Educational Expenditures and School Efficiency

January 1, 1947

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Foreword There is a tendency today to overemphasize the importance of expenditures to educational efficiency. High expenditures are frequently interpreted to mean good schools, and low expenditures the contrary. Such assumptions are far from trustworthy for states may have either inferior schools at high cost or superior schools at moderate expense.

Sometimes the importance attached to educational expenditures reaches surprising proportions, as in the following statement of the National Education Association: “Education Pays: The volume of economic activity in the various states rises or falls with the level of educational expenditure.” The implication seems to be that economic activity within a state depends upon the amount of money spent for schools. Wealthy states can and do spend more for education than poor states, but to attribute their wealth to this fact is to confuse cause and effect. Expensive schools will not make a poor state rich: they will either increase its natural resources nor transform it into a highly industrialized community.

The usual method of evaluating a. public service is first to analyze the scope and quality of benefits and then to determine whether the value of the service is commensurate with the cost involved. But many educational benefits cannot be analyzed at the state levels rendering this method only partially applicable to the evaluation of state school systems. Instead of analyzing benefits directly it is necessary to measure them indirectly by use of general statistical criteria.

School expenditures are one of these general criteria of evaluation. But they are only one, and if used alone for appraisal purposes it is obvious that the usual method of measuring the efficiency of a public service is reversed. Expenditures are then assumed to represent the quality of benefits, and hence, in a sense, to constitute benefits. Such an assumption provides a direct incentive to increase the cost of education without necessarily obtaining compensating improvements in performance. When expenditures are used in evaluating schools they should always be employed in combination with other criteria of measurement, and greatest weight should be placed upon non-expenditure factors.


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