University of Arkansas Office for Education Policy

Effects of School District Consolidation in Arkansas

In The View from the OEP on March 3, 2021 at 12:34 pm

School district consolidation has been one of the most prevalent education reforms over the last century. As a result of consolidation efforts, the number of public school districts in the U.S. declined from 117,108 to 13,551 between 1940 and 2018. Despite the scale of this reform effort, relatively little rigorous research ‎explores the effect of district and school consolidation on student achievement. In this blog post, we summarize a new Arkansas Education Report that investigates the impact of a recent district consolidation law in Arkansans.

The latest round of school consolidation in Arkansas arose in response to school finance litigation that occurred throughout the late 1990s and early 2000s. The decade-long litigation culminated in 2003 with the Arkansas Supreme Court ruling that the state’s school funding system was unconstitutional in Lake View School District vs. Huckabee.

Governor Mike Huckabee responded to the court’s decision in part by proposing large-scale school district consolidation to reduce district administrative costs and provide greater educational opportunity for students. In early 2004, the legislature passed Act 60, which required the consolidation of any district with average daily attendance of fewer than 350 students for two consecutive school years.

The new law resulted in a substantial number of district consolidations in the years that followed. Table 1 presents the number of district consolidations occurring each year beginning with the 2004-05 school year. In the first year the law was in effect, 59 school districts were required to consolidate. Although Act 60 continues to have an impact as enrollments decline in rural districts, only a few districts have been required to consolidate since the initial wave in 2005.

Figure 1 shows the geographic location and district borders of the 99 districts that were either a consolidated or a receiving district in the 2004-05 school year. The map depicts district borders in the year prior to consolidation and districts are color-coded to indicate which districts combined due to Act 60. The initial round of consolidations was relatively widespread across the state, affecting districts in every region. Districts subject to Act 60 enjoy some autonomy in determining which other district to merge with; however, the overwhelming majority have merged with adjoining district.

Studying consolidation is challenging because, in most cases, districts voluntarily choose to consolidate for any number of reasons such as perceived cost benefits or to take advantage of state financial incentives. Districts that choose to consolidate are likely different from those that don’t in many observable and unobservable ways. These differences can lead results from simple comparisons of consolidated districts to unaffected districts to be biased.

Fortunately, Act 60 provides an opportunity to overcome this common challenge. In our analysis, we compare districts whose enrollment was just above or below the enrollment cut-off designated by Act 60. Students in districts with enrollment of less than 350 in the two years immediately prior to the passage of Act 60 are assigned to the treatment group and students in the remaining districts represent the control group. Given that the cutoff was not known in advance, comparing districts right around the consolidation threshold approximates random assignment, yielding two groups of students which should be quite similar except for the treatment group gets consolidated.

We estimate the effect of district consolidation on student performance on the state’s standardized test in math and English Language Arts (ELA). Our results are based on individual student-level data that allow us to follow students across years and school districts. We find small positive effects in both subjects. In math, the average effect is 4 percent of a standard deviation and is only marginally statistically significant. The average effect in ELA is slightly larger, 6 percent of a standard deviation, and is statistically significant. We also investigated how these effects varied over time, finding inconsistent results for mathematics but consistent positive and significant results in ELA. Overall, it appears that consolidation had a positive, albeit small impact on student performance in Arkansas.

While student achievement is important, the primary motivation that policymakers articulated for consolidating smaller school districts in Arkansas was to achieve cost savings through economies of scale. Even if consolidation only had small positive effects on achievement, Act 60 would still be considered a success if consolidation reduced administrative and other spending outside of the classroom, freeing up resources for additional classroom spending or to be redirected toward other important public purposes.

To investigate whether districts affected by consolidation experienced positive economies of scale we compare district-level spending trends before and after consolidation occurred. Table 2 presents a summary of financial information for districts affected by consolidation and Arkansas averages for even numbered school years between 2004 and 2008.

In 2004, prior to consolidation, districts that would be forced to consolidate by Act 60 spent $1,098 more per student, on average, than the state as a whole.  In addition, these districts spent  a lesser share on classroom teachers, and a greater share on other certified staff like administrators than did other school districts in Arkansas (see Columns 1-3 of Table 2). On the surface, these discrepancies support the argument that consolidation had the potential to deliver improvements through greater economies of scale. 

However, when we compare expenditure trends for districts affected by consolidation to unaffected districts, we find little evidence that affected districts meaningfully deviated from broader state trends after consolidation. Columns 4-7 of Table 2 shows that Act 60 affected districts exhibit consistent resource allocation over time to both classroom staff and other certified staff (see last two rows of Table 2). 

While affected districts experienced increased spending per pupil, that trend did not deviate significantly from the overall state trend. State average spending per pupil increased by $1,781 between 2004 and 2008, while spending in consolidation affected districts increased by $1,694.

School district consolidation has been an important and sometime contentious reform in Arkansas. Overall, it appears that the first wave of consolidations under Act 60 may have had small positive effects on achievement but did little to improve the efficiency of the state’s smaller school districts. These findings are relevant today because Act 60 continues to impact Arkansas’s school districts and district leaders and policymakers continue to discuss the value of consolidation/annexation. 

In 2015 the legislature passed Act 377 which allows the State Board of Education (SBE) to grant waivers to the consolidation requirement under Act 60 (see page 11 here). As recently as the fall of 2020, the SBE granted waivers to four districts that were subject to Act 60. In addition, the SBE has used consolidation/annexation as a tool to address consistently poor student performance and/or financial distress. In December, the SBE approved the annexation of the Dollarway School District, which was previously taken over by the state, into the Pine Bluff School District. 

Our research indicates that district consolidation is not likely to result in dramatic improvements in student performance or district efficiency, but small improvements are possible. However, these improvements must be weighed against the legitimate concerns of the communities whose schools are facing consolidation/annexation. If Arkansas is going to continue to use consolidation/annexation as a tool to improve district performance, it is important that we continue to conduct research to determine if these policies are making a positive difference for students and if they make sound fiscal sense.

  1. Greetings.

    Have you done any research on the federal funds received by the districts currently under state control? How much do these districts receive, and how is that money now being used?

    Thanks for any response that you may give.

    • Hi Dexter,

      We have not looked specifically at federal funds in state controlled districts. However, federal funding makes up about 11% of Arkansas’s K-12 education revenue, and the vast majority of those funds are earmarked for Title I programs, the free and reduced price lunch program, and children with disabilities (IDEA).

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