The Financial Impacts of School District Consolidation: Early Evidence from Maine

• In Event: Roundtable Session 124
  In Roundtable Session: Lessons Learned From School District Reorganization in Maine: Process, Progress, and Early Impacts of State-Mandated District Consolidation

Abstract

Objective
The purpose of this study is to examine the early evidence of the financial impacts of Maine’s state-mandated school district consolidation law. Based on case study analyses of 12 representative reorganized school districts, evidence was collected to answer several key questions. Were there financial savings from school district consolidation? If so, how much? In what areas were there savings? How were the savings used: to improve education programming or provide taxpayer relief?

Perspective
For decades policy makers have postulated that school district consolidation would produce savings because of the economies of scale. Policy analysts have attempted to determine the actual financial impacts with limited success and mixed results. For instance, several studies report cost savings (Andrews, Duncombe & Yinger, 2002; Benton, 1994; Duncombe & Yinger, 2007, 2010; Silvernail, Gritter & Sloan, 2007), while others (Coulson, 2007; Cox & Cox, 2010; Groan & Murray, 2004) found little if any savings. Many factors may contribute to these conflicting findings, but a key one may be methodological. Most studies to date have either been based on projected savings, or based on an analysis of post-consolidation financial data only. The goal of this study is to systematically examine the financial impacts by comparing pre- and post-consolidation financial costs in non-consolidated and consolidated districts, and to isolate the financial impacts attributable directly to school district consolidation.

Methods and Data Sources
Financial impact data were examined for a sample of 12 of the 24 newly created regional school districts in Maine. The sample was selected to be representative of the population of districts in terms of district size, district organization, and complexity of reorganization (i.e., combining different school district types). Total and per pupil financial expenditures were analyzed pre- and post-consolidation, and were analyzed by expenditure category (e.g., direct instruction, system administration, transportation, etc.). Interviews and document analyses were used in determining which changes in expenditures were attributable to district consolidation.

Findings
The evidence revealed that 10 of the 12 newly created regional consolidated school districts did have a cost savings, ranging from 0.6% to 4.3% in the first year. The largest savings were in the categories of system administration, transportation, and food services. The savings were not related to district size nor district configuration, and were more related to district leadership and school board decisions. Approximately two-thirds of the districts reinvested the savings in creating more equal education programs, for example by adding pre-school and gifted and talented programs, equalizing professional development opportunities, and making salary adjustments.

Significance
This systematic financial analysis of school district consolidation indicates there may be savings from consolidation, but it may vary in amount and be highly dependent upon policy decisions made by at the district level. This study also developed a methodology for analyzing financial impacts which may be useful to others as they consider consolidation, and attempt to document the financial impacts of such a policy decision.

Authors

• David L. Silvernail, University of Southern Maine

• James Sloan, University of Southern Maine