Schools across the United States are facing budgetary pressures on a scale not seen in generations. Times of fiscal exigency force policymakers and education practitioners to pay more attention to the return on various categories of public investment in education. The sizes of the classes in which students are educated are often a focus of these…

The California class size reduction program provided schools with cash rewards for K-3 classes of 20 or fewer students. I show how program rules made it possible for schools to save money by using mixed-grade classes to meet class size reduction obligations while maintaining larger average class sizes. I also show that this smoothing of students…