Periodic Reports
School District Reorganization Report
February 1, 1993

Effective July 1, 1993, forty-one districts voted to reorganize, which is the largest number of high school district mergers to take place since 1962. This magnitude of reorganization activity, along with new information about the 1990 Census as it impacts upon rural Iowa, and data about the influence of the state finance formula upon smaller districts, are all topics that need to be explored and understood.

It has been the practice of this consultant to produce an annual reorganization report for over ten years now. This special edition addresses the three factors stated in the above paragraph.

Twenty-One Less School Districts

Between December 1, 1991, and November 30, 1992, the last legal date for a July 1, 1993, reorganization, 41 districts voted to consolidate their schools. The reason for the odd number is that a triple merger was passed by the Paullina, Primghar, and Sutherland districts. These elections reduced the number of school districts by 21, from 418 in 1992-93 to 397 in 1993-94. (See Table 1.)

The last time such a grand scale of reorganization took place was when the state went from 510 high school districts in 1961-62 to 469 in 1962-63. That year ended a ten year period of massive high school district consolidation. Large numbers of mergers took place for six more years, but they involved, for the most part, elementary school districts.

During the reorganization season ending November 30, 1992, three elections failed to carry in both districts. This meant that 20 of the 23 attempts to reorganize passed. Although 20 new districts will be formed in 1993-94, there will be 21 less districts than there are this year.

For several years, particularly when conducting studies for school districts, this consultant has many times stated whole- grade sharing should be viewed as a prelude to reorganization. This opinion is based upon the mounting compilation of data regarding whole-grade sharing and reorganization. The situation seemingly becomes clearer each year.

Support for the opinion comes from this consultant's hundreds of conversations with school board members, citizens, and other school officials. In over a dozen years this consultant has conducted various types of reorganization studies for over 200 school districts. In 1991-92 studies were conducted for 75 school districts, and most of them involved on-site visits and meetings with the boards and communities. These very personal contacts provide for a deep level of understanding.

As the current school reorganization movement continues, predictions can more reliably be made through analysis of the objective evidence. The following tables reinforce the statement that "the facts speak for themselves:"

Table 2 lists the number of districts in existence for each year since the last year of statewide stability, 1984-85. It also enumerates the number of districts maintaining high schools. Each whole-grade sharing contract, to this date, involves at least one district that sends its high school to another district; hence, there are less high school districts than legally incorporated K-12 districts.

In 1984-85 there were only two districts sharing to the extent of what we now call "whole-grade sharing." They were Lu Verne and Corwith-Wesley. Since that time, the number has risen to 153 in 1992-93. However, 32 of the 153 districts no longer whole-grade share. They reorganized after a period of whole-grade sharing. An additional 39 districts will be in that category as of July 1, 1993.

The third column in Table 3 lists the cumulative number of districts that ceased whole-grade sharing after reorganizing. The last column is the cumulative number of districts that are now, or were previously, whole-grade sharing. Of the 153, there are a few that might be classified as minor sharing participants. In other words, they receive a few of the students from a district that is sending its high school or junior/senior high to more than one other district.

The trend is continuing. To this date, six districts have filed reorganization petitions with their AEAs for July 1, 1994, effective date. This consultant is aware of another 10 to 12 districts that are in the process of developing reorganization petitions or have the project on the table.

Many school officials and citizens have reported that reorganization was easy compared to whole-grade sharing. This, of course, was based upon the premise that the districts were whole-grade sharing first.

Several school board members pointed out the thinking of some of their citizens that they thought their districts were already reorganized. The schools were bound so tightly through the sharing contract, that people did not realize they were not completely consolidated.

Dozens of school board members reported that the decisions to whole-grade share rested solely on their shoulders. This is tough. Follow-up conversations indicate that reorganization tends to be a natural step that takes place after whole-grade sharing, and the decision does not seem to be as difficult. Also, the resolution is shared by the citizens at the polling booths.


Table 4 is based upon preliminary information. In addition, Dexfield and Stuart-Menlo have already signed a contract for 1994-95 whole-grade sharing.

There have been only four reorganizations since 1985 that did not follow periods of whole-grade sharing. Two of those were in the first year of the era, and their actions to reorganize were taken in 1984-85. They were Colfax and Mingo, and Sibley and Ocheyedan. The others involved Panora-Linden and Y-J-B on July 1, 1989, and Carson-Macedonia and Oakland on July 1, 1993.

Since 1985, there has been an average of almost ten new whole- grade sharing agreements each year. The number this year is on the light side.

However, the natural conditions behind the movement have not changed. The next section of this report addresses some of the new data from the 1990 Census. In addition, the potential effects of the state funding formula are becoming clearer. The third part confronts that topic.

Only Seven Counties Gain Population in 1990

From 1980 to 1990, only seven of the 99 counties gained population. Item A, at the end of this report lists county population from 1900 to 1990.

This change from 1980 to 1990 is not unusual. Seventy counties lost population since 1900, which was the peak year for the number of farms in Iowa. The 1900 population was 2,231,813, and in 1990 it was 2,776,755. This was an increase of 544,942 in 90 years. During that time, Iowa's population increased by 24.4 percent, compared to 227.3 percent for the United States.

From 1900 there were five counties that never gained population during any ten year period, and ten counties gained only during one census. Refer to Item B for comparison of county changes for each decade.

In 1930 Iowa's farm population was 964,659, and it was down to 256,562 in 1990. That represents a loss of 708,097, or 73.4 percent. From 1930 to 1940, 15 counties gained farm population. Since then no county has ever gained farm population. Refer to Item C for details.

The subjective evidence gathered by this consultant during the studies conducted for local districts supports the contention that the roots of the reorganization movement come from three major tributaries. They are the state's population shift, the massive consolidations of farms and business, and increasing consumer demands for services and products. Schools, just like other service industries, are becoming larger. This is not to judge the conditions one way or the other. It is obvious that schools, like other services, react to natural conditions. The major difference between local government change and private enterprise modification, is that private enterprise often transforms more gradually and continuously. Schools tend to experience periods of stability, followed by spurts of activity. This third historic era of school consolidation should be more than half done.

The tables described in this section were derived from U.S. Census Bureau Decennial Census information compiled by Willis Goudy. Additional information can be obtained from Willis Goudy, at Iowa State University.

Influence of Finance Changes Will Vary

The changes wrought by the replacement of the original school finance chapter of the Code of Iowa, Chapter 442, with the new one, Chapter 257, affect different schools in varying ways. This section of the report examines the modifications as they impact the smaller school districts--those within the enrollment range of whole-grade sharing and reorganization activities.

The overall change of the new finance formula is the narrowing of the per pupil funding range. The funding range is related to the expenditure range, in that over a period of time, spending cannot outstrip funding. In 1990-91, the Southeast Polk school district spent the least amount of money per pupil. Its per pupil general fund spending was $3,668. The highest was Lytton, with $7,478.

Any change designed to compact the per pupil funding and spending ranges will have a bearing on school size and on potential moves to whole-grade share or reorganize. Small school will be affected the most.

Not all small schools are expensive, but all expensive schools are small. As the features of the new funding formula take effect, those schools that are funded significantly more than the state average will be brought down to a lower funding level. Small schools will be affected the most since many of them have the higher funding levels.

Another factor related to size is the ability to react to negative financing elements. Very few school districts take kindly to financing cuts or other adverse monetary conditions. However, the very small districts have more difficulty adjusting. For example, it is much easier to accommodate a needed reduction in staff if a district is large enough to have five math teachers rather than only one, or even less than one full-time equivalency. Boards and administrators of the medium size and large districts agonize over financial duress decisions they need to make. However, their resolutions do not dig anywhere near as deeply into the core programs as do the actions of boards that govern schools with just handfuls of teachers, administrators, and other employees.

The three most significant and direct alterations resulting from the new finance formula are the compaction of the regular program per pupil district costs, the elimination of "phantom" students, and the deletion of the extra funding, termed "guarantee." These conversions are being phased in over a period of several years.

In 1990-91 the regular program district cost per pupil varied from $2,834 to $3,913. Note, this is not the total funding available to school districts, but it is the major portion of the controlled formula. The next year, 1991-92, all districts below the average were brought to this average, $3,203. In other words, the average became the minimum. In 1992-93, this minimum, also referred to as the state cost, is $3,336. Two hundred-sixteen of the 418 schools are funded at the rate of $3,336, and will continue to be funded at the state cost or minimum. The districts in this category range in size from Goldfield, with 182 students to Davenport, at 18,211.

Also, in 1991-92 the districts above 110 percent of the state cost per pupil were brought down to 110 percent. Then, over a period of years, the plan of Chapter 257 is to phase all districts funded for more than 105 percent of the state cost down to the 105 percent level.

This year, 1992-93, there are 20 school districts being funded at a level that is greater than the eventual 105 percent maximum. These 20 districts range in size from 116 to 637 students, and the average size is 280.

For many years, until 1992-93, districts applied a formula to the current enrollment and enrollments of previous years. The formula allowed districts that were losing students to add "phantom" students to their budget enrollments. This formula was designed to cushion districts from the immediate adverse financial effects of declining enrollment.

If phantom students are converted to a percent of budget enrollment, the 1990-91 range in percent of phantoms was from zero percent to a high of 45 percent. As a result of the phasing out of phantoms, the percent in 1991-92 varied from zero to fifteen. In 1992-93 phantoms students are not counted for school district funding. In 1990-91 and in 1991-92, all of the districts with the high percents of phantoms were small.

Another longtime feature of the financial formula that has helped soften the effects of declining enrollment is commonly referred to as the "guarantee amount." Simply, a school district in 1992-93 is guaranteed to have its total regular program funded at an amount that was at least equal to the regular program district cost in the prior year--1991-92. This cushions districts from declining enrollment and the loss of phantoms. This guarantee, or adjustment, as it is also called, is being given to 157 of the 418 districts.

The per pupil range of guaranteed funding is zero to $836. This benefit tends to favor the smaller districts. The average enrollment of the districts receiving this source of funding is 563, compared to the state average budget enrollment of 1,173. The average enrollment of the districts receiving more than $250 per student is 289. Of the 73 districts receiving more than $110 per pupil, only one district enrolls more than 747 students. A few of the larger districts may receive what seems to be a lot of guaranteed funding, but the per pupil amounts are relatively small.

The Code of Iowa provides that 1993-94 is to be the last year for guaranteed funding. This could be a reduction of over nine million dollars.

In summary, the compaction of the regular program district per pupil cost, the elimination of phantom students, and the eradication of the guaranteed funding are all narrowing the per pupil range of funding available to school districts. These actions are not designed to impinge on any particular enrollment size; however, the upper ends of the funding scales are almost exclusively inhabited by the smaller districts.

Two other financial features allow the per pupil funding range to remain expanded. They are the supplemental weighting (extra funding for sharing) and optional taxes.

The supplemental weighting program is providing over 21 million in additional dollars for 1992-93. The large per pupil amounts are being raised by the smaller districts that have gone into large scale sharing, and by those districts that were sharing and are now reorganized. The important features of this program that need to be recognized are that the extra funding for whole-grade sharing, superintendent sharing, and continuance of sharing into reorganization are no longer available to districts beginning these arrangements after 1992-93, and the funding plans have five year limitations. Difficulties may arise for districts that have become addicted to the additional revenues.

The optional property taxes and income surtaxes of the general fund are raising approximately 150 million dollars a year. The per pupil range of funding from these sources varies from over $1,000 to zero. The options that are now available are not scheduled to be deleted.

In conclusion, the full effects of the new funding formula have not yet take place. Many small districts will be impacted more than other districts since they have been greater recipients of the extra revenues provided by the deviations from a standard per pupil funding amount. (Written by Guy Ghan, Retired DE Consultant)