By John Hood
Although North Carolina continues to be one of the nation’s fastest-growing states, the number of students in our district-run public schools has been shrinking. Total enrollment in the 2021-22 school year was about 4% lower than a decade earlier, translating into roughly 60,000 fewer students. Districts enrolled 77% of all school-aged children in our state last year, down from 87% in 2011-12.
The increasing propensity of North Carolina families to choose charter, private, or home schools has many district superintendents, board members, and other public officials greatly concerned. They worry that as school districts lose market share, their political and financial support will wither. Some are even worried that applying terms such as “market share” in this context is wrongheaded and dangerous.
I think their concerns are overblown. Competition generally improves performance. That’s true in business, sports, electoral politics, and the performing arts. It’s also true in sectors such as road construction, medical care, and education in which government may play a major or even dominant role in financing services but need not necessarily play as large a role in providing them.
You don’t have to believe all public hospitals should be privatized to believe it is a good idea for them to have to compete for patients. Similarly, you don’t have to favor the abolition of public schools to believe it is a good idea for them to have to compete for students.
I’m no public-school abolitionist myself. I happen to believe that fostering competition tends to improve public schools over time. I’ve often cited studies that lend empirical support to my belief. One recent paper, published last year in the journal Applied Economics, looked at education markets and outcomes in Mississippi. In places where public schools face significant competition from private ones, students in the former tended to learn more. “Policymakers should consider competition-based school reform policies to increase public school outcomes,” the authors concluded.
If I were a North Carolina policymaker deeply concerned about declining district enrollment, I’d be thinking hard about how to become more competitive and thus attract disenchanted families back to my schools. In particular, if I were in a high-enrollment district such as Wake, Mecklenburg, Guilford, Durham, or Cumberland, I’d be thinking hard about deconsolidation.
These districts are simply far too large for their own good. Merging tiny rural districts with sparse populations into larger systems probably makes them more cost-effective. But for a variety of reasons, some understandable and some puzzling, North Carolina has blundered far past the point of diminishing returns in consolidating our school districts.
While there is scholarly debate about the precise tipping point, the fiscal and educational benefits of merging districts tend to fade out when the resulting enrollments exceed a few thousand students.
When those enrollments rise into the tens of thousands of students, consolidation can actually become a net negative, both in expense (economies of scale turn into diseconomies of scale) and educational outcomes. A famous 2003 study of California’s school systems concluded, for example, that when system enrollments exceed 40,000 students “district size has a negative effect on student performance.”
After the tumultuous events of the past three years, school districts now have another good reason to deconsolidate: it will make it easier for public schools to accommodate parents’ widely divergent preferences with regard to curriculum, safety, health, and other potentially hot-button issues.
During the height of the pandemic, for example, some urban and suburban parents were furious that their public schools stayed shut down for many months. Other parents were subsequently furious when school systems resumed in-person learning as the default mode and deemphasized or eliminated virtual options.
In retrospect, more North Carolina families would have gotten the type and level of educational services they desired — and fewer would have left public schools entirely — if populous counties contained multiple districts with differing COVID policies.
For big districts looking to rekindle a relationship with departed families, here’s my advice: break up to make up.
John Hood is a John Locke Foundation board member.