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How Small Is Too Small

for Merging?   



Like Goldilocks, education leaders and public policymakers are forever seeking the “just right” — the perfect balance of cost versus benefit, resulting in the best educated students for the buck. Such perfection is as hard to find as a cottage occupied by oatmeal-eating bears.

In the case of school district consolidation, a process unfolding across the country for the past century, the question remains: How small is too small?

School district size matters, says Ulrich Boser, a senior fellow at the Center for American Progress, a public policy research and advocacy group, because thousands of small districts in this country may represent a combined $1 billion in lost potential annual capacity. “By lost potential capacity, we mean money that may not have been spent if the district was larger,” he says. In other words, money that could have been used for other things.

For Boser’s purposes, a small district is defined as 1,000 or fewer students — and an optimum-sized district is 2,000 to 4,000 students. Of course, the real world is a lot more diverse. In California, the Blake Elementary School District, which serves the Central Valley town of Woody (pop. 135), had just five pupils in 2012. At the other end of the spectrum, Los Angeles Unified boasted 662,140 students — more than 10 percent of the state’s entire K-12 enrollment.

Fiscal Drivers
The suggestion that tiny school districts such as Blake merge with other systems is a question fraught with social and emotional considerations and one not strictly tied to dollars and sense. Boser, who studied education spending in an attempt to evaluate the productivity in school districts, says complicating social, cultural and political considerations are inevitable. But because consolidation most often is driven by economic imperatives, that’s the angle most research addresses.

In an influential 2007 study purporting to be the first direct estimation of school district consolidation’s cost impact, William Duncombe and John Yinger, researchers at Syracuse University’s Maxwell School of Citizenship and Public Affairs, found mergers provided economies of size in operational spending, all else being equal.

For example, a district that doubled to 300 students experienced an operating cost reduction of 61.7 percent per pupil. For a 1,500-student district, it was 49.6 percent per pupil savings. But there also were substantial adjustment expenses, which reduced the net cost savings to 31.5 percent and 14.4 percent, respectively.

In a 2011 review, the Legislative Analyst’s Office in California found that while small districts (defined as serving fewer than 1,000 students) tended to spend more on overhead costs and have slightly lower student achievement compared to midsize districts, those differences were not large.

But the California study noted that the operational demands and limitations of being a “very small district” (fewer than 100 students) were substantial. Even with creative financing, such as pooling funds or sharing programs with other local education agencies, very small districts tend to devote a significantly larger portion of their budgets to overhead expenses and a smaller share to instructional staff and leaders.

Still, the study observed that small districts are generally reluctant to consolidate because there are state fiscal incentives to remain small and disincentives to merge. Specifically, very small districts in California receive, on average, more than twice as much funding per pupil as midsize and large districts. And they are exempt from some state laws and mandates, including certain kinds of environmental reviews or staffing levels.

Efficiency Reduced
The case against becoming very large is more obvious. Duncombe and Yinger cite higher transportation and labor costs, lower staff and student motivation and reduced parental involvement.

In a 2011 white paper, Ohio University researchers Craig Howley, Jerry Johnson and Jennifer Petrie, writing for the National Education Policy Center, said when two or more small districts merge to become one large district, the result can be “diseconomies of scale that reduce efficiency.”

“Policymakers may believe ‘We’ll save money if we reduce the number of superintendents by consolidating districts,’” the authors wrote. “However, larger districts need — and usually hire — more mid-level administrators.”



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