Open Enrollment Has Drained One District. It's Looking to Dissolve

Tara LeRoy, left, and her daughter Bailey, 10, tend their pony at their home in Palmyra, Wis. LeRoy has joined with other parents in seeking ways the Palmyra-Eagle district could stave off dissolving because of financial pressures.
Tara LeRoy, left, and her daughter Bailey, 10, tend their pony at their home in Palmyra, Wis. LeRoy has joined with other parents in seeking ways the Palmyra-Eagle district could stave off dissolving because of financial pressures.
—Lauren Justice for Education Week

Loss in enrollment has it aiming to dissolve

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Palmyra, Wis.

The list of academic and extracurricular offerings at the Palmyra-Eagle school district in Wisconsin are seemingly endless. Agriculture, woodshop, and metal classes. Eight AP courses. A marching band, theater program, and robotics club. Football and equestrian teams with recent state championships.

The 600-student district is also on the brink of bankruptcy and now wants to dissolve.

Over the course of less than a decade, hundreds of parents in this mostly rural community took advantage of Wisconsin's unwieldy interdistrict open enrollment policy and decided to send their children to Milwaukee suburban schools just a handful of miles up the road.

The sudden shift sent its finances into a tailspin and made the district a cautionary tale for policymakers across the nation eyeing open enrollment as a school choice option.

Without enough cash on hand to last through June, and after several unsuccessful requests to be bailed out by local voters or the state, Palmyra-Eagle's board now wants to dissolve the entire school system and send its remaining students to surrounding districts. A special panel will decide its fate next month.

If Palmyra-Eagle is successful in dissolving, it might not be the last. Other district administrators in Wisconsin coping with climbing debt and a loss of students to open enrollment say they will follow suit.

The complicated dissolution process has cast a sharp class division through the community, led to shouting matches between parents, and the loss of even more staff and students who'd rather not wait around, compounding the district's dilemma.

National Picture

Forty-three states allow for parents to enroll their children in districts they don't live in. Though the specifics of those policies vary widely, experts say participation rates have accelerated in several states in recent years.

Meanwhile, legislators, along with U.S. Secretary of Education Betsy DeVos, push for per-pupil tax dollars to follow a student across district lines.

This has placed some districts in what they call a no-win situation. The more students they lose, the more state and local aid they lose, and the more programs they have to cut, which results in losing more students.

School choice proponents say parents should be able to choose what works best for their child and that districts can avoid financial pressures by better managing their money.

While national figures are hard to come by, the situation in Wisconsin is especially severe.

The state's recent tax cuts under previous Republican Gov. Scott Walker, paired with its expansive, tuition-free open enrollment policies, has set up a sort of arms race among districts.

Districts tout their offerings on billboards and on radio and television ads, and parents share their experiences through social media channels. The state legislature has spurred the process on by lengthening the application window, making provisions for transferring students with special needs, and publicizing the option for parents.

"We've put dollar signs on the backs of children," said Palmyra-Eagle Superintendent Steven Bloom. "It's a vicious cycle."

Nearly 61,000 students last year enrolled in neighboring districts, almost double the rate of students who participated in the program in 2010 and up from just over 2,400 students when the program first started in 1998.

Funding experts here said that after K-12 cuts in state and local aid during the Great Recession, some districts in this mostly rural state started accepting more open enrollment applications to shore up their budgets with money from the sending districts.

The loss of students and revenue has especially hurt rural districts that are near the high-performing and wealthy suburban districts surrounding Milwaukee, Green Bay, Racine, and Madison.

In districts already suffering from pressure on the farm industry, losing just a dozen students can cause a $100,000 gap in a strained budget. More than two-thirds of districts in Wisconsin have declining enrollment.

"Taxpayers are saying, 'We're done raising taxes on ourselves to pay for this, and the districts can't cut anymore, and the costs keep going up, and there's zero new state aid. The situation here is catastrophic," said Heather DuBois Bourenane, who leads the Wisconsin Public Education Network, a school funding lobbying group.

In Palmyra-Eagle, the logistical, legal, and fiscal questions around district dissolution are fraught: Where should the state send the shuttered district's students? Where should the 57-member teaching staff go? What should happen to the three buildings? Which districts should take on the dissolved district's $11 million in debt?

Only two of the surrounding eight districts, both wealthy suburban districts, want any of Palmyra-Eagle's students.

The rest of the districts, all mostly rural, say taking on hundreds of students at once would cause dramatic budget cuts since the transportation and special education costs would far outstrip any of the state or local aid districts will receive to service the incoming students.

Last-Ditch Efforts

An active group of parents and teachers in Palmyra are making several last-ditch efforts to spare the district, including selling off one of its elementary school buildings, providing more services, and doing more outreach in Eagle in order to retain more students and asking the county government to levy a new tax.

"I'm forever seeing unicorns and rainbows," said Tara LeRoy, a Palmyra mother who has rallied parents to the district's cause. "As long as people are willing to fight, there's always hope."

The road to dissolution in Palmyra-Eagle started a little over a decade ago when parents started complaining on social media about the influx of Latino migrant workers, bullying in the school's hallways, administrative turnover, and a disjointed curriculum.

There's historically been discord between the residents in Palmyra, a rural farming community, and Eagle, an outer-ring Milwaukee suburb. The school district, established in 1976, encompasses both.

"Palmyra and Eagle are eight miles apart, but worlds away from each other," said Bloom, the district superintendent.

Shortly after the internet rumors about the school's diminishing quality began, a group of Eagle residents tried to get a neighboring district to annex the town's students, but the attempt failed in court.

That's when the district transfers started, residents say.

Under the state's open enrollment law, parents who apply can transfer their child into another school district as long as the district approves and as long as the parents can provide transportation.

School board members and administrators in Palmyra-Eagle scrambled to change the narrative about the district, replacing the superintendent, overhauling its curriculum, and hiring a public relations official who crafted a slick YouTube video touting the district's offerings.

But they were too late.

"Once the story developed about our district, we couldn't change it back," said middle and high school Principal Kari Timm.

Raising revenue in Palmyra-Eagle has always been challenging.

A 22,000-acre state forest splits the district in half, limiting the district's tax base. And several farms, including the ones that employed migrant workers, have closed in recent years leading to an aging and declining demographic hostile toward any new taxes. Since 1991, the district has gone to taxpayers more than 17 times asking for more revenue. Of all those requests, voters only approved three.

When students transfer districts, the state allows the losing districts to retain some of the per-pupil amount of state funding for a handful of years to allow administrators to reduce costs. But Palmyra was losing so many students at once that administrators and board members couldn't keep pace.

Between 2010 and 2018, the district lost more than $3 million in revenue when it went from 1,300 students to a little over 600 students. At least 300 students' families moved out of the district.

Administrators laid off staff, increased to $3,000 teachers' annual health-care deductibles, shut down the district's summer school program, and got rid of their public relations person. Many residents, especially those living in Eagle, feel their taxes already were too high and that there was more fat administrators could cut.

"There's been a lot of financial mismanagement in this district," said Cheri Geraci, a mother from Eagle who every morning drives her children just a few miles east to neighboring Mukwonago, a leafy suburban school district with some of the highest test scores in the state. "The people can't afford to pay for their medication. They can't keep taking on more tax increases like that."

Administrators and board members in Palmyra-Eagle argue moves like consolidating the district's two elementary schools or scrapping its expansive after-school and sports programs would only result in the loss of more students.

Related Blog

The State District Boundary Appeal Board made up of school board members from across the state will have to decide by the end of January whether to dissolve the district, and—if so—where to send its students and what to do with the district's assets and debt.

During one seven-hour meeting in the middle school's gymnasium last month, the tension between Eagle and Palmyra residents was palpable. Eagle residents sat in folding chairs on the gym floor while Palmyra residents, dressed in Palmyra-Eagle purple panther gear, filled the gym's bleachers.

Palmyra residents accused Eagle speakers of spreading lies while Eagle residents accused audience members of being rude and nasty in front of their children.

Surrounding districts also were frank about their reality. They complained about the provision in the state's funding formula that says that when a district dissolves, the school systems that get its students don't get the full per-pupil costs until three years after the dissolution. They say that would make it almost impossible to afford hiring new teachers, or the $50,000 bus routes they'd need to add.

"I feel like I'm airing our dirty laundry, but our story is not that different than Palmyra-Eagle's," said Patricia Deklotz, the superintendent of neighboring Kettle Moraine school district, which has 4,000 students. After lopping off a third of its budget over the last decade in response to the loss of students, the district increased its staff's single-payer health-care deductible amount to $5,000.

"District dissolution will soon be a statewide trend," she said. "Sending Palmyra-Eagle kids to us will only hasten the timetable for our district's insolvency. And then an only larger student body will be displaced."

Vol. 39, Issue 16, Pages 1, 16-17

Published in Print: December 11, 2019, as Choice Option Pushes a District to the Brink
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