJ 547 333.
Monk, David H. "Resource Allocation for Education: An Evolving and Promising
Base for Policy-Oriented Research." Journal of School Leadership 6, 3 (May
1996: 216-42. EJ 527 501.
Odden, Allan, and William Clune. "Improving Educational Productivity
and School Finance." Educational Researcher 24, 9 (December 1995):6-10,
22. EJ 519 250.
Odden, Allan. "Raising Performance Levels Without Increasing Funding."
School Business Affairs 63, 6 (June 1997): 4-12. EJ 547 295.
Picus, Lawrence O. "Does Money Matter in Education? A Policymaker's
Guide." In Selected Papers in School Finance 1995, edited by William J.
Fowler. 19-35. Washington, D.C.: National Center for Education Statistics,
1997. ED 408 691.
Wenglinsky, Harold. When Money Matters. Princeton, NJ: Educational Testing
Service, 1997. 44 pages.