Pupil Transportation: The Impact of Market Structure on Efficiency in Rural, Suburban, and Urban School Districts in Minnesota Sheryl S. Lazarus
[email protected] Department of Educational Policy and Administration University of Minnesota 350 Elliott Hall 75 E. River Rd. Minneapolis MN 55455 Gerard J. McCullough Department of Applied Economics University of Minnesota 1994 Buford Ave. St. Paul MN 55108 Paper prepared for presentation at the American Agricultural Economics Association Meeting, Denver Colorado, August 1-4, 2004. Copyright 2004 by Sheryl S. Lazarus and Gerard J. McCullough. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. 1 Abstract This paper presents a cost function for the pupil transportation industry in Minnesota. In- house provision of transportation was not shown to be more costly than outsourcing. Large contractors may seek the most profitable contracts in urban and suburban areas, while showing little interest in contracting opportunities in rural school districts. 2 Pupil Transportation: The Impact of Market Structure on Efficiency in Rural, Suburban, and Urban School Districts in Minnesota Sheryl S. Lazarus and Gerard J. McCullough This paper presents a cost function for pupil transportation for individual school districts in Minnesota. The cost function was used to analyze whether private contractors or school districts provide pupil transportation services more efficiently in rural, suburban, and urban school districts. Background The student transportation industry is the largest single carrier of passengers in the United States. During the 1998-99 school year, $12 billion of public funds were spent to transport 23 million students over 3.8 billion miles on 448,000 buses (School Transportation, 2002).