Staffing and Funding Shortages Lead to District Consolidation Pressures

Amidst staffing shortages, the erosion of state funding, and inflationary cost pressures, more and more schools are looking at sharing services and staff to become more efficient and maintain high-quality program offerings to students. It’s possible Minnesota will see a modest wave of districts considering consolidation over the next decade.

However, consolidation can be a tricky process to navigate. Combining districts can be an emotional process when districts have to give up past independence and work together as one, and it can be difficult to start the process without incentives. MREA opposes forced consolidation efforts and believes the state could do more to provide incentives to districts who want to explore and formally start a consolidation process,

Minnesota State House Research Department has provided a timeline of general law regulating school district organization. This timeline gives a brief history of legislative actions around consolidation. 

Minnesota Consolidation Legislation Began in 1959

The legislative actions around consolidation date back to 1959, when a formal definition of Consolidation and the process of consolidating was passed (Minnesota Statute 123A.48).  The statute states that the new district must contain at least 18 sections of land and that consolidation can be initiated by a board resolution or a petition of 25% of the resident voters (or by 50 such voters, whichever is less).   

1967 — Legislation was passed (MS 123A.64-123A.72) stating all districts that don’t operate an elementary and secondary school must be attached to or consolidated with an adjoining district that maintains school for all grades by July 1, 1970. 

1978 — Legislation (MS 123A.76) was authorized, allowing a school board of a consolidated district to levy for costs of consolidation.   

1987 — Legislation was passed in 1987 (MS 123A.44-446) creating the “Cooperative Secondary Facilities Grant Act” as a way to have the state help cover facility costs for a group of districts going through the consolidation process. There is no standing appropriation in this program, and therefore the incentive is difficult as the local communities must actively lobby the legislation for a grant through this program. Of particular note, MS 123A.443  allowed a grant for new construction that could not exceed the lesser of $20,000,000 or 75 percent of the approved construction costs of a cooperative education facility. A grant for remodeling and improving an existing facility could not exceed the lesser of $10,000,000 or 75 percent of the approved remodeling costs.  This statute is still in existence but has not been used for many years. 

1989 — legislation was passed (MS 123A.44-.446) creating Extra Capital Expenditure Levy for Cooperating Districts, Language on Cooperation and Combination, additional $100 per pupil to districts that cooperate prior to combining, revenue after combining, $250,000 grant for Cooperation and Combination (Repealed in 1991). 

1993 — legislation was passed (MS 123B.66) allowing districts to apply for a grant of up to $100,000 for capital facilities after the districts consolidated. This was repealed in 1999. 

1994 — legislation was passed (MS 123A.485) creating “Consolidation Transition Revenue” of $300 per pupil, which can be used to cover the costs of early retirement incentives, enhance learning opportunities for students, or other costs incurred in the re-organization. 

Since 1994 very little legislation has passed to incentivize consolidation.

Current Consolidation Efforts

Currently districts have the Consolidation Transition Revenue of $300/pupil as an incentive to consolidate.  However, many districts who start the process think this is not enough for planning and follow-through for consolidation. The facility grants language (MS123A.443) is still available to school districts but has not been used in years.  The statute has a maximum grant amount of $20 million, and the money for this program would need to be appropriated by the legislature, most likely through an omnibus bonding bill, but perhaps an education or tax bill. The language has been tweaked a number of times over the last two decades, but the legislature is not inclined to appropriate funds into this program without a specific local community request. 

See the consolidated districts by year.

From 1978 to 2021 the state of Minnesota went from 440 school districts to 329 school districts, totaling 111 districts which have consolidated in the last 44 years. The majority of the districts consolidated in the 1990s. “Consolidation” was still an unpleasant word in the late 1980s and the 1990s, and as a result, the incentive process was statutorily referred to as the Cooperation and Combination (C&C) program.  Many things drove that round of consolidation: 

1. 1. 1. 1. Declining enrollment was significant and ongoing in many of these districts. Ever since the baby boom had crested in 1972 a number of these districts were faced with much smaller cohorts enrolling in kindergarten than graduating.  At that time, a two-section high school was seen as the minimum size necessary to offer broad curricular requirements.  Additionally, open enrollment gave students a relatively easy way to choose to attend a different school if that student’s family did not find the curriculum at the resident district sufficient. 
         2. A number of the districts that consolidated had low pupil counts.  Many of the districts that consolidated had a K12 student count of under 200 pupils at the time of consolidation. 
         3. A number of the districts that consolidated were fairly small in geographic size and were relatively geographically close to the nearest district.  Many times, the distances from one school to the next school were less than 10 miles. There were large and geographically isolated districts that consolidated, but many were small and close to other districts.  Perhaps not surprisingly, often a smaller district would choose to consolidate with another small district, even if it was slightly further away, rather than consolidate with a bigger, closer district. 
         4. While Interactive TV (ITV over coaxial cable) and other methods of sharing coursework were pursued, they tended to be subpar substitutes for in-person instruction. 
         5. Earlier rounds of consolidation (when common school districts were required to offer a full K12 program—unless they were academically paired with another district) had left a lot of bitterness in the communities where the former common schools had been closed.  These town rivalries and feelings of distrust of neighboring towns had waned for many of those remaining in the communities. 
         6. While some shared administrative staff prior to the consolidation, the consolidation often made shared resources much easier.
         7. Facility needs were significant, but many consolidations led each separate community to keep at least part of its facility open as a school.  Some of the space in the worst condition was no longer used by the consolidated district, but relatively few buildings were closed outright.  These facility closures have continued to happen over time, but some of the consolidated districts most in need of facility upgrades continue to be stymied by the lack of support for a single school location. 
         8. Legislation was passed in the late 1980s and early 1990s that made consolidation more attractive.

Enhanced Debt Service Bill Stalled

This past legislative cycle saw SF 406/HF 576 introduced to create “Enhanced Debt Service Equalization Aid.” The legislation would have provided an equalization factor of 300% of ANTC/pupil for a facility project associated with a newly consolidated district. The legislation had support, including from MREA, but when the dust settled it did not become law. An aid program like this would be a significant help for districts looking at consolidation. Passage of this legislation depends on local communities actively advocating for its passage.  

Any consolidation efforts over the next decade are most likely to be in rural areas. Many districts are faced with staff shortages, aging buildings, lack of adequate funding, and declining enrollment which is prompting discussions of sharing services or outright consolidation of districts. Currently, there are about 15 school districts in Minnesota with less than 200 students and another 15 districts with enrollment between 200 and 300 students. MREA believes these smaller districts provide quality personalized education for their students, while also being strained by these pressures. 

Small school districts have a lot to offer, and MREA opposes any effort to force consolidation. MREA does support legislation that gives districts options or incentives to make this challenging process more palatable for local taxpayers and staff, with an eye toward improving program offerings for students.