What is the cost factor?

The district’s cost factor is the ratio of the district’s actual costs to the district’s predicted costs based on an analysis of the district’s data.  If the ratio is one hundred percent or less, the district program is assumed to be efficient.  If the percentage is greater than one hundred percent, there is presumed inefficiency.  The State Board of Education uses this cost factor expressed as a percentage to adjust allowable costs as an incentive for economical service.  A variance factor of four percent based statistically on the standard error has been determined to allow for any possible error in the analysis (5 CSR 30-261.040 (8)).