(Brad Penner/Reporting) The flags go up, and a new day begins at Oak Valley School. Oak Valley looks like a classic one-room school, straight from central casting. From the front you can't see the recent addition of a second room. It looks like a school where kids just learn reading, 'riting, and 'rithmetic. It is that kind of school, but it's also much more.

(James Walla/Chess Coach) I think it's time to attack her position.

(Penner) The Oak Valley Chess Club meets Thursday mornings at 8. Teacher Jean Nabity came up with the idea.

(Jean Nabity/Oak Valley Teacher) I just started it last year, because I always try to do something fun in math every year, to add to our book learning. Last year it was chess and it just took off. And the kids were very interested and they wanted to keep doing it."

(Penner) Jean asked chess expert James Walla to visit Oak Valley last year.

(Walla) When I came out here I noticed that there was a very good relationship between the teachers and the students. The intimacy that the school provided for both the teachers and the students made for great communication.

(Penner) Walla returned with his stepdaughter, Terra Thomson.

(Terra Thomson/Oak Valley Student) I came here with my Mom and step-dad for a chess lesson and I really liked it."

(Penner) Now Terra attends Oak Valley, and competes for the Chess team.

(Walla) She loves it. She thinks it's just a wonderful, wonderful, place to be. She has great friends here. She has a nice, positive relationship with her teacher. I could not be happier. I don't know that she could be happier either.

(Penner) It seems everyone connected to Oak Valley is committed to Oak Valley.

(Jill Moore/Oak Valley Teacher) This is my ninth year here at Oak Valley.

(Penner) Jill Moore teaches Kindergarten through fourth grade.

(Moore) I love teaching here because you get to know the students as individuals.

(Chelsea Lewis/Oak Valley Student) I think she's a very good reader.

(Penner) Kids of all ages help each other learn. They enjoy each other's company.

(Jacob Miller/Oak Valley Student) But here everybody gets along, and you get more personal time with teachers and stuff like that.

(Penner) But if things are so good at Oak Valley School, why are parents worried that a proposed change in State law could force their school to close?

(Randy Wiegand/Oak Valley Treasurer) They're putting more emphasis on the dollars instead of the quality of the education.

(Penner) Randy Wiegand serves as treasurer of the Oak Valley School Board. His daughter Ashley is a 7th grader.

(Wiegand) I've always felt that she's always at least a grade, maybe two, above what she would have been anywhere else.

(Penner) Wiegand is among a group of parents opposing a plan to restructure and reduce school districts in Nebraska. They and other supporters of Class I schools fear the plan would lead to the end of the country school.

(Wiegand) We agree that some of the schools need to be assimilated. But don't do it to all of them. That's the big key. I mean you need to let the ones that are doing a good job, doing it efficiently, keep doing what they're doing.

(Sen. Dennis Byars/Education Committee) There's a lot of panic out there and justifiably so. People are really frightened in the fact that their school might be closed.

(Penner) State Senator Dennis Byars sits on the Legislature's Education Committee. The Committee held three hearings around the State on a plan designed to save an estimated $4 million in education costs. Chairman, Senator Ron Raikes says it's part of an effort to find savings in all areas of State spending.

(Sen. Ron Raikes/Education Committee Chairman) If you've got to trim, or realize efficiencies, then I think you just about have to address public education.

(Penner) An interim study team examined the options and issued a thick report addressing an important question.

(Raikes) Exactly how can we organize our school buildings and systems, if you will, in such a manner as to provide the quality education we want with as low a cost as is possible.

(Penner) Class I school districts are generally the smallest in the State. Class I's can provide kindergarten through 8th grade classes, but do not include high school. The proposal would require that Class I districts merge with nearby k-12 districts.

(Raikes) We have a large number of districts and we have districts that-that are small in terms of population of students. If this proposal were adopted, the number of school districts in Nebraska would drop by almost half, not quite. We have about 500 right now. We have dropped down to just a little over 250. So all of the overhead you need in order to operate a school district and a separate annual budget for each school district, that would all be eliminated.

(Penner) And Senator Raikes says it's important to remember the state is not closing any school buildings. That decision would rest with the K-12 district that takes over a Class I district.

(Raikes) You're allowing a locally elected school board to have control over how many buildings they have, uh how many students in each building and all those-those-those sorts of issues.

(Wiegand) He doesn't want to play the bad guy you know. He's not saying he's gonna close the schools.

(Penner) Randy Wiegand and other Class I supporters believe most country schools would be closed by larger districts. They don't want to get to the point where they can't control the future of the school. They're meeting with State Senators, including Senator Raikes, to make their case.

(Wiegand) You gotta have a reason why. And it can't be emotional. The senators have heard that for years.

(Penner) Their case relies on good old facts and figures.

(Nabity) OK, so this is the chart of the Class I schools, going off of the 2001-2002 financial reports. Oak Valley here is number 9 with the average daily membership cost 4875 dollars per student.

(Penner) Oak Valley's costs compare well with other Class I schools. Most are between 5-and-10 thousand dollars per pupil. But quite a few exceed 10-thousand, and some surpass 20-thousand dollars per student. In recent years Oak Valley's per pupil cost also beat the state average. In 2001-2002 the difference was more than 2-thousand dollars. educating high school students. When figures are adjusted to reflect only elementary student, Oak Valley looks good compared to neighbors in Malcolm and Lincoln. Part of the reason is Oak Valley can save in ways larger schools often can't. For instance, parents and board members do most of the maintenance work.

(Nabity) In fact we have a couple dads that come in almost on a daily basis and ask us if we've broken anything today.

(Penner) Students pitch in to do chores often done by custodians at other schools.

(Wiegand) Our overhead on maintenance costs is nil. You know, we don't have any maintenance costs. It's something needs done, the parents will do it.

(Penner) Oak Valley's efficiency even drew the attention of Dr. Barbara Lawrence. Dr. Lawrence and her research team authored a report advocating small schools called "Dollars and Sense.” Now, a group called Knowledge Works is funding further study of Oak Valley, and 14 other small schools across the country. They aim to learn more about how those schools use limited resources to educate kids.

(Dr. Barbara Lawrence/Education Researcher) I'm not saying that all small schools are good schools, but many of them are, and they should be treasured rather than trashed.

(Penner) Dr. Lawrence says larger schools have higher administrative and transportation costs.

(Lawrence) There's also a tremendous expense in terms of the increase in violence, the increase in discipline problems, the alienation of our kids. Perhaps that's the most costly, that our kids don't enjoy going to school.

(Penner) For the most part, the kids at Oak Valley do enjoy going to school. In fact, for most, it's a choice. 22 of the 28 students come from outside the Oak Valley district. Some even travel from nearby Lincoln.

(Nabity) They're just from families that are focusing on education. The kids know why they're here, they're here to get an education. We can teach. We spend our day teaching here."

(Penner) The folks at Oak Valley, and a number of Class I schools, say they're doing a good job at a fair price, and Sen. Raikes won't argue that.

(Raikes) There's some Class I schools that do an excellent job. And they do that job in a very efficient manner.

(Penner) But even given that assumption, it might still save money to close a Class I school.

(Raikes) If you had a Class One building that was operating efficiently and say spending a hundred thousand dollars a year, um the cost per student is comparable with the K-12. Yet it still may be possible for say the-the-the ten children or the 12 children, whatever happens to be in the Class One to be integrated into the K-12 without building a new building, without hiring a teacher. They may, in effect, be able to be integrated without much additional cost.

(Penner) The money saved, Sen. Raikes says, could be used to reduce property taxes or improve education in the K-12 district. He says it's also important to consider that in many rural areas, enrollments are declining.

(Raikes) You would be hard pressed to find any-any K-12 school board that would not be interested in the ways that they could-they could make changes that would-that would serve the students uh and-and either-either save money or offer a better quality education. Now, to go on from that, does that mean they can do that without making anyone unhappy? Particularly if they had to close a building? Probably not.

(Julie Nash/Class I Parent) I would like to ask you to let Class I schools remain the same.

(Byars) We have to make some changes. I think we need to.

(Penner) Senator Dennis Byars and his Education Committee colleagues heard a lot of support for Class I schools at the hearings. He's also aware that there could be a significant group of senators allied to stop consolidation. But he says lawmakers must face up to the challenge.

(Byars) It becomes then what do we as policy makers do. Are we representing all of the people of this state? How do we do that, how do we be compassionate, how do we truly look at appropriate education for every single kid in the state and how do we construct a school system that will do that?

(Penner) Sen. Raikes says there's no guarantee the current reorganization proposal will even become a bill, let alone make it to the floor of the legislature. But he believes it's a good middle ground proposal.

(Raikes) And I guess I would say that if this proposal were adopted, I would be very disappointed if every Class One building in the state were closed, and I would be also very disappointed if every Class One building in the state were kept open. Because I think there is a-a point in the middle which makes good sense in terms of efficiency, and I think the local K-12 school boards are the best-the best groups, if you will, to make that call.

(Penner) While there may be some exceptions, Sen. Raikes believes consolidation of Class I districts would ultimately lead to better educational opportunities for more kids.

(Penner) At Oak Valley, they like what they have now. A well-equipped computer lab provides access to the Internet. It's small, but the school band offers students the opportunity to learn an instrument. There's no gym, no organized sports teams. But if it's warm enough to dribble a ball, you'll find a good game of knockout on the outdoor basketball court. It's a little country school, simple, but substantial. And no one here wants to see it go.

(Luke Bescheinen/Oak Valley Student) I really enjoy Oak Valley, and it'd be pretty sad if they closed it down.

(Penner) But emotion won't win this game. The next move is up to the Legislature. Reporting for Statewide, I'm Brad Penner.