Cost and value ratios of operating renewed English secondary schools

Abstract

The relative cost ratios of facility construction and operations, and the value generated from building use have been much debated in recent years. Relative values of these ratios are likely different between alternative facility types. Empirical analyses of ratio estimates are presented for English secondary schools over recent years. Findings challenge established views of the relative cost ratios of 1 (construction), 5 (facility management) to 200 (operations or staff), suggesting the ratios are actually 1/1/5 respectively. The study also estimates the value of investing in schools in terms of improved outcomes, applying educational attainment data for rebuilt schools. These are converted into monetary values using wage uplift indicators. This produces estimates of expected economic benefits (increased productivity and output) and benefits to government via future tax receipts (financial return). Findings suggest the present value of future tax revenues alone do justify investing in school rebuilding. Average economic returns are positive but highly variable, with high dispersion in expected benefits. These benefits are positive only in half the rebuilt schools. The results will help inform allocation of public resources in schools, while also assisting management of the growing independent and semi-autonomous school estate.

Keywords:

• building evaluation
• cost–benefit analysis
• evidence base
• human capital
• public policy
• schools
• whole-life cost

ORCID

Alex Murray http://orcid.org/0000-0003-0624-2070

Richard Marsh http://orcid.org/0000-0002-3258-9206

Notes

1 The government department responsible for schools in England and Wales has recently changed name several times. Before 2001 it was the Department for Education and Employment (DfEE); from 2001 to 2007 the Department for Education and Skills (DfES); from 2007 to 2010 the Department for Children, Schools and Families (DCSF); and since 2010 it has been called the Department for Education (DfE). In this paper the abbreviation used varies according to the period of the reference.

2 Refurbishment includes schools where between 50% and a 100% of the school's floor area had undergone capital works.

3 GCSEs are General Certificates of Secondary Education and are the standard qualification for assessing academic progress in UK secondary schools. Typically, pupils study towards these between the ages of 14–16. Normally, qualifications are pursued in between eight and 12 separate chosen subject areas, subject to the requirement that pupils study English (literature and languages), mathematics, sciences and, increasingly often, at least one modern foreign language. The coverage of GCSEs is designed around a national curriculum and is graded from A* to G. GCSE results are used by many school sixth forms and further education colleges for assessing admission onto courses leading to A- and AS-levels, A-levels being the standard qualification resulting from 16–19-year-old education. These A- and AS-levels are the principal criteria for entry into higher education university degree programmes. Pupils typically take between two and five A-levels over two years of further education, in combination with the single-year AS-level qualifications (essentially, the first year of A-levels). GCSEs (five A*–C), A/AS-levels, and bachelor degrees constitute levels 2, 3 and 4 respectively in the Qualifications and Credit Framework for England, Wales and Northern Ireland.

4 Her Majesty's (HM) Treasury is the UK government's economic and finance department with responsibility for maintaining control over public spending and setting the direction of the UK's economic policy.

5 Other admissions types excluded included ‘selective’, ‘modern’ and ‘N/A’. This step also removed academies as well as Welsh establishments from the sample, as they did not have sufficient admission type data.

6 Survey undertaken by the DfE, completed by local authorities and provided to the authors by Partnerships for Schools.

7 For detailed descriptions of what each expenditure line includes, see the School Financial Benchmarking website (https://www.education.gov.uk/sfb/Assets/metrichelp.htm).

8 Provided in the initial Edubase.gov data set of educational establishments in England and Wales.

9 The subsamples for investigating both the cost ratios and the investment returns for F, S and V are somewhat smaller than the initial C sample. The reasons for this include the following. For the cost ratio data, F and S seem to lose some 69 schools from the initial C sample. These can be broken down into three schools that were seemingly rebuilt too early for us to observe three years post-rebuild data, 35 schools with incomplete data for a full F or S calculation (refer to the method for constituent expenditures) and 31 schools for which there were no data reported in any year, likely the result of a failure to match between data sets based on imperfect unique identifiers. The loss of an additional 41 and 43 schools for the investment appraisal of F and S respectively is down to lack of reporting of constituent expenditures as well as some schools having been rebuilt too recently for us to have three years post-rebuild data. As for the subsamples used for the investment appraisal looking at V, 76 schools were lost from the initial larger C sample. These can be broken down into one school that was rebuilt too early to have amassed three years pre-rebuild educational attainment data, 47 schools that were rebuilt too recently to have amassed post-rebuild data, seven schools that seemingly report no pre-rebuild educational attainment and are assumingly completely new, and a remaining 21 schools that do not provide sufficient data both before and after rebuild. In some cases, failure to be included within the samples is the result of failure for data sets to match appropriately (unfortunately unique identifier can change for a number of reasons, e.g. if the school undergoes institutional change such as becoming an academy). Future work with the amassing data sets, and specifically in terms of matching efficiency and imputing reasonable values for missing values, would assist in improving the sample sizes and hence the basis for our conclusions.

10 The actual sample behind the DfE cost data is as yet unpublished by the department. Work continues to collate these data sources in building data sets for further empirical analysis of the school estate.