The study calculated the relative technical efficiency of public school districts in the State of Arkansas utilizing an output oriented variable returns to scale data envelopment analysis (DEA) for the school year 2005-2006 and found over 80% of the schools districts were inefficient to a certain extent. The elimination of the relative technical efficiency could generate potential savings of $250,000,000. The study also found significant variances in relative technical efficiency and average effectiveness for school districts with similar concentrations of poverty students. Additionally, the study found significant variances in average effectiveness among school districts that were fully efficient. Finally, the study found significant discrepancies in the utilization of endogenous inputs resulting in significant differences in relative technical efficiency.

The outputs utilized were the percentage of students proficient on the state mandated criterion referenced exams for 4^th grade literacy and math, 8^th grade literacy and math, Algebra I, and end of course literacy. The average of these outputs formed an effectiveness index which served as the single output for the application of DEA. The four endogenous inputs were the student teacher ratio (STR), average teacher salary (ATS), expenditures per student (EPS), and administrative expenditures per student (AD-EPS). The educational environment was accounted for by the concentration of poverty students within a school district based upon the percentage of students qualifying for a free or reduced meal within each school district. The 252 public school districts were grouped based upon the concentration of poverty students within the school district. Four approximately equal reference sets served as the framework for analysis.