Cost-Utility Studies: A Means Toward Public Accountability for Educational Expenditures

Abstract

Cost-utility analysis can be defined as the process by which costs and certain benefits associated with program outputs are related and studied by the decision-maker in the determination of priorities and the allocation of resources. Most of the educational cost-utility work in the past has been concentrated upon the costs of education. The main problem area, however, is the obtaining of adequate, quantifiable data on facets of education other than costs.

In view of increasing student enrollments, increasing demands by employers tor their occupational skills, and the necessity of allocating scarce educational resources, several important questions can be raised.

1. Do the existing vocational-technical education programs provide positive cost-utility relations?

2. Can a cost-effectiveness analysis be used to develop optimum utilization models in terms of human resources (staff) and facilities?

3. Can a cost-utility analysis be an effective technique for educational plan- ners at local school system level to develop a Planning, Programming, Budget System?

If educational resources were unlimited, the necessity for careful evaluation and planning of programs in order to assure optimal allocation of resources would be non-existent. However, educational resources are scarce and require a high degree of accurate cost and utility estimation as decisions regarding the expendi- ture of these scarce resourcesare made.

This study used data from a representative vocational-technical education program (electronics technology) collected at a vocational-technical education center located in a large Urban FlorIda county. There are four main phases developed by this cost-utility study.

The first phase identified direct and indirect costs related to the electronics technology program. Algorithms were developed for the retrieval and assign- ments of program costs from actual expenditure records.

The second phase established criteria for determining marginal program utility in terms of marginal income increases for individual graduates of the pro- gram and marginal tax increases received by society as a result of the income gain of program graduates.

The third phase related the public and private costs to their respective utility values In terms of marginal monetary return on investment.

Finally, a cost-utility planning model was developed for use as a conceptual model for Implementing a Planning, Programming, Budgeting System. The cost-utility model is presented as being essential to the concept of PPBS – that of designing programs in terms of optimizing human and monetary resources to achieve short and long-range objectives.