International Conference on Economics, Finance & Business, Vienna

MONITORING INEFFICIENCY IN PUBLIC EDUCATION – A VALUE-ADDED APPROACH

KALYAN CHAKRABORTY

Abstract:

In 2023 the U.S. spent around $1trillion in combined State, local, and Federal funding to K-12 education, more than any other program, such as national defense. Measuring school performance is vital for performance-based school reform efforts. With competing demands for government funding, it is crucial for education to be provided most efficiently. Efficiency occurs when output from education such as test scores or value-added are produced using lowest level of resources. One approach to measuring efficiency is to apply econometric and linear programing techniques that have been developed to measure productive efficiency. Studies on school accountability systems hold schools accountable for their performances using value-added models that measure effects of schools on student learning. This study examines the inefficiency of public secondary schools in Texas using value-added and data envelopment analysis (DEA). The empirical application uses four-year panel data from 410 school districts and applied seemingly unrelated regression (SUR) to determine the effect of socioeconomic and environmental factors on students test scores. Next, the raw test scores are adjusted using predicted residuals from the SUR regression model and applied as outputs in an output-oriented DEA model. Several school characteristics are used as inputs in the DEA model that generates school specific (in)efficiency scores. The study found the secondary schools in Texas are mostly efficiency, the average efficiency across all schools and for all years is 90.5 percent. However, the Malmquist productivity index found the total factor productivity (TFP) decreased over the time. The study found dropout rate, poverty, low English proficiency, and disability affects test scores negatively; and the cohort test score from the prior year affect current year test scores positively. We found smaller school districts are less efficiency although they spend more tax dollars per student. They have higher poverty and disability compared to large school districts. Large school districts are more efficient, and they have significant cost saving since they have the lowest expenditure per student. However, they have higher percentage of students with low English proficiency level. To our knowledge this is the first effort to measure efficiency of secondary school in Texas using robust mythology. This study provides valuable insights to policymakers, education researchers, and parents to make informed decisions on school choice.

Keywords: Efficiency, Education, Value-added, Productivity, Data Envelopment Analysis, Seemingly Unrelated Regression

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