Indiana lawmakers may have found a way to spur the consolidation of small school districts without jumping into the politically unpopular issue: Starve small districts of state funding to financially push them toward merger talks with other districts.
The latest version of the state budget proposes big cuts to the state's tiniest school districts. The budget plan would eliminate extra grants to small schools but direct additional money — up to $100,000 — to districts with at least 500 students to help them make up for that loss.
It's an intentional move by lawmakers to convey a message that's considered too touchy to push outright: Districts with fewer than 500 students need to seriously consider consolidating.
"I hope it will force the discussion," said Senate Appropriations Chairman Luke Kenley, R-Noblesville.
Superintendent Fran Thoele, who oversees the single K-12 school with 164 students in New Harmony, said it would be more honest for lawmakers to pass a bill mandating consolidation rather than taking away funding until the handful of districts with fewer than 500 students are forced to merge.
The budget would reduce New Harmony's funding from about $1.5 million in 2011 to about $1 million in 2012 — a cut of about a third. The district has enough money to keep going on its own for the next two years, Thoele estimated, but could face difficult decisions in the future.
New Harmony's K-12 school is a big part of the fabric of the historic town, which was the site of an 1800s utopian community that believed in free education. If the district merged with a nearby school corporation, Thoele fears New Harmony's close-knit and high-performing school would close, hurting the Wabash River town about 20 miles outside Evansville.
"It would be sad," Thoele said. "It's such a wonderful community. It's where education really flourished in Indiana early, and it's going to lose its educational system."
But supporters of larger districts question whether it really makes sense to have an entire district — and the costs associated with it — for such a small number of students.
A 2007 report by the Indiana Commission on Local Government Reform said districts should have at least 2,000 students to maximize student academics and cost effectiveness. In 2009, Gov. Mitch Daniels pushed legislation to force districts with fewer than 1,000 students to combine their central operations with others unless they are already the only district in the county. Daniels argued that many small districts simply don't have the resources to offer the wide range of classes students need to be successful, including advanced placement classes and other upper-level offerings.
Daniels' proposal was promptly killed by lawmakers, and Kenley said it's unlikely similar legislation will gain momentum anytime soon. Many lawmakers are wary of stepping into the local politics of merging schools — a debate often caught up in emotion as local residents fight for their schools, their sports teams and even their mascots.
State Superintendent of Public Instruction Tony Bennett said districts need to take a hard look at their academic offerings on their own and see if they provide the resources that will help their students compete.
"It is incumbent upon schools and communities to realign themselves to afford their children that chance," Bennett said. "If they can't provide competitive opportunities for their kids, I think they should then begin to make different decisions."
Lawmakers plan to hash out a final version of the budget before the legislative session ends April 29. House Speaker Brian Bosma, R-Indianapolis, said House budget negotiators will consider the provisions dealing with small schools, which were added by the Senate.
"We need to have some incentives out there for the smallest of corporations to consider consolidation," Bosma said. "On the other hand, there are some smaller corporations that are performing well and want to maintain their independence. We'll have to try to balance that."
Leaders at small districts are watching to see whether the cuts will remain. Union School Corp. in Modoc, about 20 miles northwest of Richmond, would face a 15 percent cut from 2011 to 2012. The district has discussed consolidation before, but the effort stalled, Superintendent Philip Wray said.
"I don't know how much we can cut," Wray said. "This could possibly start that discussion back up."