Examining Economies of Scale in School Consolidation: Assessment of Indiana School Districts

This article examines the potential for reducing costs through school district consolidation by employing economies of scale. Utilizing Indiana school district data primarily from 2004 through 2006, we find evidence for scale economies with optimal enrollment being 1,942 students, with a per pupil estimated cost at $9,414. The 95% confidence interval of the optimal enrollment is 1,300 to 2,903 students. The study examines several hypotheses discussed in this line of literature. Transportation does not appear to hold significant scale economies potential, while salary data provides mixed results. Finally, attendance is shown to be negatively influenced by school district enrollment levels, with the impact of attendance on student performance being examined in a subsequent study.