Indiana lawmakers seem unlikely to tackle school consolidation in 2024 session

A new statewide report is fueling discussions about consolidating Indiana’s smallest school districts, but state lawmakers continue to lack an appetite for action — at least for now.

For years, the Indiana Chamber of Commerce has asked the General Assembly to move legislation that encourages school districts with fewer than 2,000 students to consolidate.

Small and rural school officials — longtime critics of the chamber’s lobby for more school consolidation — are pushing back against the new study and the potential for Indiana policies that would require small schools to increase their student population.

“We don’t have a problem with consolidation, but it needs to be driven by locals — it has to be something they want for it to be successful,” said Chris Lagoni, executive director of the Indiana Small and Rural Schools Association. “Our members do feel like there’s a lot of attacking going on here.”

“The state has said we want more private schools, we want more public schools, we want more choice, more choice, more choice,” he continued. “The chamber advocated for those policies. That’s why we’re just having a hard time understanding this issue — because we’re not attacking it equally across all choices.”

The business advocacy group’s newest report highlights lagging academic performance in the state’s smallest schools — where a fifth of Hoosier students are enrolled — and pushes to consolidate at least some of the state’s rural schools and increase district sizes.

Although the latest study dropped just before the start of the 2024 session, the issue of school consolidation doesn’t seem to be on policymakers’ radars.

So far, none of the roughly 700 bills filed deal with consolidation, though such language could be amended into existing bills later in the session. One proposal, House Bill 1134, authored by Rep. Ed Clere, R-New Albany, addresses the distribution of local income taxes after school districts merge, but it does not seek to enact policy pertaining to — or requiring — consolidation, specifically.

Instead, education-related agendas released by the governor and GOP legislative leaders focus on literacy, career readiness and antisemitism.

When asked by the Indiana Capital Chronicle, Indiana Secretary of Education Katie Jenner said she hadn’t reviewed the Chamber’s report in full. She additionally did not say whether she thought more Hoosier school districts should consolidate.

The chamber maintains that — while difficult — conversations about consolidation and other reforms to improve performance at small and rural schools need to start now.

Chamber leadership said cutting the number of small districts in half will help increase educational attainment in Indiana and produce more workforce-ready graduates. It could also help school districts struggling financially.

“Consolidation is the boogeyman. Historically, it’s the most controversial when talking about closing schools or consolidating districts. But we don’t see this as a solution for everything,” said Jeff Brantley, the chamber’s senior vice president of political affairs. “We have talked in the state a lot over the last two decades about what’s happening in our urban districts. And there are still serious problems today. We don’t talk enough about what’s happening in small and rural towns in Indiana.”

A yearslong push

The School Corporation Reorganization Act of 1959 led to a significant decrease in the number of districts across Indiana — from 939 before the law took effect down to 382 by 1968.

In recent decades, consolidation has been far less common, however.

The 2007 Kernan-Shepard government streamlining report commissioned by Gov. Mitch Daniels recommended districts smaller than 2,000 students consolidate. Even so, legislation never advanced in the Statehouse.

That same year, lawmakers sent $200,000 to the Indiana Department of Education (IDOE) for school corporations to conduct consolidation feasibility studies during the 2007-08 and 2008-09 school years. Eight studies were conducted under the IDOE grant program, with varied findings from corporation to corporation.

That led to the consolidation of only two districts — Turkey Run and Rockville — into western Indiana’s North Central Parke Community School Corporation in 2013. District officials said students and families were supportive of the merger because it increased opportunities for students to take advanced courses and participate in athletics.

Consolidation efforts in other parts of the state, like Randolph and Wabash counties, have been unsuccessful, though.

The last serious push for school consolidation came in 2017, when a separate Ball State study commissioned by the chamber produced similar findings to the one released earlier this month.

Researchers noted that school corporation size impacted nearly every measure of student performance studied. Corporations with fewer than 2,000 students generally performed worse on SATs, passed Advance Placement tests at a lower rate, had a lower ISTEP passage rate and scored worse on most end-of-course assessments.

Indiana lawmakers responded with a one-time financial incentive of $250 per student to schools that wanted to consolidate. But no school districts applied for a grant from the $5 million fund.

Other studies have shown that around 2,000 students is the minimum for school corporations in Indiana to support adequate student performance. But more than half of Indiana’s school corporations had K-12 enrollment lower than 2,000 in 2022.

And small school districts are only getting smaller, according to the latest data. About 74% of the 162 districts with less than 2,000 students saw declining enrollments over the last decade.

The chamber’s 2024 study emphasized that increasing school corporation size to around 2,000 students has the potential to reduce per pupil cost and free up funds for classroom instruction or other purposes — changes that could improve the educational outcomes of students.

Researchers said further that a more modest increase to student enrollment in the state’s smallest school districts can improve performance, as well.

‘Flawed’ data?

But Lagoni, along with Indiana School Boards Association executive director Terry Spradlin, point to what they say is a misrepresentation of data in the chamber’s study. They maintain, too, that the idea of consolidation is “simply flawed altogether.”

“The chamber’s report is wholly inadequate. It’s not complete. It doesn’t look at the full spectrum of educational policy and systems that the state is funding,” Spradlin said.

Spradlin noted the chamber’s study doesn’t adjust for poverty, for example.

“There’s no secret — and they don’t address this in the report — that the biggest predictor of academic outcomes is family income, poverty,” he said. “Of course the smallest, rural districts and communities have high poverty. But the correlation here is that some of our largest urban districts also have a high concentration of poverty.”

He pointed to data in the chamber study showing that students in districts with enrollment between 500 and 999 students earn the highest percentage of academic honors diplomas compared to all other districts. 

Spradlin also emphasized that Indiana’s small and rural school corporations currently operate 32 early college high schools that enable students to complete the Indiana College Core or an associate degree before graduation. Further, many Indiana small and rural high schools are leaders in Career and Technical Education (CTE) programming, he said.

Spradlin additionally held that the chamber study fails to illustrate adequate data about charter schools, which would have been the lowest performing group of schools in the state had they been analyzed the same as small and rural schools.

The average enrollment in a Hoosier charter school is 436 students. Conversely, there are only five school corporations in the state with enrollment below 500 students.

“The state mantra is that we’re funding students, not schools. And so we can’t exclude other systems that are funded with state dollars,” he said. “We just need a fair conversation. If it’s okay that kids go to small charter schools or use Choice Scholarship vouchers to go to small private schools … let’s not pull the rug out from under the families that have chosen to live in rural communities and remove their local school.”

Echoing Spradlin, Lagoni said many families in rural Indiana oppose consolidation because it often means longer commute times in order to attend a school on the opposite side of a county.

Local tax rate implications are also a “major” drawback, he said. Consolidation of districts may impose a higher tax rate on some residents of the new district. Closing or expanding a school building and extending bus routes could also impact tax rates and property values, Lagoni continued.

He additionally cautioned that Indiana’s “$1 law” — which allows charters to acquire traditional public school buildings for almost nothing from districts with significant declines in enrollment — could take away from any local savings gleaned from consolidation.

So, when schools in rural areas close because of declining population, the buildings can reopen soon after as charter schools.

That was the case in 2013, when Northeast School Corporation near Terre Haute voted to close a pair of schools amid declining enrollment.

Instead of sending their kids to the other schools in the district, as was proposed, members of the community opened a charter school system at the site — called Dugger Union Community Schools — which caused enrollment in the traditional public corporation to drop by almost half, under 800.

“You can’t just say, independently, that we’re going to consolidate, and then also not deal with the school choice thing, because then you’ll never see the savings, you’ll never see the larger schools, you’ll never see the deeper chemistry department or the multiple math offerings, because people will just start charter schools that are close to them,” Lagoni said. “It’s a difficult battle, where the school choice policies don’t match up with consolidation and the outcomes.”

Brantley, with the Chamber, disagreed.

“Charter schools, with only a few exceptions, are in urban areas,” he contended. “I think that talking about charter schools is a different topic and it’s sidestepping the issue. If there were dozens and dozens of charter schools trying to open in small districts, it’d be a different discussion. That’s not the case.”

Chamber wants ‘more discussion’

The chamber’s 2035 economic development plan includes goals to improve student performance by merging small districts, sharing services between districts and increasing online access to high-level courses.

Brantley said the chamber supports alternatives to consolidation that increase academic performance among Hoosier students. Still, he emphasized that more discussions should be happening at the local level to prepare for inevitable changes coming in the future.

“We need to talk about this and begin a conversation that doesn’t just happen at the statehouse, but happens in school districts and communities and regional planning operations around the state, if we want to address our workforce issues and our educational attainment issues,” he said. “We would hope that local communities begin to look at how they address this and whether it’s restructuring the way they provide services and classes. Whether the legislature can provide resources to study or to incentivize or to help them — that’s all to be determined. But we have to face that there’s a problem. Because it’s so easy to just ignore this.”

Lagoni and Spradlin remain vehemently opposed to any type of state mandate forcing consolidation, saying it would be “contrary” to all other “school choice” policies because it pushes less school choice for rural communities.

The duo said they’d rather see state lawmakers provide another round of state grants for planning and feasibility studies for school districts and communities wanting to examine consolidation. Doing so would have to wait until the 2025 budget-setting session, however.

Additionally, they said the General Assembly could forgive debt for schools that close buildings. If school districts carry debt, another community may not want to inherit that responsibility. Eliminating debt obligations could help encourage more consolidations.

Lawmakers made a similar move a decade ago for charter schools, forgiving $92 million in debt.

“We think it should be a case by case, local decision. And there are some communities that continue to have conversations around the idea,” Spradlin said, noting that “rather than force consolidation,” Indiana would be better off with renewed funding for planning and feasibility study grants that help locals decide what’s best.

“Our approach is for local control. So, this would counter if we were to have the state intervene and arbitrarily pick a number — say at 2,000 — and the districts smaller than 2,000 students would have to consolidate,” Spradlin continued. “Broadly, that seems to have some benefit, but the devil’s in the details, and there’s a lot of harm by that arbitrary number and policy.”

The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.