Archive for December, 2010

Penalties of Scale: Why Large School Districts Need to Disaggregate

Sunday, December 26th, 2010

Proponents of mayoral control frequently argue that concentrating decision-making power over the school system within the mayor’s office rather than at the state level or within an elected board of education enables more resources to be focused on those most affected by education and enables those most involved in providing education to provide better instruction.  But state control causes local school districts to spend less time on students as well as parents because more time is required to be spent on state imposed bureaucratic obligations and requirements.  Mayoral control advocates, therefore, go further by arguing that concentrating decision-making power over the school system within an elected board of education often leads to instability, fragmented leadership, and a dysfunctional school system. 

The local school district not only is closest to the students, parents, teachers, and taxpayers but also has the necessary expertise to most effectively decide how to provide a quality education and to generate the necessary support among local taxpayers for the public funding of public education.  But the size of the local school district impacts school and student performance.  If a school district gets too large and unwieldy even with mayoral control then parental engagement decreases which harms student achievement because parental involvement is a key component supporting student performance. 

Antonucci (1999, p. 1) reports that “the larger a school district gets, the more resources it devotes to secondary or even non-essential activities.  In sum, large school districts engage in ‘mission creep,’ building activities which rapidly lose any connection to the original goal of educating children”.  Antonucci (1999) argues that large urban school districts are too large to function effectively and to improve school and student performance.  Indeed, his research suggests (Antonucci, 1999, p. 2) that the typical “American public school system suffers from penalties of scale”.  Many education reformers, especially those who favor large countywide school districts, purport that the larger is a school district the more economies of scale it realizes.  These reformers, however, do so based on presumed but unsubstantiated economies of scale that do not account for the true nature of school systems and educational organizations. 

Big business is much more like a large public school district than is small business.  While scale may differ, the effects of scale and scale economies are largely the same.  Most large businesses operate in the flat portion of the long run average cost curve while many of the older, less efficient, larger, perhaps declining industries, utilities or utility-like firms (i.e., railroads) operate beyond the pivot point on the long run average cost (LAC) curve at which their LAC exceeds their marginal cost (MC) which results in operating losses.  Large especially urban public school districts also operate beyond this pivot or break point. 

The economics of large especially urban school districts resemble those of big business because when a large, often urban, school system’s LAC exceeds its MC it typically results in public subsidies to cover budgetary gaps as exemplified by the Abbott districts in New Jersey.  This defines the economics of our nation’s large scale public school systems such as Newark, New York City, Los Angeles, and Chicago.  Large scale public school systems operate with enrollment levels that are beyond their optimal level (i.e., approximately 3,500 students) which results in their LAC exceeding their MC.  At this pivot point, the cost of their production inputs exceeds the benefits of their educational output largely as a result of congestion and crowding.  This is turn results in ongoing subsidies because, as New Jersey demonstrates, state legislators seem to believe that the Abbott school systems should continue and subsidize them according to a rationale similar to the one supporting the railroad industry’s subsidies. 

The conventional wisdom or misconception concerning our schools that somehow they are different from yet should be run as if they were each a large private sector business is the root cause of many of the challenges facing our public schools.  Larry Cuban demonstrates this principle in his book, The Blackboard and the Bottom Line.  In his book, Cuban (2004, pp. 3-4) quotes from the “Blueberry Epiphany” of Jamie Vollmer, a former business executive turned school reformer:  “Our schools are not factories”.  Indeed, no business could survive if they had not only to abide by the same rules and regulations but also to operate according to the same economic constraints as those that apply to our public schools.   

The size of large urban school districts, therefore, influences the extent to which any form of structural control can improve the school system.  Large urban school districts generally have not been accountable for improving school and student performance because they have been constrained by their overly large scale with its concomitant penalties of scale or diseconomies of scale.  The typical large urban school district needs to be right-sized or disaggregated into several smaller districts with each not exceeding approximately 3,500 students.  This would enable the control structure for the school system to improve accountability and lowers its cost structure while freeing it from penalties of scale.  The solution seems to be to disaggregate districts with more than 3,500 students into several smaller more manageable but empowered local school districts under the control of a locally elected board of education. 

Los Angeles

The Los Angeles school district is the nation’s second largest school district.  It includes the school systems of 26 other cities besides Los Angeles, over 1,100 schools, and slightly less than one million students.  Because it is composed of the school systems of 26 other proximate cities, Los Angeles is often referred to as a large unified school district or the L.A.U.S.D.  The L.A.U.S.D. exemplifies a large urban school district with a mixed governance structure that is plagued by a fragmented power sharing arrangement among 26 mayors rather than centralized control under the command of one mayor or locally elected board of education.  As such the L.A.U.S.D. suffers from the penalties of scale that afflict large urban districts.  It also lacks the benefits of having one just one person or group, one mayor or board of education, which the voters can hold accountable for the school system’s performance. 

The Los Angeles school district seems to be a district, therefore, that could readily benefit from disaggregating into several smaller local districts of no more than 3,500 students and unifying control under a locally elected board of education within each of these smaller districts.  Each of these districts would be empowered to allocate its financial and human resources according to local needs and priorities.  Implementing this arrangement would empower each local district to levy their own local property taxes to fund their schools according to local needs and priorities.  This also would require the repeal of California’s Proposition 13 that banned local districts from levying their own local property taxes. 


Once a newly disaggregated school district becomes free of the excessive bureaucratic burdens imposed by its former fragmented unmanageably large school district, unified under the control of a locally elected board of education, free of its state’s governmental strings attached to funding, and regains the ability to levy their own property taxes, each small local district would be much better equipped to generate the necessary public support for the public funding of its local public schools.  The disaggregation process, therefore, not only could be applied successfully to school districts nationwide with enrollments exceeding 3,500 but also would greatly improve accountability and enable the disaggregated school districts to realize the benefits of economies of scale. 


Antonucci, M. (1999). Mission Creep:  How Large School Districts Lose Sight of the Objective – Student Learning (AdTI Issue Brief Number 176).  Retrieved from   

Cuban, L. (2004). The Blackboard and the Bottom Line. Cambridge, Massachusetts:  Harvard University Press.