A special state panel in Wisconsin has rejected a financially strapped district’s request to dissolve.

Residents in Palmyra-Eagle, a mostly rural district of 600 students, voted last year to dissolve after the district lost more than half its students to neighboring schools over the course of a decade, sending its budget into a tailspin.

But neighboring districts told a state-appointed panel that receiving so many students from the dissolved district at once and absorbing its debt would overwhelm their budgets. One district threatened to sue.

Palmyra-Eagle’s board now faces a fiscal cliff in the wake of the Jan. 9 vote denying the district’s request to dissolve. The district has little savings and there is little appetite among voters to raise taxes. Last summer, a credit-rating agency placed the district on fiscal watch.

The district faces a $2 million deficit next year.

One very determined group of parents has pitched selling off one of the district’s elementary schools, moving to a four-day school week, and asking a local philanthropist and residents to pay out of pocket for many of the district’s costs, including its elaborate after-school and sports programs.

The panel has heard more than 17 hours of testimony over the last three months from residents for and against the dissolution. The late-night meetings have led to shouting matches and tears.
Katie Maloney, one of the panel members said at the hearing Thursday, according to media reports, “I think there is a new sense of urgency that has developed in this district. And if we were to affirm the dissolution, there is no opportunity for the district to explore all their other options.”

Residents on the east side of the district who voted for the dissolution said on Facebook that the process was a “sham” and that the state is preventing the district from doing what residents repeatedly elected them to do.

Only one member of the panel that considered the dissolution request, a state department official, voted for it, citing the local voters’ will.

According to local media reports, after the panel’s vote to keep the district alive, there was a thunderous applause among the more than 200 residents who crowded the district’s high school gym.

Read Education Week’s coverage here.