Does School District Consolidation Cut Costs?

Consolidation has dramatically reduced the number of school districts in the United
States. Using data from rural school districts in New York, this paper provides the first direct
estimation of consolidation’s cost impacts. We find economies of size in operating and capital
spending: doubling enrollment cuts total costs per pupil by 28 percent for a 300-pupil district and by 9 percent for a 1,500-pupil district. Adjustment costs in capital spending lower these
enrollment-based cost savings by about 5 percentage points. Overall, consolidation makes fiscal sense, particularly for very small districts, but states should avoid subsidizing unwarranted capital projects.

The results of this paper should be of interest to state and local elected officials, to people in state education departments, and to public school administrators.