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5 Reasons Why Dissolution Could Be a Growing Trend for Rural Districts

Before Thanksgiving, I spent some time in Palmyra, Wis., where the 600-student school district is looking down the barrel of bankruptcy and is looking to dissolve (Read the story here.).If the school board members are successful, it will be the first time in almost 30 years that a district in Wisconsin has dissolved. The process is legally and logistically complicated, and a special panel set up by the state has to figure out by next month whether to go through with it and—if so—where to send its students, and what to do with the district's assets and debt.

But I was surprised to see how many of the other district administrators in southeast Wisconsin said they were also seriously considering dissolving purely for financial reasons.

Patricia Deklotz, the superintendent of neighboring Kettle Moraine school district, who Education Week profiled in 2017 as part of its "Leaders to Learn From" reporting project, said this at an especially emotional hearing regarding Palmyra-Eagle's proposed dissolution: "I feel like I'm airing our dirty laundry, but our story is not that different than Palmyra-Eagle's. District dissolution will soon be a statewide trend. Sending Palmyra-Eagle kids to us will only hasten the timetable for our district's insolvency. And then an only larger student body will be displaced."

Kettle Moraine has more than 4,000 students.

More than two-thirds of Wisconsin's school districts are losing students to open enrollment, the closing of manufacturing plants, and the shuttering of farms. The state has been slow to come up with a way to save them.

Here are five reasons experts say dissolution could be a viable option for rural districts in the coming years: 

1) Declining enrollment will only accelerate. Communities all across the upper Midwest and in the Northeast are losing students at a rapid clip.  Because funding in states is based on student enrollment, the loss of just a handful of students can potentially wreak havoc on a district's budget. District superintendents say that because the loss in enrollment is so piecemeal (one 2nd-grader, three 5fth-graders, etc.), cutting hundreds of thousands of dollars out of your budget year over year has a detrimental impact on classroom learning.

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2) District consolidation is politically unpopular. Consolidating school districts or busing children to new communities after closing a school can stir up contentious race and class wars. It's a process that most local or state politicians would rather avoid. (Vermont had to employ a carrots-and-sticks approach to incentivize consolidation.) Dissolution in Wisconsin is a policy move that absolves local politicians from having to decide which child goes where. Instead, the state has to step in and decide.

In Palmyra, only two of the surrounding school districts want any of Palmyra-Eagle's students. (The rest of them say taking on so many students at once would lead to even more budget cuts.) Though the dissolution process has been combative among parents, a rezoning process could even be more contentious.

3) The financial situation for many rural districts is unsustainable. In years past, states have tried to assist districts with declining enrollment and subsequent loss in revenue with more state aid. But this aid hasn't counteracted the rise in costs and the wave of voters repeatedly voting against tax levies to raise revenue for school districts. In addition, the loss of students has made spending visibly insufficient. In addition to a full roster of extracurricular sports programs, Palmyra-Eagle had four students in its high school's AP Chemistry class, and a relatively new, but mostly empty middle and high school. That's further angered voters who have accused administrators of being wasteful of their money.  

4) Taxpayers are tired of paying for schools: Anti-tax sentiment in some areas of America is at an all-time high, as measured by statewide polls and especially in communities where the economy has led to either high unemployment rates or high price-of-living costs. In Palmyra, residents told me they could barely afford their medical bills, let alone their tax bill. Since 1991, the district has gone to taxpayers 17 times asking for more revenue. Of all those requests, voters only approved three. Many taxpayers told me they hope not having a local school district to pay for will lower their tax rates, but administrators and school board members are unsure if that will happen. 

5) The expansion of open enrollment, charter schools, and vouchers in rural areas has only worsened disticts' dilemma.  Parents in many states have the option of enrolling in neighboring districts or in local charter schools if they aren't satisfied with their traditional public school. This has accelerated the rapid decline of revenue for many school districts.  More than 40 percent of Palmyra-Eagle's residents enroll in a neighboring district, which has resulted in almost $3 million in budget cuts over the last decade. Administrators say if they cut any more programs, they'll likely lose more students, which will lead to cutting more programs.

Nearly one in five children in the U.S. attend a rural school district. But experts and practitioners are telling policymakers that in many states, rural districts' funding scenarios aren't sustainable and academically harmful. Could dissolution be a viable alternative?  Palmyra-Eagle could be a test case. The special state panel will decide the district's fate Jan. 9.  

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