One frequently proposed policy is to consolidate rural school districts in order to save money by obtaining economies of size. The effects of school district size on both expenditures and standardized test scores are estimated for Oklahoma. Results indicate that economies of scale with respect to expenditures per student exist up to an average daily membership (ADM) of 965 students, but that as school districts become larger, tests scores decline. Even if savings in school district administration from consolidation are spent on instruction, state average test scores would decrease slightly. Thus, school district consolidation can reduce costs, but it will also reduce student learning.
