Climax-Shelly is a tight-knit district, a place where the community paints its school, where entire families bring their ladders to do it -- and where a bar sells pulltabs to pay for the things the school can't afford.So when another girl leaves, bringing the sophomore class to 13 kids total, you know it hurts. Climax-Shelly isn't just a small school, a teacher says -- it is "frighteningly small."

Across Minnesota, communities are holding onto their small schools, but the schools are struggling to survive.

A Star Tribune analysis reveals that nearly one-fifth of the state's 340 school districts are fighting combinations of deep enrollment declines, dwindling budget reserves and/or student flight.

Large percentages of their kids, dissatisfied with the quality of learning or drawn to bigger, richer programs elsewhere, are taking the option that open enrollment provides and are bailing out to neighboring districts.

Yet state and local taxpayers keep the money flowing.

Of the more than $9 billion that the state gave to Minnesota school districts in 2001, more than $2 billion went to schools outside the 11-county Twin Cities metropolitan area, and of that amount, more than $145 million went to the state's smallest districts -- those with fewer than 500 students.

The federal government chipped in more than $150 million to non-metro districts in 2001 -- and more than $11 million to the state's smallest. The federal government is paying for Climax-Shelly's new $500,000 roof.

This is a story about the prices paid to keep a school in town -- about the costs to students in programs they see, about local taxpayer commitments to save schools at all costs and about the help required of state taxpayers to prop them up.

The newspaper's analysis identifies scores of districts where students and taxpayers may best be served by a new wave of district consolidations. Using a checklist provided by the state to help school districts decide whether to pursue mergers, the Star Tribune found more than 40 districts that fell below recommended enrollment levels in grades K-6 in 2001. Thirty showed dwindling reserve funds. And 23 of the smallest districts are the biggest spenders.

Where the money goes

Consolidation is wildly unpopular in small towns and at the State Capitol -- Lt. Gov. Mae Schunk has called it "the 'c' word." But it has the support of the head of the state's teachers union and the acceptance of many students.

"We are going to have to look at where we need to have schools and some type of reorganization," said Judy Schaubach , president of the union, Education Minnesota. She argues that kids in small rural districts are not getting an educational opportunity equal to those in larger districts.

Where the students are

"We have to make sure we don't have a school system in Minnesota that is the haves and the have-nots," she said.

Les Norman, superintendent of the Lake Crystal-Wellcome Memorial district in south-central Minnesota, agrees. His district, already consolidated once, still struggles for money and students. Recent changes in school funding and land taxes are only widening rural-to-metro disparities, he said.

"Young families, if they want a good education, don't stay in rural areas," he said.

Merging small school districts

A district in decline

Henning, in west-central Minnesota, is a district that has it all: a dedicated community and staff -- and almost all of the problems besetting Minnesota's small schools. The enrollment declines, the budget troubles, the tax pressures, the classroom cuts. Plus a fierce resolve to stay independent.

For 50 years, Henning has seen decline; it's a farm community stung by population losses. The mayor says things are turning around, that the 2000 census showed a 4 percent gain, to 760 people. But go downtown; look around. As a real estate agent says, "The school makes the town go."

Statistics have not been kind to the Henning school.

During the 1996-97 school year, it had 462 students. During 2000-01, it was 382 -- a 17 percent drop.

Henning also remains among the state's biggest losers in the percentage of its students choosing home school or other options.

Of the 426 residents eligible to attend, 103 students, or 24 percent, go elsewhere. With them goes more than $600,000 in state funding -- more than $5,900 per pupil. The district only picks up 25 students from other districts.

The district is in debt. Two years ago it began a five-year effort to rebuild its finances. Last year it passed one levy increase, then went to voters again this September, seeking an additional $300 per student. That request failed.

Henning, however, is averse to mergers, having dropped out of a plan to combine with the neighboring Battle Lake schools about 10 years ago. So when board members directed Superintendent Deb Wanek to begin partnership talks again, a community groundswell forced another levy plan onto the Nov. 5 ballot. This time it passed easily, and at twice the cost -- $600 per student.

The tax hike isn't paid by Henning alone. Of the $250,000 to be raised annually by the local levy, state taxpayers will pay $43,000, Wanek said.

The superintendent believes there is hope. The number of kids from birth to age 5 looks promising, she said. Declines may level off soon.

Also, Wanek said, test scores are high, a comment echoed by the principal and by the teachers -- one of the first things the people at the school will tell you, in fact.

Two star students, Patrick Campbell and Grant Seipkes , said they have been pleased with the education they have received. But they also noted there weren't many advanced-course options, nor as many electives as they would like.

"You take Spanish . . . " one said. ". . . or you don't take a foreign language," finished the other.

Neither student would oppose a merger. Both play for a combined Battle Lake-Henning football team, and they have friends there.

Two elementary-school teachers, Nan Brutlag and Kitty McDonald , said consolidation would be a "fair option" provided the two districts combined their teacher seniority lists, McDonald added.

Battle Lake "wants our kids," she said, but they don't want Henning's longtime teachers -- and the high pay scales that come with them.

If Henning can hang on, it could save some serious money. The district would like to offer teachers early retirement in about five years, to allow the hiring of younger, cheaper replacements. But teachers say it is too soon to commit to that.

Troubles abound

"Hanging on" is central to the rural school experience.

Henning is among the 70 percent of Minnesota school districts that saw enrollments tumble between 1996 and 2001, with the problem being mainly a rural one. Seventy-nine percent of non-metro districts lost kids during that time.

As enrollments shrink, budgets are squeezed, cuts follow.

Declining enrollment is "permeating much too much of what we do," said Grand Rapids Superintendent Lloyd Styrwoll . While his district is large, the pain is the same, so much so that he tries to hold off on budget-cutting discussions until after Christmas, for morale's sake.

Even with budget cutting, debt problems are weighing heavier on the state's schools.

From 2000 to 2001, the number of school districts, both large and small, declared to be in statutory operating debt jumped from 23 to 35, according to the state. That means the districts, which include Henning, have negative fund balances greater than 2.5 percent of their general budgets and are under orders to get back in the black.

Tax increases are key to getting out of debt.

In pitches to sell school levies, small-school supporters will tout the traditions essential to community life -- saving the school and its Friday night games -- and talk about the value of small classes. As a Climax waitress put it, "the less kids in the classroom, the more you should learn."

But local tax increases approved by voters often require statewide help. Of the $288 million in school operating levies this year, $58 million, or 20 percent, is being covered by the state. (That includes the levies for all schools, large and small, according to state Senate estimates.)

Despite taxpayers' generosity, most students in small towns never see the advanced courses common in larger schools.

Only 30 percent of the state's smallest schools, defined as those with fewer than 415 students, were offering advanced-placement courses in 2001, according to a recent survey of state superintendents. That compared with 98 percent in the state's largest schools.

But being small doesn't seem to hurt districts' test scores. Several of the top-scoring districts in the 2002 Minnesota Comprehensive Assessments had fewer than 500 students.

The pressures make for some strange circumstances.

In Chokio-Alberta , where the school board may have to consider closing a building, a factor favoring keeping one school is that it could bring in $60,000 more per year in state funding based on "sparsity" of the student population.

Nicollet has seen new housing built, people move in and property values rise as the town becomes a bedroom community to nearby St. Peter, New Ulm and Mankato. Yet the school has gained no students.

Steve Johnson, math teacher and wrestling coach, was excited about a Twin Cities teacher possibly taking a district job -- not because of his qualifications, but because of his five children and the aid they'd bring.

Said Johnson, a Nicollet teacher for 31 years: "This town has shown a lot of pride. It's always come through with what we need."

It just can't come up with more kids.

What about merger?

The state Department of Children, Families and Learning has a checklist to help school districts assess whether they're in the kind of trouble that makes consolidation worthwhile. It includes 44 indicators of the "need for studying reorganization alternatives."

More than 40 districts have many of those indicators, according to a Star Tribune review of the most recent state education data.

Yet the state saw its last merger rush in the early to mid-1990s, back when the state was providing extra money to encourage consolidations. Minnesota's law still is on the books, but the financial incentive no longer is funded.

That carrot, worth $600 per pupil, allowed teachers and principals to plan programming, to have a vision for their new district, said Bob Buresh , the state education official who oversaw consolidations during the 1980s and 1990s.

In the West Central Area School District, formed in 1995 from merger of the several districts in west-central Minnesota, that meant giving Hoffman and Kensington high school students six new social studies courses, as well as additional sections in biology and chemistry, among other changes, according to state documents.

Without the incentive, merger action has dried up -- although Buresh said that maybe six times a year, school board members will call him "on the sly" to ask about their options.

The need is still there, said Rose Hermodson , an advocate of countywide school systems. She looks at district demographics, at how half of the state's 340 school districts have fewer than 1,000 students -- about the size of the student body at Mahtomedi High School -- and wonders why more districts aren't being merged.

Politicians are leery. Gov.-elect Tim Pawlenty has said he does not believe Minnesota has too many districts. The state went from about 435 to 340 districts in a decade and a half, he said, "so it's not like we haven't consolidated." Kids are taking long bus rides, he said, before the election, and "we've had enough of that."

He's far from the only elected official to feel that way. It's no secret that mergers can bring about hard feelings.

In the Lake Crystal-Wellcome Memorial School District, the anger has become acute. There is anger over continuing budget woes -- the district, 3 miles from the Mankato schools border, is in statutory operating debt. There is anger over budget cuts and school closures -- the district recently closed its Vernon Center and Garden City schools.

And there is anger over what many people in the communities outside of Lake Crystal see as unfair treatment. Voters backed a $315-per-student levy to ease the district's debt, but will not approve the money to replace the boilers for the high school in Lake Crystal.

Jayne Doyen , owner of the Wylde Syde restaurant in Vernon Center, said people felt cheated when their schools closed. To her, a 14-mile bus ride is unacceptable when the kids once had a school two blocks away.

She has enrolled two of her five children in the Maple River schools.

Consolidation, however, does have its financial advantages, according to the state legislative auditor's office. During the 1990s, it said, fund balances per student rose 70 percent in the consolidated districts, compared with 31 percent in other districts.

Consolidation is not part of any Education Minnesota agenda, said Schaubach, but it is an option that must be explored.

"This is about politics. And what we have to do is try to find out what is the best for our students," she said.

If nothing is done, she said, districts will fade away anyway.

Indeed, the census gives small districts little hope. Student counts are expected to see double-digit percentage declines in many regions of the state between 1995 and 2003. Projected drops include 15 percent in the northwest, home to Climax-Shelly; 13 percent in the Arrowhead region and Upper Minnesota Valley; and 10.9 percent in the West Central area, home to Henning.

In survival mode

Yet districts hold on amid the empty desks and bare coat hooks.

In Climax-Shelly, local support has stepped up as enrollment has dropped. Two years ago, parents and community members determined to take advantage of an offer of free paint finished the entire school in a week and a half.

Last month, voters approved a school levy increase of a whopping $950 per student, raising total local support to $1,931 per pupil.

Superintendent Shirley Moger knows how to scrounge. She won grants for the Valspar paint, for after-school programs, for a new roof on the school, for 26 new computers, and while leading a tour of the building, she will take note of the second-hand weight equipment and lunch tables.

But will it be enough?

"I lie awake at night a lot," Moger said.

Devery Feickert , a high-school English teacher, wants to buy a house, to feel secure, to pay taxes to the district where he's taught since 1996.

But he can't now, he said. First he wants to be sure the Climax-Shelly School will be open in 10 years, and he is unconvinced that it will be.

Last year, Feickert turned down a job in Ada-Borup , at a school he described as a $14 million palace built with federal flood-aid money, deciding at the last possible minute to stay put -- to "trade security for happiness."

The loyalty test is played out by students, as well, and even more so by parents.

During a recent basketball game against Morris, a pair of brothers on the Chokio-Alberta team, both of them expert three-point shooters and football stars as well, kept the outmanned Spartans competitive into the fourth quarter.

Their mother, Sharon Melberg , watching, wearing their pictures on buttons on a pink sweater, spoke to the pride they have in their school. She brushed aside the question of whether they ever considered open-enrolling to Morris.

"They would never," she said.

-- Anthony Lonetree is at alonetree@startribune.com .

-- James Walsh is at jwalsh@startribune.com .