Texas Ed: Comments on Education from Texas

August 21, 2006

The cost of teacher dropouts

Filed under: Education reform, Teacher issues — texased @ 12:25 pm

Star-Telegram | 08/21/2006 | Turnover rates take toll on districts:

The national teacher turnover rate is 15.7 percent annually compared with the average rate for all professions, 11.9 percent, according to 2004 data from the National Commission on Teaching and America’s Future. The commission estimates that the average cost to recruit, hire, train and then lose a teacher is $50,000.

Maybe we should be focusing on something other than the high school dropout rate. If you were to interpret the turnover rate like a dropout rate (okay, I know it’s not the same since new people enter, etc), a turnover rate of 15 % a year means that by the fourth year almost 40% of the original teachers would be gone.


  1. My experience in New York City is that the turnover rate is largely dependent on years of experience. A high percentage of first year teachers don’t make it, while by the fifth year more teachers are likely to stay.

    We claim that the median years of service here is 5, but that data may be out of date.

    What this means is that we lose about 50% in 5 years, but also that the same line might turn over 2 or 3 times in that time period.

    And of course the neediest kids, the ones who are at real risk of dropping out, usually are paired with the teachers with least chance of making it to the next year.


    Comment by jd2718 — August 21, 2006 @ 1:49 pm

  2. Having the least experienced teachers assigned to the neediest, hardest classes seems to be pretty common. Can you imagine assigning your least experienced engineer to your most demanding project? I think they should pay proven, experienced teachers more and then put their experience to use.

    Comment by texased — August 21, 2006 @ 6:46 pm

  3. We know what the hardest to teach classes are, maybe teachers should get a little extra $$ for taking them…


    Comment by jd2718 — August 21, 2006 @ 7:08 pm

  4. An obviously sensible solution. But imagine the fallout when kids are assigned to such classes…

    Comment by texased — August 21, 2006 @ 8:38 pm

  5. […] TexasEd notes that teacher turnover is scandalously high, and wonders what are the costs of such turnover on students and on student achievement.  We focus on student drop-out rates — perhaps we should focus on teacher drop-out rates.  Explore posts in the same categories: General, Education, Teaching, Public education, Education blogs, Teacher Pay […]

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  8. Cost Efficiency in Education
    DR. Ahmad Basri Yussof and M ihsan Dacholfany M.Ed


    This paper reviews the concept of efficiency in education. This is done by relating several efficiency concepts namely internal efficiency, external efficiency, technical and economic efficiency to the basic relationships between inputs and outputs as represented by an educational production function (EPF) and educational cost function (ECF). The paper begins by elucidating several cost concepts in education, summarising at the end of it a classification or taxonomy of educational costs. This is a prelude to a better understanding of the concept of cost efficiency in education and the application of cost analyses in educational evaluation.


    There is no dearth of studies on educational costing. Beginning in the late 1960’s, UNESCO made a major effort in the promotion of cost analysis in educational planning in developing countries. Its application to educational planning reflected the acceptance of educational policymakers that spending was an investment activity amenable to economic calculus. Nevertheless, there is absolutely a dearth in these kinds of studies in Malaysia. Questions have been asked as to what are educational costs? What is efficiency in education as well as questions pertaining to the why’s of cost analysis. These questions are often asked and are important to address in light of the major challenge for educational decision-makers today, that is, improving education under tight budgetary constraints.

    Educational Costs.
    Economists have a number of ways of examining costs. One of these is to differentiate between direct and indirect costs. The word ‘direct’ is used to indicate that these are spent directly by students or by public authorities on such items as teachers’ salaries or books. These costs are directly attributable to education whereas ‘indirect costs tend to be implicit. For example a student’s time is valuable and is part of the cost of education, though it is not paid for directly. These indirect costs may have to be allocated in a rather arbitrary manner because they are shared with other activities.
    Direct costs receive most attention because the figures are fairly easily available. When issues of educational costs are discussed, attention is usually concentrated on total costs. The prime determinant of total cost is the rate of output. Just as it costs more to produce a thousand chairs than five hundred, so the total cost of education a thousand children will be more than that of educating five hundred. This does not mean that costs will necessarily rise proportionately; a school for a thousand children may be twice that expensive as one for five hundred but it may be more or less than that.
    Another common term in educational costs is institutional costs, which refer to costs incurred by the school on educational inputs or services. They are divided into two categories for accounting purposes: recurrent costs and capital costs. Recurrent costs are costs of educational inputs or services that last for one year, such costs are often divided into two sub-categories: personnel and non-personnel costs. The distinction between personnel and non-personnel costs is a meaningful one in that it shows the relative mix of education inputs.

    Capital costs are cost of inputs that last for more than one year; they include costs of buildings, equipment, and land. To determine the costs of a building or a piece of equipment in a year, the market or replacement value of the building or equipment has to be annualised. The annualisation depends on both the discount rate and expected years of service of the input. Different discount rates can be used to show how capital costs vary with such rates, but in practice, the average rate of return to physical capital of 10% is used as a discount rate. Different types of buildings and equipment have different years of service; they thus require different annualisation factors. The cost of land is estimated as the imputed annual rent of the land. The imputed cost of land per unit are can vary tremendously across regions, as there are large regional differences in the price of land.
    Private resources to education can be classified into three categories: direct private costs of education, household contributions to schools, and indirect private costs of education. Direct private costs of education are expenditures by parents on their children’s schooling, such as expenditures on school fees (tuition and other school fees), textbooks, writing supplies, uniforms, boarding fees, transportation etc. Indirect private costs of education (opportunity costs) refer to the economic value of opportunities foregone as a result of schooling. The opportunities foregone can be a child’s labor in household production, in looking after younger siblings etc. Such costs are usually difficult to estimate and assumptions have to be made about the economic value of a child’s labour. Nevertheless, they are still important to consider in that parents sometimes withhold their child from school because of the need for the child’s labor, especially for parents in rural areas.
    For a variety of reasons, many cost studies consider recurrent costs of schooling with less attention to capital costs and private resources of schooling. The failure to consider these costs can significantly bias the determination of total costs of education and the relative ratio between government schools and private schools.
    Another oft-mentioned type of educational cost is marginal costs. These are the incremental costs of an activity or the costs, which would not have been incurred if the activity had not started. Fixed costs do not alter when the scale of an activity changes (telephone rental is unaffected by an increase in pupil numbers) whilst variable costs do. Marginal costs will be found among variable costs. For example, it could be feasible to accommodate twenty more students at a lecture session, but an addition of the twenty-first would require another hall and another member of staff.
    Figure 1. A Classification of Costs of Education1

    In this case the marginal cost of the twentieth is tiny, but the marginal cost of one more student is very great. Marginal cost is used more generally to refer to the additional costs to be incurred as the result of any decision. This is critical to rational decision-making because it is in some senses the definition of rationality; one makes ‘rational decisions when one compares the additional i.e. marginal, costs and benefits that will result from the particular decision under consideration.
    Tilak (1985) suggests a taxonomy for organising different kinds of educational costs. He distinguishes between public costs and private costs, direct or visible costs (recurrent and capital costs) and indirect or invisible costs (opportunity costs). Two distinguishing features of the taxonomy are that firstly, it is suitable for measuring the real or social costs of education. Second, it focuses on both the sources of educational costs and the costs of various input items to education.
    A more comprehensive classification of costs in education (Figure 1) is provided by Tsang (1987a). This is a modified version of Tilak’s taxonomy, addressing sources of support for education (external aid and contributions from the private sector) as well as providing a matrix of input items and their functional uses of recurrent costs.

    Efficiency Concepts in Education
    The economic framework of educational production views educational output as the result of the internal process though which educational inputs are transformed. In other words, given production objectives, prices and technology, inputs are being transformed into desired outputs. According to Tsang, “the internal process that transform inputs to outputs is represented by a production function that is a relationship indicating the maximum amount of outputs that can be produced for given inputs”. By input, it is meant by the various ingredients such as students, teachers, instructional materials, equipment and others whereas output of education consist of effects accrued via schooling such as cognitive and non-cognitive skills as well as such benefits of higher productivity and earnings. The curriculum, pedagogical methods, distant learning, school management etc. constitute the technology of education. The relationship between inputs and outputs is represented by an educational production function (EPF).
    By using this educational production framework, several concepts of efficiency in education can be applied. These concepts include internal efficiency, external efficiency, technical efficiency and economic efficiency.
    The internal efficiency of education compares the costs of education to the outputs or effects within education, such as the acquisition of skills, cognitive and/or non-cognitive. Education production is said to be more internally efficient when it can produce more desired outputs given the same amount of resources. While internal efficiency compares outputs and costs within the realm of education, external efficiency deals with costs and effects without. In other words, it compares costs and effects of education that are external to educational production such as higher earnings, and productivity. “Educational production is technically efficient when the maximum amount of school outcome is produced” given the amount of financial resources to purchase a certain combination of inputs at prevailing prices. In other words, a school is technically inefficient when some given inputs are not fully utilised and thus school outcome can be raised without incurring additional costs. The way to do it is by utilising fully the unutilised existing inputs. Similarly, educational production is economically efficient when, given prices, technology, and financial resources, the maximum amount of school outcome is produced by selecting the right combination of inputs (more or fewer teachers as opposed to textbooks or physical facilities). Therefore a school is economically inefficient, when school outcome can be raised without incurring additional cost, just by altering the combination of inputs.
    An alternative but equivalent way to study efficiency is to use an educational cost function (ECF). Whilst EPF is a relationship which indicates maximum output given the same resources, the ECF is a relationship which indicates the minimum cost needed to produce a given level of outcome. This is to say that when a school is technically inefficient, educational costs can be reduced by cutting excess inputs without affecting the level of school outcome. Similarly, when a school is economically inefficient, cost can be reduced by changing the mix of inputs without affecting the level of school outcome.

    Thus by viewing education as a production function, several areas of educational cost studies can be categorised namely (a) Educational costing and cost-feasibility studies, (b) studies analysing the behavioral characteristics of educational costs and (c) cost-benefit and cost-effectiveness studies in education.

    Benefits of Cost Analysis in Education
    As education faces increasingly the pressures of competition for resources, inflation, and ever-increasing demands on the schools for new programmes and innovations, a way must be found to choose among competing alternatives. While standard evaluation approaches take account only of the effects of alternatives, cost analyses take account of both the costs and effects of selecting alternatives, making it possible to choose those alternatives that provide the best results for any given resource outlay or that minimise the resource utilisation for any given outcome.
    The significant underutilisation of educational inputs in some schools should be of concern to educational policymakers. By more fully utilising teachers and school facilities, more school outputs may be produced without incurring additional costs.
    The dominance of teacher costs in recurrent expenditure implies the importance of keeping teacher costs under control. In many countries, teacher costs account for nearly 90% of the recurrent expenditure on primary education, leaving very limited funds for buying non-teacher items.
    The negative consequence of an imbalance in the mix of educational inputs for student achievement has to be confronted.
    Many educational systems have vocationalised or diversified their schools on the presumed productivity and employment advantages of the vocational curriculum. In light of the significantly higher unit costs of vocational training, there is need to examine the evidence for the presumed benefits and effects of vocational training.

    Unit costs of higher education are considerably higher than those of primary education. A close look will reveal large subsidies to university studies. We may question whether or not the significant cost gaps are compensated by higher social benefits of higher education. Mechanisms of financing higher education have to be re-examined. There could be a need to reallocate resources between educational levels and alternative financing strategies may be called for.
    In many countries, due to financial constraints, policymakers are exploring alternative technologies of education. Given a large enrollment and a long operating life, new educational media can achieve low unit costs. This could be a good strategy to reach students in rural areas to reach students in thinly populated areas. These are areas in which cost analyses of education are most useful and where benefits could be accrued.
    It also pays to understand the behavioral characteristics of educational costs by regularly constructing and examining educational cost indicators and by studying resource utilisation in schools. It could uncover opportunities for improving efficiency of educational investment. An awareness of the disparities in educational costs in different settings is necessary for decisionmakers to design proper policies applicable to diverse settings. In short, sound economic research and evaluation can improve the efficiency in the allocation of resources in education.

    Blaug, M (1985) Where are we now in the economics of education? Economics of Education Review, 4(1), 17-28

    Chesswas, J & Hallak, J (1972) Uganda: Behaviour of non-teacher recurrent expenditures, in Educational Cost Analysis in Action: Case Studies for Planners (Vol. 3, pp. 67-104). Paris:UNESCO, IIEP

    Coombs, P & Hallak, J. (1987). Cost Analysis in Education. Baltimore, MD: John Hopkins University Press

    Levin, H.M, (1983) Cost Effectiveness-A Primer. Sage Publications

    Md. Yussof, A.B (2000) A Study of School Costs in Malaysia: Efficiency, Equity and Sustainability. An unpublished Phd. Thesis, University of Sussex, Brighton

    Tilak, , J. (1985) Analysis of Costs of Education in India. National Institute of Educational Planning and Administration (India), Occasional Paper No. 10. (ERIC Document Reproductive Service No Ed261 946)

    Tsang, M. (1987a). A Cost–of-Education Data System for National Educational Planning and Policy Analysis. Unpublished report prepared for Project BRIDGES, Harvard University, Cambridge, MA

    Tsang, M. (1988) Cost Analysis for Educational Policymaking: A Review of Cost Studies in Education in Developing Countries. Review of Educational Research, Summer 1988, Vol. 58, No. 2, pp.181-230

    Woodhall, M, (1967) Cost Benefit Analysis in Educational Planning. Paris, UNESCO, IIEP

    Comment by BIDAN EVI YUZANA SKM & DR. Ahmad Basri & M Ihsan Dacholfany M.Ed — June 8, 2009 @ 3:41 am

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