Monday’s Legislative Post Audit school consolidation report found the state could save as much as $138 million per year by consolidating smaller school districts. A full report on LPA’s audit is here.

Several district superintendents filed objections to the report, most citing a desire for local control of consolidation decisions and a desire to avoid the challenges of working with other districts. LPA auditors stated, “None of the issues they raised prohibit consolidation.”

Mike Sanders, Superintendent of USD438 Skyline, objected to some of the audit’s findings in a letter included with the audit report. He objected to the characterization that USD438 recruits students from outside the district. The audit pointed out that over half of Skyline’s students reside within the Pratt district’s boundaries and that Pratt spends time and money recruiting students to stay in the Pratt district.

Sanders also objected to the audit stating that an annual $625,617 reduction in district spending is a “local savings.” “The loss of $625,617 expenses to a county isn’t a savings it’s a loss to the businesses and economy of Pratt County,” Sanders wrote. “This proposed savings might save the state money but in doing so it will have a direct impact on the economy of our county.”

He went on to say, “Consolidation should be left in the hands of local school boards. At this present time we don’t favor consolidation with USD382 Pratt. We like the smaller rural school setting.”

Auditors squarely addressed the inertia working against locally-driven consolidation:

The State should encourage or require school districts to consolidate to make the K-12 education system operate more efficiently. Smaller school districts cost more to operate because they aren’t able to reach the same economies of scale as larger districts. Under the current school finance formula, districts with fewer than 1,622 students receive additional low-enrollment funding. Additionally, our 2006 study of K-12 education costs found that districts reach peak efficiency when they have at least 1,500-2,000 students. While districts with fewer than 1,500-2,000 students may be large enough to provide an “effective” education, they’re not efficient and they’re unlikely to consolidate voluntarily unless they have trouble offering a quality education. Therefore, any effort to consolidate districts to make the system more efficient likely will need to be a State- driven effort.

Any consolidation effort is “unlikely to generate immediate savings and should be viewed as a long-term investment,” according to the report. The process takes time but the state also provides a funding incentive few districts have taken advantage of:

Under current law, districts that consolidate have their funding held constant for several years. Kansas currently allows consolidating districts to retain their pre-consolidation funding level for several years following a consolidation. Unless the law was changed, the State wouldn’t realize any savings until after this funding incentive ran out.

State Board of Education member Walt Chappel has recommended that this provision have a sunset thus pushing districts to consolidate before the offer of extra funding is withdrawn.

According to the LPA report Maine and Arkansas have recently required school districts to consolidate:

In recent years, Arkansas and Maine have passed very aggressive school district consolidation plans that include forced consolidation. Here’s a summary of the consolidation plans currently being implemented in each state:

Arkansas—In 2004, Arkansas passed a law that requires districts with fewer than 350 students for two years in a row to consolidate. Any district that meets this criterion can either voluntarily consolidate (and receive additional funding for the first two years) or rely on the Arkansas Board of Education to do the consolidation for them (no additional funding). Since 2004, 108 districts have consolidated into 50 new districts.

Maine—In 2007, Maine passed a law that requires districts with enrollments of fewer than 2,500 students to consolidate (under special circumstances, the threshold can be lowered to 1,200 students). As of October 2009, the number of districts had been reduced from 290 to 213. An attempt to repeal this law was put to a statewide vote in November 2009, and the consolidation law was upheld by the voters.

The report acknowledges some challenges but finds no reason why consolidation should not proceed and concludes with recommendations for legislative action that would spur consolidation and reap savings:

1. Because K.S.A. 72-8233 may provide a disincentive for some districts to reorganize voluntarily, the Legislature should consider amending that statute either to limit the number of years districts are allowed to share entire grades with one another through an inter-district agreement, or to eliminate the provision entirely.

2. To make the State’s K-12 education system more cost efficient, the Legislature should consider strengthening the incentives for districts to consolidate voluntarily. Among the possible options discussed in this report are:

• Amend K.S.A. 72-6445a so that budget incentives for districts that reorganize voluntarily are based on their budgets from the 2008-09 school year.
• Amend K.S.A. 72-6445a so that budget incentives for school districts gradually phase out over a multi-year period.
• Lower the mandatory 20-mill property tax levy for districts that consolidate voluntarily.
• Provide additional funding to help pay for new or expanded facilities in districts that reorganize voluntarily and can demonstrate they are needed.

Current 293 school districts

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Consolidation resulting in 152 school districts and saving $138.4 million annually

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Kansas LPA School consolidation audit –