Efficiency: The Missing Metric
What is the remedy for a failing school? Should it lose its students, or its principal, or be completely closed down and "reconstituted"? Or, on the other hand, should the problem be addressed by providing more resources and support—more money, expert consultants, or more professional-development days? In other words, should failing schools be punished or helped? Unfortunately, as important as this question is, there seems to be no consistent answer inherent in the actions and policies of educators and policymakers. Sometimes failing schools are shown the stick; other times they are offered the carrot.
The confusion stems, in part, from the reliance on school "output measures" (such as test scores or graduation rates) and the absence of information about school efficiency. If we knew which schools were efficient, that is, which ones were using their resources in a way that maximized their outputs, and which schools were inefficient, then we would have a better sense of what to do. Answering the question about what to do requires information on school efficiency.
Notice that knowledge about school efficiency would also provide guidance on how to treat high-performing schools, which are often let off the hook entirely. For example, a common statement of philosophy (and practice) is: High-performing schools should be given greater autonomy. But does this make for good policy? What if these high performers could reach their goals with less money? Why should they not be reconstituted or provided with consultants the same way low-performing schools are?
The key to making our entire school system more cost-effective as it strives to reach higher performance goals is to create and use measures of school efficiency along with the school performance measures we are already using. Such a dual metric system would allow us to delineate four classes of schools, at least, deserving different treatment: High-performing, efficient schools would be left alone to do more of the same (and perhaps serve as models); high-performing, inefficient schools would be required to perform better or give up some resources; low-performing, efficient schools would be given more resources of various kinds; low-performing, inefficient schools would be reconstituted.
The real question, then, for implementation policies is this: Can efficiency be measured reliably and inexpensively? Three years of research on school efficiency measures convinces us that it can. In our research, we have constructed school efficiency measures for public elementary schools in New York City and the state of Ohio, using administrative data available from school authorities. At the heart of our methodology is an "educational production function" relating school outputs to school, student, and community inputs. We use regression analysis to identify how well each school uses its inputs to produce school outputs—say, performance on standardized tests. Thus, the regression provides a measure of school efficiency. The measure "rewards" schools that produce high scores on exams or high graduation rates, but adjusts the performance measures for characteristics of students that make education more or less difficult, as well as for school resources.
In the end, whether these efficiency measures are useful depends upon the extent to which efficiency and performance differ. Are all high-scoring schools efficient and all low-scoring schools inefficient? Our research suggests that the answer is no. As an example, in our 602 New York City elementary schools, according to their performance ratings based on public sources as well as their efficiency measures from our research, 158 schools are rated high performers. Of these, 71 are also efficient, while 10 are inefficient. The rest of the high performers are in-between in efficiency. On the other side of the performance scale, 140 schools are rated low-performing. Of these, 26 are also efficient, while 50 are inefficient, with the rest in-between.
These classifications, if used to devise remedies, would mean that the 10 high-performing but inefficient schools would be asked to do more or "do with less." On the other hand, the 26 low-performing but efficient schools would be given more resources to keep up their efficient work, but produce more of it—that is, raise scores. What do these groups of schools look like in terms of their students and resources? The inefficient high performers educate students who are 46 percent eligible for free lunches and 6.4 percent limited-English-proficient; spend $10,551 per pupil; and are located 40 percent in Staten Island and 10 percent in the Bronx. The efficient low performers, on the other hand, educate students who are 92 percent eligible for free lunches, 27 percent limited-English-proficient; spend $9,126 per pupil; and are located not at all on Staten Island but 42 percent in the Bronx.
Efficiency is important to using public dollars cost-effectively. As demonstrated by the characteristics of inefficient high performers and efficient low performers, it is also important to fairness. Why let the high performers, with students who are easier to educate, off the hook if they could do better? Why punish low performers, with more difficult-to-educate students, if they are doing as well as possible?
Efficiency can and should be part of public decisionmaking. Efficiency measures must be added to the public metric.
Vol. 24, Issue 02, Page 42Published in Print: September 8, 2004, as Efficiency: The Missing Metric