Recently released March roll statistics show the number of pupils at South Otago schools has fallen from 2483 in 2010, to 2196 this year (11.6%), and six schools have posted their lowest rolls in a decade.
Clutha Mayor Bryan Cadogan was surprised by the continued roll decline.
He had expected rolls to start increasing because there was a lot of "momentum" in the local economy, and plenty of jobs on offer.
"It has us thinking because [the school rolls] really didn't come out the way we were expecting."
Big River Cluster Community of Learning co-executive and Balclutha Primary School principal Paddy Ford said rolls were declining because many of those who worked in the Clutha district did not live in the area.
"I think we're just a victim of city drift that happens in New Zealand.
"People are travelling from Dunedin to work in Balclutha."
He said the Silver Fern Farms Finegand Plant put on a couple of buses from Dunedin each day, and there were also car-pools of staff from the Southern District Health Board and the dairy factory in Stirling travelling to and from Balclutha each day.
"Really, it's because they can.
"If everybody that worked in the town, lived in the town, Stirling would be a huge place. But it's not."
He said the dairy industry was the only thing slowing the decline of school rolls in the area.
"Certainly, without the dairy industry, the likes of St Joseph's would have one-third less staff, and Clutha Valley School would be the same."
Mr Cadogan said part of the reason for the commuting was the difficulty getting rental properties in the area, and houses for sale were "snapped up in no time".
"Anyone that wants to shift to South Otago is having difficulty finding accommodation."
He said about 400 people - many of them young - commuted each day from Dunedin to the Silver Fern Farms Finegand plant alone.
He believed if they could be housed in Balclutha, it would only be a matter of time before it translated to growth in local schools.
"We also know that we have to do something to actually make people want to come here and put their roots down.
"Are we sexy enough to attract staff? At the moment, no.
"So it's around our housing shortage and our ability to attract labour - those are the two big challenges that we see for the near future.
"We're trying to address that with our community plan projects."
He said $40million worth of council transformation projects would be carried out over the next three years which aimed to revitalise the area and attract more young families.
Projects included more residential subdivisions, and upgrades to the main street, swimming pools, parks, toilets and water supplies.
"We're now on a roll [attracting new people] and we want to keep that momentum going."
