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Published in Print: March 28, 2007, as Savings From School Consolidation Plans Uncertain

Savings From School Consolidation Plans Uncertain

Researchers are divided on whether streamlining results in cost-efficiency.

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Maine Gov. John E. Baldacci’s bold promise to save state and local taxpayers $241 million over the next three years by consolidating roughly 290 school administrative units into 26 “regional centers” is drawing questions about whether such savings estimates are realistic.

Quite apart from the political and policy debates ignited by such a far-ranging overhaul, researchers are divided on whether district consolidation translates into fiscal efficiency—a key argument by state leaders who advance consolidation plans.

Studies on the effects of such plans have yielded differing results.

For example, researchers found that district consolidations cut operating costs by up to 28 percent for 12 small rural districts scattered across New York state between 1985 and 1997. But those who looked at a 2004 rural consolidation plan in Arkansas found no reduction in spending or the size of administration.

“When you talk about hundreds of millions of dollars, you get people’s attention. … [I]t’s so alluring and sexy on its face,” said David C. Thompson, a professor of educational leadership at Kansas State University who has conducted research on district consolidation for lawmakers in his state. However, he said, the plans “almost never” end up saving taxpayers as much as policymakers predict.

Joshua H. Barnett, who studied the effects of consolidation in Arkansas as a doctoral student in the department of education reform at the University of Arkansas at Fayetteville, offers a similar warning.

“I would be very hesitant to actually promote a cost savings that is close to what’s expected,” he said of the Maine proposal, given that district consolidation often carries costs that are hard to predict. He cited families’ decisions to enroll their children in schools outside their new district boundaries as among the unexpected costs he encountered in Arkansas to the districts that took the students.

Shrinking Numbers

Since the late 1930s, the number of school districts in the United States has fallen from roughly 120,000 to about 15,000. Some states, such as New York and Idaho, have offered financial incentives to small districts to promote consolidation; other states, such as Florida and Nevada, have instituted countywide districts.

Some districts have been consolidated as a result of declining enrollment or in order to provide expanded course offerings, especially at the high school level. Supporters of such changes often cite the prospect of economies of scale—the idea that it’s more cost-effective, to a certain point, to educate students in larger schools and districts.

That theory is one of the primary reasons behind the Maine initiative, which grew out of a series of reports from the Washington-based Brookings Institution, the Maine Children’s Alliance, and the state board of education, arguing that the state’s declining student enrollment will not be able to sustain the present level of administration. ("Maine Governor Seeks Sweeping Consolidation of Districts," Jan. 17, 2007.)

State education officials estimate that the state’s school-age population, which peaked at 225,000 in 1980, will drop to 182,000 by 2010. The current statewide enrollment is 198,000.

The state school board’s report, “The Learning State: Maine Schooling for the 21st Century,” cites a 2005 study conducted by researchers at the University of Maine in Orono, which found that the state had an average of 393 students for every full-time school district administrator—less than half the national average of 816 students per administrator. The study also found that of the 227 administrative units that operated schools, 121 had fewer than 500 students.

That study, as well as others, concluded that “there are substantial unrealized economies of scale in Maine’s public school districts … and considerable duplication of spending on administration and facilities that would not exist if education were organized on a larger scale in some areas.”

Maine School Consolidation Proposal

Maine Gov. John E. Baldacci promises $263.5 million in savings for state and local taxpayers if lawmakers adopt his plan to consolidate the state’s school districts into 26 “regional centers.”

$124.2 million from consolidating school district administration
$61.9 million from streamlining special education services
$53.0 million from restructuring the management of school facilities
$24.4 million from rearranging transportation services
Total: $263.5 million

Gov. Baldacci, a Democrat, projects savings of $124 million in the next three years by replacing the state’s 152 superintendents and 290 locally elected school boards with 26 central offices, each run by a superintendent, other administrators, and a 15-person regionally elected school board.

He wants to slash per-pupil spending on administration to $186 from $348 for districts with more than 2,500 students and to $248 for smaller districts. He also wants to save an additional $139 million by reorganizing the management of facilities and streamlining special education and transportation services.

John M. Yinger, a trustee professor at Syracuse University’s Maxwell School of Citizenship and Public Affairs and one of the researchers who found consistent cost savings by consolidating rural districts in New York, considers the idea sound.

“There has to be cost savings for closing those districts—there has to be,” he said of Maine’s smallest districts in an interview this month.

Mr. Yinger was a co-author of a 2002 survey of research on economies of scale in education that concluded that “sizable potential cost savings in instructional and administrative costs may exist by moving from a very small district (500 or fewer pupils) to a district with 2,000 to 4,000 pupils.”

But Mr. Barnett, who studied Arkansas’ experience with consolidation, is not so convinced by the Maine plan, which the state legislature’s education committee continues to debate.

“Intuitively, you think it will [save money],” he said. “In reality, what happens is that all those people who lost their jobs get picked up again” by other districts.

Like Maine, Arkansas had a high share of small districts before legislators there mandated the consolidation of districts with fewer than 350 students in 2004, in response to a 2002 Arkansas Supreme Court decision that required improvements in poor rural schools. In the 2002-03 school year, the average district in the state served roughly 1,400 students.

Mr. Barnett and others found that as administrators in the state took on responsibility for more students, they were forced to hire staff members to take over duties that had been performed by smaller staffs in smaller districts. Most administrators who were laid off after the state forced the consolidation or merger of 57 districts ended up being rehired as assistant superintendents, principals, transportation coordinators, athletic directors, and in other positions.

Keeping Schools Open

If policymakers choose to consolidate districts, they should make sure that high-performing small schools stay open, researchers say.

“It’s just that it’s so tempting for larger districts to end up closing schools,” said Paul E. Peterson, a professor at Harvard University’s John F. Kennedy School of Government.

Christopher R. Berry, an assistant professor at the University of Chicago’s Harris School of Public Policy, found that any academic gains from district consolidation tend to be eliminated as soon as schools are closed.

“If the results indicate that some combination of larger districts and smaller schools provides the greatest returns for students, policymakers have historically not followed such a recipe,” says a study that Mr. Berry co-wrote this year. “That is, larger districts tend to operate larger schools.”

In Maine, the governor’s plan does not call for the closure of any schools—any such decision would be made, if at all, by local communities, not school boards.

But even the possibility of school closures was enough to draw hundreds of Maine residents to a public hearing in the state capital last month, most offering emotional testimony on their fears that local boards would succumb to that temptation. ("Maine School Consolidation Plan Under Fire," Feb. 14, 2007.)

Opponents of the plan could find some ammunition in West Virginia’s experience. In that state, Gov. Joe Manchin III, a Democrat, has been pushing measures to roll back policies that have closed more than 300 schools since 1990. Studies have shown that the efforts to close schools did not end up saving the state and taxpayers any money.

And even if Maine’s governor is right about the projected per-pupil administrative savings, that might not be enough to placate critics. With administrative costs now representing less than 4 percent of the $10,145 the state spends per pupil every year, some researchers and small-school advocates question whether administration is the best place for policymakers to be trimming costs.

They argue that properly using technology, offering incentive pay for teachers and administrators in rural districts, and sharing services could better address some of the problems that trouble rural schools, such as teacher shortages and limited access to specialized subjects.

“I would imagine that if the people on both sides didn’t dig their heels in so much, there could be some compromises,” said Gary W. Ritter, an associate professor of education and public policy at the University of Arkansas.

Vol. 26, Issue 29, Page 10

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