Economy+of+Scale

The concept that indicates that increasing size of an organization can result in a lower per unit production cost is known as economy of scale. Smaller districts have a disadvantage of economy of scale compared to a larger district. The overall infrastructure cost per student in a larger district is less than that of a smaller district. The average cost per expenditure per student is less in the larger district because it is spread over larger number of students per campus. The result of economy of scale is that the larger district has more instructional revenue per student. This allows a district to provide more funds for teacher salaries and to use more funds to enrich existing instructional programs. From the analysis of the data from a small and a large district we found the following:

District 1 Number of Schools = 3 Number of Students = 830 Total Revenue per Pupil = $10,529 Total Operating Expenditure per Pupil = $8,611 Average Teacher Salary = $39,771

District 2 Number of Schools = 45 Number of Students = 32,326 Total Revenue per Pupil = $10,316 Total Operating Expenditure per Pupil = $8,908 Average Teacher Salary = $50,307

From the initial examination of the data it looks like the two districts are comparable with total revenue and expenditure per pupil. For District 2 they generate over $329 million in revenue versus only $8.8 million in revenue for District 1. The extra revenue in District 2 allows for greater teacher salaries and a more enriched instructional program as evident by a higher percentage of teachers with advanced degrees and higher average SAT and ACT scores. The larger district has a larger fund balance which may also impact the overall instructional program of their district.

Please add more as needed. James

I agree James. The smaller district will have the same basic cost and personnel as a larger district. For instance, the smaller district will have a curriculum director for the three schools. The curriculum director may be able to handle more than three schools in the large district, thus saving money per pupil to be put somewhere else. The same thing can be said for maintenance and other areas. One superintendent for the large district handling 45 schools with his cost split among the 45 campuses versus 3 campuses handling the cost of one superintendent. There are some embedded costs that are the same regardless of the school size and economy of scale can help the larger district to allow more and better programs and higher teacher salaries, because many costs are spread among more campuses.-Mark

Great job! The principle also encompasses other areas, such as heating or cooling gyms, cafeterias, and office spaces. Regardless of how many students a campus educates, these areas are common to schools of both sizes. District 1 also had a higher teacher turnover rate at 16.4% compared to 15.7% in District 2. This could be indicative of teachers staying longer in the school with the higher salary. Again, this is an indicator that larger schools, which are able to provide higher salaries, retain higher quality teachers for a greater length of time, thus providing a better instructional program for students.-- Kristy

This is the merged product:

The concept that indicates that increasing size of an organization can result in a lower per unit production cost is known as economy of scale. Smaller districts have a disadvantage of economy of scale compared to a larger district. The overall infrastructure cost per student in a larger district is less than that of a smaller district. The average cost per expenditure per student is less in the larger district because it is spread over larger number of students per campus. The result of economy of scale is that the larger district has more instructional revenue per student. This allows a district to provide more funds for teacher salaries and to use more funds to enrich existing instructional programs. From the analysis of the data from a small and a large district we found the following:

District 1 Number of Schools = 3 Number of Students = 830 Total Revenue per Pupil = $10,529 Total Operating Expenditure per Pupil = $8,611 Average Teacher Salary = $39,771

District 2 Number of Schools = 45 Number of Students = 32,326 Total Revenue per Pupil = $10,316 Total Operating Expenditure per Pupil = $8,908 Average Teacher Salary = $50,307

From the initial examination of the data it looks like the two districts are comparable with total revenue and expenditure per pupil. For District 2 they generate over $329 million in revenue versus only $8.8 million in revenue for District 1. The extra revenue in District 2 allows for greater teacher salaries and a more enriched instructional program as evident by a higher percentage of teachers with advanced degrees and higher average SAT and ACT scores. The larger district has a larger fund balance which may also impact the overall instructional program of their district.

District 1 will have the same basic cost and personnel as District 2. For instance, District 1 may have a curriculum director for the three schools. A curriculum director may be able to handle more than three schools in a larger district, thus saving money per pupil to be put somewhere else. The same thing can be said for maintenance and other areas. One superintendent for the District 2 handling 45 schools with his cost split among the 45 campuses versus 3 campuses handling the cost of one superintendent. The principle also encompasses other areas, such as heating or cooling gyms, cafeterias, and office spaces. Regardless of how many students a campus educates, these areas are common to schools of both sizes. District 1 also had a higher teacher turnover rate at 16.4% compared to 15.7% in District 2. This could be indicative of teachers staying longer in the school with the higher salary. Again, this is an indicator that larger schools, which are able to provide higher salaries, retain higher quality teachers for a greater length of time, thus providing a better instructional program for students. These embedded costs are the same regardless of the school size and economy of scale can help the larger district to allow more and better programs because many costs are spread among more campuses.