Rural areas get less return on school funding because of brain drain; consolidation fights still on

In a recent article on size of school districts, The Economist magazine reported what it called a sad irony: "The better a small town educates its pupils, the more likely they are to seek jobs elsewhere. According to a study by Pennsylvania State University, returns to investment in human capital are much lower in rural areas than in urban ones."

The Economist did not cite the name or author of the study, but thanks to help from our friends at Penn State, we tracked it down. It's called "The Returns to Education in Rural Areas," and it addresses the rural "brain drain" alluded to by the magazine. The lead author is Stephan Goetz, of Penn State's Northeast Regional Center for Rural Development. In a policy brief for the Southern Rural Development Center, the authors explain that the brain drain "not only deprives local employers of an educated workforce, but it also represents a drain on local resources because the communities that invested in the education of these workers do not reap any returns on that investment."

The study crunched numbers to place an actual number on returns for education in rural and urban areas. The study found that a 1 percent increase in the share of high school graduates in a typical rural county raises per capita income by $128, while a 1 percent increase in urban areas result in a $413 increase. The graph below shows the figures vary widely by region.

The regional variances are important because key factors such as population density, social capital, classroom size and highway access ramps "have no statistical effect in leveraging the impact of educational attainment," the study says. It concludes that there are "staggering odds or disadvantages that rural areas face in terms of providing those with a high school degree a reasonable return on their investment."

The Economist examines the long-term trend toward consolidation of schools and school districts, a major issue in rural areas. Its article highlights South Dakota, where the total enrollment of students has fallen 9.4 percent over the past 10 years (Economist chart). That drop led legislators to force any school district with fewer than 100 students to merge with another. "Legislators, particularly urban ones, reckon that merging districts will create economies of scale and allow schools to offer a broader curriculum," The Economist reports. "But in many cases, a merger will lead a good school to close, forcing its pupils to take long bus journeys to the next town."

The Economist connects South Dakota's example to the "long and contentious"' history of school consolidation in this country, which had 117,000 school districts in 1939 and 14,000 in 2005. Maine passed similar legislation last year, and the transition has not been smooth. (A column in Tuesday's Bangor Daily News attacks the plan for eliminating school choice.) North Dakota considered a consolidation plan in the 1990s, but the discussion "sparked such outrage that politicians dropped the subject entirely," The Economist reports. (Read more)