The State of Minnesota funds its public schools primarily through a funding formula that
provides school districts the same amount of revenue per pupil regardless of the size of their
enrollment. In an earlier paper (Thorson and Edmondson 2000), we demonstrated that, similar to
other areas of the economy, larger school districts incur less cost per pupil due to savings attributed to
increased efficiency derived from the economic principle of “economies of scale.” The purpose of
this study is to evaluate whether smaller school districts, as a result of their higher costs per pupil,
experience greater hardship in the areas of infrastructure, resources, and staffing. To test this
hypothesis, we surveyed school superintendents throughout Minnesota.
Over 88 percent of public school superintendents responded to the survey. Some of our most important findings include:
- In many key areas of infrastructure and technology, small school districts had significantly
lower quality levels compared to larger school districts in the state. - Smaller school districts had much more difficulty than larger school districts in attracting and retaining teachers.
- The disparities between small and large school districts are even larger when one compares
the low referendum small districts with other school districts in the state. - To help eliminate these disparities, we recommend altering the state’s basic funding formula
(currently $4,601 per student) to provide 8 percent more funding for a district’s first 500
students and an additional 4 percent to the next 500 students. All additional students beyond
the first 1,000 in each district would be funded at the $4,601 level. These increased revenues
would be available to all school districts in the state. The total cost of the proposal is $77
million (less than 2 percent of state educational revenues).
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