Performance comparisons of Missouri public schools using data envelopment analysis

Public schools in the United States continue their struggle with the divergent goals of improving performance and reducing spending. For almost a decade, they have been challenged to comply with the federal No Child Left Behind Act (NCLB). In many local districts, those goals have been pursued with the reality of funding reductions, and the problem now exacerbated by budget shortfalls due to the global economic crisis. In the present situation, solutions based on efficiency and economy are worthy of renewed examination. This chapter employs data envelopment analysis (DEA) in a large-scale study of 447 public school districts in the State of Missouri. It develops a baseline DEA model to measure district efficiencies. Then it classifies districts using a relative wealth variable (rich and poor) and attempts to determine the degree to which that classification changes the baseline model. The study concludes that using a relative wealth variable in the analysis produces more robust results than the baseline model. It further demonstrates that funding allocation decisions may be improved by including a relative wealth variable in the decision-making processes.