The school's future has been under review since March last year when its board of trustees was dissolved and a commissioner, Mike Allison, was appointed.
In a statement, Mrs Tolley said options had been explored including, most recently, consulting four neighbouring schools over retaining education on the Otepopo School site at Herbert.
However, the boards of Hampden, Maheno, Kakanui and Weston schools had made it clear they did not want to operate Otepopo as a second campus.
"Our priority is to provide a good education for the 19 pupils, and nearby schools will deliver this and will be funded for the increase in their rolls," she said.
Consultation over closure took place due to concerns about governance at the school, the Education Review Office considered there was not sufficient purposeful teaching taking place and the school roll had seen a significant drop in the last few years, she said.
Having looked at the long-term viability of the school, it was clear closure was the best option, Mrs Tolley said.
She acknowledged the service that staff and former board members had given to the school and its community over the years.
In January, placard-bearing supporters of the school gathered outside Waitaki MP Jacqui Dean's office in Oamaru to show support for the retention of the school.
When contacted yesterday, parent spokeswoman Michelle Macdonald declined to comment, saying she had only received an email notifying the decision yesterday morning and parents were yet to meet to discuss it.
Mr Allison said parents, who were very disappointed, had fought valiantly to keep the school open.
The announcement did not come as a surprise, as closure was signalled last year. There was a small chance there might be a local solution but that had not come to pass, he said.
Otepopo School, which was established in 1864, won the Goodman Fielder best small school award in 2003.
