Merging School Districts Was Supposed to Save Taxpayers Money. It Didn’t, a 20-year Study in Arkansas Found

When Mike Huckabee was the Arkansas governor in 2004, he wanted government to be more efficient. He signed a law to shut down tiny school districts with fewer than 350 students.

Over the next decade, 85 school districts merged with others, triggering the closure of 105 schools, most of them high schools.

Families and teachers protested. Some students had bus rides so long that they couldn’t participate in sports and other after-school activities. A 2022 study found that the mergers had accelerated depopulation in rural communities and depressed property values; that same year another study found almost no academic gains.

At least there was one potential payoff: saving taxpayers money.

What economic sense does it make to maintain a superintendent and a district office to serve just a couple hundred students? Consolidating tiny districts seemed like an obvious way to eliminate administrative overhead. 

But a surprising new analysis by researchers at the University of Arkansas finds that the savings never materialized. Reductions in administrative overhead were offset by rising costs for transportation and instructional staff. 

The study, presented Sept. 26 at the annual conference of the Society for Research on Educational Effectiveness in Baltimore, followed the finances of Arkansas school districts for two decades. It found no overall cost savings from consolidation — not immediately after districts merged and not more than a decade later.

“I think we should be cautious about recommending school consolidation,” said Josh McGee, an economist at the University of Arkansas and a co-author of both the new cost analysis and the earlier study of academic outcomes. “I think the potential benefits have not materialized as envisioned and there are real potential harms.”

The new study has not yet been published in a peer-reviewed journal. 

Arkansas is an ideal place to study school district consolidation because of that statewide consolidation law. But McGee said there’s nothing unusual about the state’s school funding or costs, and he would expect similar results elsewhere. That matters as school districts around the country confront shrinking enrollments. Birth rates have been falling since 2008, and K-12 enrollment is forecast to decline by 6 percent between 2020 and 2030. As the number of students declines, pressure to consolidate districts — and close schools — could grow.

So where did the savings go?

Administrative costs did fall. The researchers estimate that consolidation reduced administrative spending by as much as $138 per student, on average, according to their preliminary, unpublished calculations. Some instructional costs, including spending on education technology and textbooks, also declined, by as much as $92 per student.

But those savings were eaten up by higher costs elsewhere.

Transportation costs rose $24 per student initially and continued climbing over the years, growing to an additional $63 per student each year. Instructional staff costs — including teachers and aides, as well as math and reading coaches — rose by as much as $179 per student. Pupil-support costs, including guidance counselors and social workers, rose by as much as $61 per student.

The basic problem is that merging two districts doesn’t eliminate the need to educate the same number of children. And larger districts may create new layers of management or add more support staff, such as instructional coaches, counselors and aides. 

“You still have to run schools, and those schools still need teachers,” McGee said. “You could think there’s going to be some efficiencies at the district level because we’re not going to need two superintendents. But whenever you get larger school districts, you tend to hire people. You get assistant superintendents. You don’t necessarily cut the total number of positions.”

One Arkansas district that was forced to merge had just 81 students. But the study can’t tell us whether 81 students is too few to sustain a district economically.

The size of the district before consolidation may matter less than the type of merger, said the study’s co-author Md. Juwel Ahmed Sarker, a researcher at the University of Arkansas who presented the study in Baltimore. He said he detected more instances of cost savings when a large district absorbed a small one than when two small districts merged.

There’s another reason the savings may not have materialized. Arkansas’s school funding formula is based on the number of students. Consolidation reduces the number of districts, but it doesn’t reduce the number of children who need to be educated or provide a financial incentive to spend less.

“You get your allotment through the state funding formula, and you’re going to find ways to spend it,” McGee said. “Hopefully, you’re spending it in ways that are going to be beneficial for kids.”

The research doesn’t prove that every school district merger is a bad idea. A large district absorbing a tiny one may have different economies of scale than two small districts joining together. But the Arkansas experience shows that a simple reduction of the number of districts won’t make public education cheaper.

Meanwhile, Arkansas itself seems to be backing away from school district consolidation. The state often waives the requirement even after district enrollment falls below 350. And three districts have done the opposite: They’ve broken up into smaller districts.

The supposed tradeoff was that consolidation would be disruptive, but at least it would save money and perhaps improve efficiency. Twenty years of Arkansas data suggest that the first part of that bargain came without the second.

Contact staff writer Jill Barshay at 212-678-3595, jillbarshay.35 on Signal, or [email protected].

This story about school district consolidation was produced by The Hechinger Report, a nonprofit, independent news organization that covers education. Sign up for Proof Points and other Hechinger newsletters.