Finance+Week+4,+Part+2

Comparing Economy of Scale in Large and Small Districts


 * || **District 1** || **District 2** ||
 * Total Revenue Per Pupil || $10,529 || $10,316 ||
 * Total Operational Expenditures || $8,611 || $8,908 ||
 * Average Teacher Salary || $39,771 || $50,307 ||

District 1 is significantly smaller than District 2 (830 students vs 32,326 students). Although the two have many similiarities, District 1 expends 54% of their budget on instructional expenditures (teachers), while District 2 expends 62% on same. District 1 expends 34% of its budget on Plant Services and Other Operating expenditures, while District 2 expends only 28% on same. This is a good example of “economy of scale.” Because District 2 is larger, their Plant and Other Operating expenses require a smaller piece of the revenue pie, therefore leaving more money available to increase the instructional/teacher salary piece of the pie…more funds available to enable District 2 to be able to pay higher salaries than District 1.