Cutting Costs or Cutting Corners?

Published August 1, 2007

As the debate over school size continues, it’s up to educators and policymakers to maintain the delicate balance between what’s best for students and what’s best for the bottom line.

For years, the consensus was that school district consolidation was one of the most effective ways to provide an adequate education for rural students. At its peak, between 1930 and 1970, school district consolidation resulted in the closing of nine of every 10 school districts nationwide.

Since the 1970s, interest in consolidation has waned, but it continues to be viewed by many policymakers as a way to cut costs.

Maine, Michigan, and Vermont are the latest states considering consolidation as a way to streamline public education. This policy, which often entails closing small rural schools, has intuitive appeal because money presumably can be saved by achieving economies of scale. For example, one superintendent can oversee a district of 600 students nearly as well as a district of 300 students–resulting in one less superintendent to pay.

However, even if money can be saved, should states consider closing small schools if they provide better education? The answer to that question lies first in determining how effective small schools really are, and then in calculating how much money can be saved.

Student Achievement

The evidence on school size and student achievement is decidedly mixed. In her 1996 survey of “School Size, School Climate, and Student Performance,” Kathleen Cotton reported 14 studies on school size and student achievement revealed no difference between students in large and small schools. However, Cotton found eight other studies in which smaller schools outperformed their larger counterparts.

A 2006 Brookings Institution study by Barbara Schneider and others found small schools did not positively affect student performance, with all else being equal. But a 2003 study published by the KnowledgeWorks Foundation reported graduation rates are better for students attending small schools than large ones.

Herbert J. Walberg, in a 1993 analysis for The Heartland Institute, concluded, “States with large districts and large schools, and which pay more of the costs of primary and secondary education, tend to have the lowest student achievement. During the past half century, nonetheless, states have created ever-larger schools and districts, and increasingly they have concentrated funding responsibility on state rather than local authorities. Theory, previous research, and the new analysis reported here strongly suggest that these trends have been counterproductive for education’s chief purpose: learning.”

Of course, student achievement, though perhaps the most important goal of public education, cannot be pursued with no holds barred. Efficiency matters.

Different Options

William Duncombe and John Yinger’s 2005 paper, “Does School District Consolidation Cut Costs?” suggests consolidating two 300-student districts can save more than 20 percent. However, the rate of savings diminishes as the size of schools increases. According to Duncombe and Yinger, combining two 900-student districts saved only about 8 percent, and combining two 1,500-student districts did not result in any significant savings.

An alternative view, untested but often espoused by rural school administrators, is that small districts are actually more cost effective because they have more operational flexibility and less bureaucracy.

So what can we make of this evidence? Should states move to consolidate or not? Under the right circumstances, consolidation might be a way to save money. States with many small districts–that is, districts with approximately 300 or fewer students each–might want to consider it. However, states whose small districts have much larger student populations might want to look for other cost-saving options.

Brian Kisida ([email protected]) is a research associate for the School Choice Demonstration Project, Brent E. Riffel ([email protected]) is deputy director of the Office for Education Policy, and Marc Holley ([email protected]) is a doctoral fellow in public policy, all at the University of Arkansas Department of Education Reform.

For more information …

The following documents are available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to and search for the document number provided below.

“Dollars & Sense: The Cost Effectiveness of Small Schools,” by Barbara Kent Lawrence et al., KnowledgeWorks Foundation, 2002, document #10902

“Does School District Consolidation Cut Costs?” by William Duncombe and John Yinger, Center for Policy Research, Syracuse University, November 2005, document #21465

“Losing Local Control of Education,” by Herbert J. Walberg, Heartland Policy Study No. 59, The Heartland Institute, November 1993, document #3725.

For additional information, see:

“School Size, School Climate, and Student Performance,” by Kathleen Cotton, May 1996,

“Is Small Really Better? Testing Some Assumptions about High School Size,” by Barbara Schneider et al., Brookings Papers on Education Policy, 2006/2007, (restricted access)