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What Does It Really Cost to Graduate a High School Student?
 Big schools spend less than small schools to open the doors and let kids find a seat every morning, and there are lots of economies of scale studies that say so. But what does it cost to actually teach a student, and to do it well enough to graduate that student, and maybe even get that student into college? Research done for the Nebraska Alliance for Rural Education finds that small schools measure up very well against their big neighbors when the cost of schooling is measured as the cost per graduate.
Smaller districts are common in Nebraska. The state has just 12 districts with high school populations over 1000, only 22 with high school populations over 600; and 246 districts with populations under 600. Sixty-three districts have fewer than 70 students. According to research done for the Alliance by independent consultant Patricia Funk and Center for Rural Affairs analyst Jon Bailey, this is an educational endowment worth protecting. Funk and Bailey compared outcomes from different size districts, including only K-12 districts so that expenditures for districts of all sizes would be consistent. They learned that the smaller the district, the higher the graduation rates, and the higher the percentage of students going on to college and other post-secondary institutions. High school dropout rates go up as school size goes up in Nebraska. High schools with under 70 students graduate 97% of them. Those with over 1000 students graduate 84%. The big break is at about 600 students. Those with fewer than 600 graduate over 90%. Those with more than 600 graduate less than 80%. Because larger Nebraska districts have higher dropout rates, their annual cost per pupil graduated is higher than for most smaller districts. Districts with 1000 or more high school students spent less per pupil per year than smaller districts, but because of that 16% dropout rate, had higher annual costs per graduating student than high schools with as few as 100 students. The lowest annual cost per graduate was achieved by schools with between 300 and 599 students in high school. Even districts with between 100 and 300 high school students are actually cheaper per graduate than their big neighbors with over 1000 high school students. Only districts with fewer than 100 students had higher costs per graduate than the largest districts (but they did graduate 97% of their students). And these small districts not only pump out the graduates, but they send them on to post-secondary schools. Using data on enrollment by county in Nebraska institutions of post-secondary education, Funk and Bailey computed the post-secondary enrollment rate for graduates from counties based on average high school size in the county. In counties with larger high schools, the college enrollment rate for graduates was lower. The exception is Lancaster County, the seat of state government and the University of Nebraska. Again, the smallest schools sent the most graduates to college. Those with under 100 students sent about 70% to college. Despite their obvious effectiveness, small schools in Nebraska are under political siege by those who believe faithfully that when it comes to schooling, bigger is cheaper. State policy makers have persisted in crimping funds to smaller districts. As Funk and Bailey note, "the state aid to education distribution formula penalizes most small schools for any above average per pupil costs." The logic has been that smaller schools are more expensive and presumably like a lot of small inefficient systems, they should merge and become more efficient. This is the basic, age-old thinking of school closure and school and district consolidation. Funk and Bailey also analyzed the real costs of high school dropouts to the state of Nebraska. They consider the loss of income to non-high school graduates, the numbers who participate in public assistance programs, and the number of dropouts in prison and their annual costs of incarceration. Keeping these kids in school would be a real cost savings in many ways. If high school dropouts had graduated instead, and participated in public assistance programs at no greater the rate than other high school graduates do, there would be 35,000 fewer Nebraskans receiving public assistance at an annual savings of $130 million in that social program alone, not including Medicaid and housing assistance. These social "costs" of dropping out will always be higher than the per-graduate costs of even the smallest high schools. The money spent on these remedial and penal systems would be better spent on small high schools in small districts that can produce graduates and send them on for postsecondary education. Or at least, as Funk and Bailey more modestly conclude, "it is essential that we not discriminate against small schools in the distribution of state aid when the student outcomes for most of these schools are so positive." Though it is sometimes forgotten in our market-driven policy climate, schools are not operated primarily to make money, or save money. Presumably they operate to educate the young people of the state to be productive, responsible citizens. Ignoring that cost for the sake of petty gains in per pupil expenditure is pennywise, and pound foolish. Learn more about Rural Policy Matters Events | Services | Newsroom | Contact Us | Search © 2003 The Rural School and Community Trust 
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