Discusses the relationship between school size and per-pupil educational costs and describes a number of possibilities for using state aid formulas to encourage school districts to operate schools of optimal size. Three possible approaches are discussed, including penalty factors, incentive payments, and a combination of penalties and incentives.…

This report focuses on the relationship between State aid to education and incentives for the efficient allocation of resources. Following a description of the historical and current manifestations of State aid, an empirical analysis was conducted to study the impact of State aid on several variables. More State aid was found to be associated with…