Arkansas School District Consolidation Failed to Save Money

A new long-term study reveals that Arkansas’s school district consolidation effort delivered no cost savings. The research, tracking two decades of district finances, found that promised administrative savings were entirely offset by rising transportation and instructional costs.

In 2004, then-Governor Mike Huckabee signed a law to shut down tiny school districts with fewer than 350 students. Over the following decade, 85 school districts merged with others. This triggered the closure of 105 schools, most of them high schools. Families and teachers protested the mergers.

What the mergers actually cost students and communities

Students faced excessively long bus rides that cut off access to sports and after-school activities. Some students had bus rides so long they couldn’t participate in sports and other after-school activities.

Studies showed the mergers accelerated rural depopulation and depressed property values. 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 from the consolidation policy.

The financial outcome: no savings, only shifted costs

A two-decade financial analysis by researchers at the University of Arkansas found that savings from consolidation never materialized. Reductions in administrative overhead were offset by rising costs for transportation and instructional staff. The study found no overall cost savings from consolidation, not immediately after districts merged and not more than a decade later.

While administrative costs fell due to consolidation, with an estimated reduction of $138 per student on average, other costs rose significantly. The researchers' preliminary calculations show how per-student spending shifted across categories.

Instructional staff costs, including teachers and aides, as well as math and reading coaches, rose substantially. Pupil-support costs, including guidance counselors and social workers, also increased. Some instructional costs, including spending on education technology and textbooks, did decline.

Why Arkansas was a test case, and what it means for the future

Arkansas is an ideal place to study school district consolidation because of that statewide consolidation law. Economist Josh McGee, a co-author of both the new cost analysis and the earlier study of academic outcomes, said there’s nothing unusual about the state’s school funding or costs. He would expect similar results elsewhere.

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. One Arkansas district that was forced to merge had just 81 students.

Researcher Md. Juwel Ahmed Sarker, who presented the study in Baltimore, detected more instances of cost savings when a large district absorbed a small one than when two small districts merged. The study cannot determine whether 81 students is too few to sustain a district economically.

National trends suggest continued pressure to consolidate. Birth rates have been falling since 2008. 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.

Meanwhile, Arkansas itself seems to be backing away from school district consolidation. The state often waives the requirement to consolidate even after district enrollment falls below 350. Three districts have broken up into smaller districts instead of consolidating.