IssuesPA

January 1 2008

IssuesPA Takes a Look at the Cost-Effectiveness of Consolidating Pennsylvania School Districts

A recent Standard & Poor’s study found that consolidating smaller school districts within a certain population range could potentially save tens of millions of dollars annually across the state. While the hypothetical savings varied, some of the combined districts were predicted to save upwards of almost $3 million annually. Consolidated districts also were expected to provide more academic services, although students could lose the personal attention they enjoy in smaller districts.

Standard & Poor’s analysis of the state’s 501 school districts determined districts with fewer than 500 students spend an average of $9,674 per pupil in operating costs. The amount generally decreases as districts get larger until reaching an average of $8,057 for districts with 2,500 to 2,999 students. Per-pupil spending tends to go back up once enrollment goes over 3,000 students.

The statewide analysis by Standard & Poor’s was commissioned by the Legislative Budget and Finance Committee in 2006 to study consolidation as a possible method of lowering escalating costs in the state’s 501 school districts. Costs in Commonwealth school districts have jumped almost three times the national rate of inflation in recent years, according to the study. Average per-pupil spending exceeds $10,000 in Pennsylvania, although actual district costs vary.

The state legislature wanted to test the theory that consolidating smaller districts would reduce costs. Smaller districts are believed to spend more for two reasons. First, fixed costs are spread among fewer students. Second, the districts are not big enough to use their purchasing power to obtain volume discounts.

The study concentrated on 88 school districts with enrollments below 3,000 that had higher than average per-pupil spending for their size and that bordered a district with the same characteristics - and where the resulting consolidated population would remain under 3,000.

In all, 97 “pairings” were examined in detail, with some school districts evaluated in more than one pairing. The study found 34 pairings that could potentially save about $81 million if consolidation resulted in lowering per-pupil costs to the average spent by similarly sized districts across the state.

For example, the Lackawanna Trail School District in Wyoming County had per pupil costs of $9,482 in 2004, while neighboring Mountain View School District in Susquehanna County had per pupil costs of $8,408. Districts with a student population size similar to combining Lackawanna Trail and Mountain View spent an average $8,057 per pupil. Based on the lower per pupil cost, a merged Lackawanna Trail and Mountain View could potentially save $2.5 million over what the two districts spent in 2004.

Using similar calculations, a combined Weatherly School District and Jim Thorpe School District, both in Carbon County, could potentially save $2.5 million, while a consolidated Sullivan County School District in Sullivan County and Benton Area School District in Columbia County could hypothetically save $2.8 million.

Despite possible cost savings, superintendents from the 88 districts who responded to a survey cautioned that mergers would be extremely controversial, according to the study. They cited socio-economic and demographic differences between the districts, potential for longer bus rides, less local control and a loss of local identity, among other factors.

Still, 42 percent of the 49 superintendents that responded believed costs would go down if districts were merged without closing schools. Fifty-seven percent believed costs would decrease if districts were merged and one or more school was closed. Also, 61 percent of superintendents said they’d be willing to consider consolidating. The majority of superintendents believed merged districts could provide more and better academic enrichment and extra-curricular opportunities. On the down side, superintendents worried that providing more services could come at the expense of individualized attention.

Most superintendents were willing to share services without consolidating as another cost saving measure, with many already involved in that type of arrangement. The study suggests using intermediate units as a vehicle for more shared services. Districts could also save on services by partnering with state and local government.

The study notes consolidation cost savings depend in part on how the mergers would impact transportation. For instance, superintendents generally believed transportation costs and route lengths would go up if consolidations closed schools.

Finally, the study adds a concern that districts performing higher on the Pennsylvania System of Student Assessment tests could see a drop in proficiency if combined with a lower-performing district.  

 Selected PEL Central Division School Districts
Suggested Pairings and Hypothetical Savings     

 

 Per Pupil Costs 2004

Paired With

Per Pupil Costs 2004 

Average Per Pupil Costs of Both Districts 

Hypothetical Per Pupil Savings Based on Average of Similar Size of Paired Districts 

Cambria County

 

 

 

 

 

Conemaugh Valley

 $8,719

Richland 

$8,276

$8,438

$381

Central Cambira

 8,576

Conemaugh Valley

 8,719

 8,622

565

Central Cambria

 8,576

Blacklick Valley

 9,622

 8,855

798

Ferndale Area

 9,151

Conemaugh Valley

 8,719

 8,917

438

Portage Area

 8,757

Penn-Cambria

 9,134

 9,002

945

Penns Manor

 9,398

Blacklick Valley

 9,622

 9,487

1,008

Northern Cambria

 9,535

Blacklick Valley

 9,622

 9,566

1,067

Northern Cambria

 9,535

Cambria Heights

 9,558

 9,548

1,491

United

 10,146

Blacklick Valley

 9,622

 9,992

1,493

 

 

 

 

 

 

Dauphin County

 

 

 

 

 

Line Mountain

 8,368

Millersburg Area

 8,580

8,457

 133

Halifax Area

 9,513

Upper Dauphin

 8,180

8,761

 704

Halifax Area

 9,513

Millersburg Area

 8,580

9,106

 782

 

 

 

 

 

 

Lycoming County

 

 

 

 

 

East Lycoming

 8,494

Muncy

 9,353

8,815

 758

Montgomery Area

 9,381

Muncy

 9,353

9,367

 1,043

 

 

 

 

 

 

SOURCE:
Study of the Cost-effectiveness of Consolidating Pennsylvania School Districts Part 2 

For full report, visit http://lbfc.legis.state.pa.us/ 

--Article contributed by the Pennsylvania Economy League, Central Division