| Chapter 1: | Introduction |
This is a limited free preview of this book. Please buy full access.
small library districts (circulation < 100,000). We also found that library services suffer from G-inefficiency. In our model, we found that each additional library district in a county increased per-patron operating costs by $10 annually.
We also examined scale economies and G-inefficiency using data for Indiana's 289 school districts. We found that scale economies are present in districts with an enrollment of 2,000 or fewer students. Within this range, the addition of 100 extra students to a school district would reduce costs by $580 per student, or almost 6% of the annual per-student costs. This held when we controlled for the other factors which determine per-student cost. We also found evidence of G-inefficiency in educational spending. If county-level consolidation of schools were to occur in this sample, so that the number of districts was reduced from the maximum of 7 to one per county, we would observe a decline in per capita educational costs of roughly $110 per resident. This represents one of the larger cost-saving estimates reported in this book.
Conclusions, implications, and extensions are discussed in chapter 8. In this chapter, we compare our results for each of the estimates that have been provided in the book. We then make comparisons of our findings of scale economies across functional areas and regions and use our empirical findings to simulate the potential savings to be had from the consolidation of government activities. This provides estimates of the anticipated effects of both structural (aggregate) and functional consolidations of local governments. We then provide simulations for savings that are associated with G-inefficiency. In this chapter, we simulate the effect of consolidating local governments on each specific functional area.
We then discuss the limitations of the current research and make specific recommendations for future research, including exploring further avenues of analysis. We speak to theoretical issues that remain unresolved, as well as to remaining empirical analyses which would support public sector decision making at the state and local levels in the United States. The first issue at hand is to describe government consolidation, and that is where we now turn our analysis.