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Intriguing findings in declining enrollment study

Colorado schools districts thrive financially when they’re growing, and they struggle in decline.

That’s long been the conventional wisdom about the state’s school finance system, which doles out state aid to districts based on their enrollments.

But, a lengthy new study finds lots of nuances in declining enrollment, such as the conclusions that consolidation of small school districts is not necessarily an answer, that declining districts aren’t necessarily suffering financially that there’s little difference in academic performance between declining and growing districts.

The study warns, however, “To date, declining school districts have been able to adjust costs to meet the decreases in funding; however, a number of costs for school districts are ‘fixed’ and reducing costs further becomes increasingly more difficult. If the declines in enrollments continue, it may be necessary to consider other options such as modifying the funding formula, increased cooperation across school districts and/or consolidation, where feasible.”

Here’s a snapshot of the findings. The study is very detailed, and filled with charts, so the Findings and Highlights is worth a read.

Trends and funding

Even though enrollment statewide increased from 2002-03 to 2007-08, enrollment declined in 109 of 177 districts. (One district, Vilas, was not included because of statistical anomalies created by its online program.) The majority of declining districts have fewer than 1,000 pupils and are in rural areas or small towns.

The percentage of at-risk students have increased in all districts over the six years, but declining districts tend to have higher percentages of such students than growing ones.

Districts have some financial flexibility in adjusting to decline, but transportation costs are the least flexible.

Adequacy of funding

The study found that 2004-05 Colorado school funding “was substantially below the base costs for most levels of school district enrollment,” based on two external funding measures. Based on those, the report concluded “the state does not provide the resources believed by professionals in education necessary to meet student performance expectations. Given state budget issues, this gap is likely to continue to increase.”

The report also noted that additional costs are likely to be required in the future to implement the Colorado Achievement Plan for Kids.

Declining enrollment districts have been able to keep pace with or exceed spending increases by the growing peers – except in the Denver metro area, where declining enrollment districts have lagged in spending.

District consolidation

Contradicting what may be conventional wisdom, the authors said analysis and review of other studies did not “do not identify obvious cost savings or increased academic opportunities from an across the board or formula driven consolidation of school districts. At best, on a case‐by‐case school district basis, the data reviewed identifies some very limited opportunities for cost savings or increased academic opportunities from the consolidation of school districts.

“Benefits from consolidation may exist when school districts are geographically close and there is substantial student movement between the districts (i.e., incoming or outgoing), especially if one of the districts is experiencing declining enrollment.”

Student performance

There is no statistically significant difference in student performance between declining and growing districts, regardless of enrollment or location. Reading and math CSAP scores are correlated to per-pupil spending, more so for math.

School choice

Because of districts’ fixed costs, loss of students to charter schools has a financial impact on districts, and “School choice results in traditional schools educating the more expensive students as the study finds the percent of students at‐risk or with special needs is higher in traditional schools than in charter schools.”

Background and what’s next

The study was ordered up by the 2008 legislature, at a time before state revenue collapsed and some lawmakers hoped a study would provide evidence that could be used to increase funding. The study was delayed a year and was done by Pacey Economics Group of Boulder, a economics study firm headed by Patricia Pacey, who is a member of the Colorado Commission on Higher Education. The study was paid for with $200,000 from the State Education Fund.

The report gets its first legislative airing March 24 at a joint meeting of the House and Senate education committees. (The original March 17 briefing was rescheduled.)

Declining enrollment is a little lower on the legislative radar screen this year because the state revenue crisis will force budget cuts of 6 to 8 percent on all districts in 2010-11, regardless of whether they are growing of shrinking.

There are some minor discussions of school finance reform going on in the legislature. One pending measure, House Bill 10-1183, would authorize a study of alternative school finance systems. Another, Senate Bill 10-008, would commission a study of using the average daily membership method of counting enrollment. A third proposal, House Bill 10-1015, would have created a pilot program under which declining districts would get stable state aid for five years while they developed efficiencies. (Declining districts now can use an averaging system to ease reductions in state aid.) HB 10-1015 didn’t gain any traction and was killed at the request of its sponsor, Rep. Karen Middlefield, D-Aurora.

Links to the study, a summary and reports on individual districts

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