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Across the nation, hundreds of school districts are trapped in a death spiral of declining enrollment that forces dramatic budget cuts which then trigger more student departures.

State officials, who have the power to merge or dissolve districts to create more financially stable systems, are often reluctant to interfere in a process that can raise issues of class and race and brims with emotional implications for how communities define themselves.

In Wisconsin right now, there are deep anxieties in the legislature about a dissolution process that went awry after residents in Palmyra-Eagle, a rural district near Milwaukee in fiscal distress, repeatedly voted to dissolve the district but were rebuffed by an appointed panel controlled by the state school boards association.

The district now faces severe layoffs this summer after more than 100 students, unsure of the district鈥檚 fate, enrolled in surrounding districts.

鈥淭his has created a bit of an uproar in Madison,鈥� said CJ Szafir, the vice president of the Wisconsin Institute for Law & Liberty, an influential conservative think tank in Milwaukee. 鈥淲e know there needs to be more district efficiency. The question for us is if the state should take a carrots or sticks approach to this.鈥�

It Starts With the Lines

But Wisconsin is not unique. Large swaths of the nation are undergoing dramatic demographic shifts due to urbanization, a changing economy, and declining birth rates. Despite that, district lines鈥攗nlike voting boundaries that are redrawn every decade鈥攎ostly have gone unchanged, creating a patchwork system of sparsely populated school districts and overcrowded schools.

Because school funding is so closely linked to student enrollment counts, this has caused deep disparities. Many policymakers now blame stagnant district lines for the nation鈥檚 spotty but widespread teacher-shortage crisis, outcome and opportunity gaps between student groups, and the exponential growth in the amount of money America has spent on its K-12 system in the last 30 years.

It hasn鈥檛 always been this way. Between 1930 and 1960, states aggressively shuttered one-room schoolhouses and consolidated sparsely populated districts with their neighbors as part of a wartime effort to reduce K-12 costs, standardize instruction, and improve academic outcomes. Though there were 120,000 school districts in the country in 1930, there were fewer than 21,000 in 1960.

But that effort slowed in the 1960s when white parents in communities around the country lashed out at the federal government鈥檚 attempt to force local school districts to racially integrate with neighboring districts.

Today, there are about 13,500 school districts in the country, and a growing number are in fiscal distress because of rising pension and health-care costs and dwindling tax revenue after precipitous drops in student enrollment.

But only nine states give themselves explicit authority to dissolve their school districts, according to EdBuild, a national advocacy group that pushes for reform of state funding and district maps.

鈥淪tates are mandated [by their constitutions] to provide for every kid in the state an adequate and equitable education,鈥� said Rebecca Sibilia, the CEO of EdBuild. 鈥淏y not consolidating and dissolving districts in financial trouble, they鈥檙e completely abdicating that responsibility.鈥�

Drastic Action

When states do have the right to shutter financially insolvent school districts, decisions can be swift.

In Oklahoma, for example, the state board of education voted in 2016 to dissolve Grant-Goodland Public 69传媒, a rural, 118-student district in the southeastern part of the state whose administrators were under investigation by the FBI for embezzling money.

Vermont, which in 2016 had more than 280 school districts for 80,000 students, is undergoing a consolidation process that involves incentivizing local school districts to merge with their neighbors to receive a series of tax cuts. (Communities that don鈥檛 comply receive a tax hike.)

The state, which spends around $18,000 per student, one of the highest rates in the nation, has successfully consolidated 150 districts in the last five years, though the process is very contentious and, in some communities, has been tangled up in court.

A bill in South Carolina would allow the state to take over a district in fiscal distress, though several black school board members in the state say the law is a violation of local control and the 1965 Voting Rights Act, arguing it would disproportionately affect majority non-white school districts.

Wisconsin embodies many of the conditions that would seem to make dissolution a necessary tool, at the same time illustrating why the process is so messy, emotional, and nearly impossible to carry out.

More than a quarter of its 446 school districts are in fiscal distress, according to the state鈥檚 school board association, due to a series of statewide tax cuts, an aging population, and a changing economy.

Wisconsin鈥檚 Experience

Residents in Wisconsin grew deeply suspicious of state lawmakers, district administrators, and teachers鈥� unions in the 1940s and 1950s as the state consolidated some 5,000 school districts, many of them tiny, into 500 within a period of six years. That wiped out the community identity of hundreds of small homestead towns, according to Campbell F. Scribner, a University of Maryland K-12 historian who has extensively studied Wisconsin鈥檚 K-12 governance model.

That hostility only intensified in the 1960s and 1970s during the busing wars.

鈥淐onservatives who moved to the suburbs took up the cause of local control,鈥� Scribner said. 鈥淲hile they were busing black kids across district boundaries, conservatives started saying, 鈥楴o, no, no, we have local control. You can鈥檛 bus anybody.鈥� That thwarts any effort by the state to consolidate or dissolve districts.鈥�

Wisconsin鈥檚 dissolution process was overhauled in 1990 and effectively punted the authority to the state鈥檚 school board association. So far under that process, no district has been allowed to dissolve.

With so many districts in the state in fiscal distress, and the state curtailing how often districts can go to voters for more money, many residents were watching the Palmyra-Eagle process closely.

In November, more than four months after Palmyra-Eagle residents voted to dissolve, a panel made up of one state appointee and five school board members from a variety of towns from across the state, was dispatched to the district to decide whether it should dissolve. If the answer was yes, the panel also would have decided where to send the students and staff, and how to divvy up the district鈥檚 debt and assets.

As the meetings progressed, panel members quickly realized the complications of the town鈥檚 troubles: community schisms, plummeting enrollment, and widespread disagreement about whether the district is salvageable.

Compounding the panel鈥檚 dilemma, only two of the surrounding eight districts originally wanted any of the district鈥檚 students. One of those two, Whitewater, pulled out of a plan to split Palymyra-Eagle in half once administrators realized none of the Palmyra residents wanted to attend the district.

More Cuts Ahead

After the panel鈥檚 6-1 decision to keep the district alive, panel members, local administrators and community members all said the process felt rushed, relied too much on emotion rather than fact, and was incongruent with the state鈥檚 expansive open enrollment system and antiquated funding formula.

The panel was 鈥渇aced with a question that had no perfect answer,鈥� said Wisconsin State Superintendent Carolyn Stanford Taylor, whose appointed member was the only member who voted to dissolve the district.

Palmyra-Eagle administrators now face the prospect of more than $2 million of cuts in the coming six months in order to keep the district operating.

And last week, the district was sent a bill: It owed more than $15,000 to the state to pay for panel members鈥� hotel costs, food, and time spent in the district.