LAO: Cut small districts’ bonus

Forty percent of distrits enroll fewer than 1,000 students (LAO graph).
Forty percent of districts enroll fewer than 1,000 students (Click to enlarge LAO graph).

The Legislative Analyst’s Office is recommending that the Legislature stop giving thousands of extra dollars per student to small school districts and that it decertify the tiniest of them – those with fewer than 100 students. Enacting the combination of the two measures could spur more district consolidations.

With 40 percent of California’s nearly 1,000 districts serving fewer than 1,000 students, California has “an exceptional number” of small districts, the LAO said in a report** issued Monday. Nearly a quarter of the state’s districts have only one school. And one out of ten districts serve fewer than 100 students. By contrast, the state’s 15 largest districts serve a quarter of the state’s 6.2 million students.

In “How Small Is Too Small? An Analysis of School District Consolidation,the nonpartisan LAO stopped short of suggesting that small districts be forced to consolidate. There is not strong enough evidence to support the assumption that doing so would significantly improve student achievement and lead to a more efficient use of state money, the LAO concluded. However, at the same time, there’s no justification for extra state and federal subsidies that perpetuate the financial advantages of small districts. The single biggest state source – the Necessary Small School grants – provides an average of $7,300 more per student than the average state amount. For the tiny districts, it’s an astounding $18,000 per student. Districts don’t have to be in rural isolation to qualify for the extra money, and many aren’t. Some one-school districts, like the mismanaged K-8 Luther Burbank, subject of two civil grant jury inquiries, in the heart of San Jose, are a stone’s throw from a unified district.

Ending the subsidy would save the state tens of millions of dollars – not a huge savings out of $50 billion spent on K-12 education – but it would “contribute to a more rational and equitable school funding system.”  Other disincentives, however, might discourage consolidation, the LAO found.

  • Consolidated districts would lose their individual parcel taxes until the newly formed district passed a new one;
  • The new basic per-student revenue would be the average of the two districts, so one district would lose out;
  • Current state law prohibits laying off non-teacher employees for two years after a merger, even if job consolidation made sense;
  • Most of the 120 “basic aid” districts – those whose schools are funded by property taxes at a level above average state revenue, often by thousands of dollars per student – are small and would see no advantage to consolidation;
  • Many parents in small districts prefer the intimacy of smallness and wouldn’t vote for consolidation, and their approval ultimately would be required.

The Legislature asked the LAO to investigate whether the advantages of scale – more course offerings and efficiency of operations in larger districts – warranted small-district consolidation.

The LAO found that very small districts (under 100 students) and, to a lesser extent, small districts (under 1,000 students) do tend to spend less on instruction and instructional support (teachers and administrators) and more on overhead (40 percent in very small districts, compared with 25 percent in districts with more than 1,000 students. But it also found that most small districts already have found ways to economize by sharing services like banking, payroll, and insurance with other districts, or contracting them out.

The LAO also found that student  performance, as measured by district API scores, was slightly higher for midsize districts (between 2,000 and 10,000 students). However, enforcing accountability in tiny districts is problematic, because of the unreliability of student sampling and because they’re exempt from most federal reporting. That’s one reason the LAO recommends raising the minimum threshold for constituting a district from six students in an elementary district and 11 for a high school district to at least 100.

“While our findings do not suggest the state should actively pursue greater district consolidations, nor do they support the current system that implicitly discourages districts from opting to consolidate,” the LAO said.

** The report was written by K-12 analyst Rachel Ehlers.

Author: John Fensterwald - Educated Guess

John Fensterwald, a journalist at the Silicon Valley Education Foundation, edits and co-writes "Thoughts on Public Education in California" (, one of the leading sources of California education policy reporting and opinion, which he founded in 2009. For 11 years before that, John wrote editorials for the Mercury News in San Jose, with a focus on education. He worked as a reporter, news editor and opinion editor for three newspapers in New Hampshire for two decades before receiving a Knight Fellowship at Stanford University in 1997 and heading West shortly thereafter. His wife is an elementary school teacher and his daughter attends the University California at Davis.

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