Performance Measurement in Not-for-Profit Governance: An Empirical Study of the Minnesota Independent School Districts

Abstract

Linearity and separability assumptions are pervasive in most not-for-profit governance and performance measurement systems. In this paper, we employ both parametric and nonparametric econometric methodologies to test the linearity and separability assumptions using data collected from the Minnesota Independent School Districts. Our test results reject both the assumptions for the Minnesota independent school districts. These findings suggest a need to develop alternative procedures that do not rely on these two pervasive assumptions if the information provided by not-for-profit performance measurement systems is to be relevant for governance decision making and performance evaluation.

Keywords: Performance Measurement, Not- for-Profit Governance, Linearity, Input Separability, School District Financing, Political Economy

JEL Classification: C44, C61, C67, D61, G18, G30, H10, I22, L30, L31, L51,M40, M41, M49, P16