Mrs Tolley said there were 620 surplus pupil places at Macandrew Intermediate, Calton Hill, Caversham, College Street, Forbury and St Clair schools, representing 39% of the schooling network.
Demographic projections showed no significant rise in pupil numbers over the next few years.
The schools had lost a fifth of their pupils during the past decade and the ministry was aware roll declines led to reduced funding, reduced staffing and fewer educational options for pupils, she said.
"We want to work with the local community to ensure a stable future for year 1-8 students in South Dunedin," she said.
Mrs Tolley has presented for consideration two restructuring options for schools in South Dunedin, which include the closure and amalgamation of some of the schools.
Option two is to close Macandrew Intermediate and merge Caversham, College Street and Calton Hill schools into a year 1-6 contributing primary school on the Caversham site.
"Other options may arise during the consultation process and they will also be given consideration," Mrs Tolley said.
Mrs Tolley acknowledged there were other schools in the city and the wider Otago region with declining rolls, and said if their communities wished to participate, she might start conversations with them, too, about practical solutions.
"If North Dunedin schools want to come and have a chat with me, I'm more than willing to talk about it with them. But they have to initiate it."
Mrs Tolley had a meeting with the affected South Dunedin schools yesterday to make the announcement.
After the meeting, St Clair School principal Richard Newton said it was a timely decision that was received positively by the schools.
"I think it was a well-considered decision."
College Street School principal Gary Tenbeth agreed.
"The consolidation of resources in South Dunedin is sensible."
Mr Tenbeth welcomed Mrs Tolley's intervention because he believed it was too difficult for communities to close schools on their own.
"I'll grieve for my school, but you can't live in the present," he said.
"You have to look to the future."
Macandrew Intermediate board chairwoman Ernie Mather was excited about being involved in creating "the new direction" for education in South Dunedin.
"We've waited a long time for something to happen. This is a positive move."
However, Caversham School principal Mike Darracott was concerned the planned consultation was moving too fast.
"This is a decision that needs to be made by our parents, for our parents.
"I accept there is a critical mass for the efficient running of a school. But not everybody likes a large school where you are just a number."
Forbury School principal Janice Tofia declined to comment, and a spokesman for Calton Hill School could not be contacted yesterday.
Dunedin South MP Clare Curran believed the minister's interest in the issue was a "good thing", but she did not believe there were easy solutions.
"Whatever decision is made needs to be long-term and sustainable. We don't want to have to revisit this again in the future because every time there is a school closure, it hurts the community."
