PHILOMATH, Ore. - Nearly 40 years ago, Rex and Ethel Clemens, a couple with no children and a sizable timber fortune, made a remarkable promise: They would pay college tuition for any graduate of Philomath High School.

Their generosity benefited thousands, helping daughters and sons of loggers and mill workers move on to careers as engineers, teachers, nurses and business executives.

But over the years, the town moved away from its blue-collar roots as timber work dwindled, high-tech plants opened and equity-rich newcomers moved in.

The change is most vivid at the high school, where students have shocked some old-timers by dyeing their hair fluorescent colors, piercing their noses, and forming clubs such as a gay support group.

Unhappy with what they were seeing, the Clemens Foundation board of directors decided last month to teach the school a lesson. They yanked the scholarships.

John Ayer, 57, a former school board member who sympathizes with the action, says the school has sullied "the values of the old timber families ... working hard, God, America and apple pie."

"We've had enough of political correctness," Ayer said.

What happened in Philomath resonates across the United States, with once-rural communities, especially those near high-tech hubs, growing into bedroom communities.

The foundation's decision has sharply divided the 4,000 residents of the town, whose name means "friend of learning." Members of some families have stopped speaking to one another. Both sides agree the heated bickering over the school is fueled by deeper resentments built up during the town's transformation.

The town's timber industry was hit hard in the 1980s by economic recession, foreign competition and environmentalist efforts to save habitat for endangered species.

High-tech jobs multiplied at nearby Hewlett-Packard and other companies. Philomath got subdivided and suburbanized, what locals called "Californication." Wooded hillsides were cleared to make room for cul-de-sacs of look-alike houses. Philomath's population today is more than double its 1970 size.

Newcomers were suspected of moving in expressly for the scholarship. In 1990, the Clemens Foundation limited awards to those who had lived in Philomath for three years; in 1993, it raised the minimum to eight years.

Some old-timers tagged the changing culture of the high school not as a normal evolution, but a foreign import carried in with the commuters. Marlene McDonald, 68, a local historian, opposed killing the scholarships. But she says she understood how longtime residents occasionally felt slighted.

"There's a perception that we're rednecks ... that we're ignorant," McDonald said.

The hostility surfaced at a June school board meeting. Ron Yechout, a retired banker, attacked newcomers who criticized logging but "were first in line to accept the handout of the Clemens scholarship." His remarks drew long applause in the packed gymnasium.

At that meeting, Steve Lowther, one of the Clemenses' nephews, implied that today's Philomath students are not the children of "the man in the woods, at the mills, driving trucks" that Rex and Ethel intended to help.

Students are outraged. Philomath High senior Mischa Brittin, 17, said it is absurd to knock the town's shift from logging because the scholarship is partly responsible: "They gave families money so their kids would not have to work only as loggers. The kids did that, and now they are mad."

Today, even with a smattering of pierced and tattooed students, it is easy to see much of the same cheerful innocence. There are no metal detectors or armed police. Flannel-shirt-wearing "country" students walk alongside black-clad Goths to the Dairy Queen.

"I have friends in the forestry club, the Bible club and the gay-straight alliance," Brittin said.

Those who see Philomath High School as symbolic of the town's demise tend to blame Superintendent Terry Kneisler.

A Chicago native who came to Philomath in 1996 after coordinating education programs for the Bahai faith, Kneisler has raised test scores and the ire of district critics. During Kneisler's tenure, the gay support group was formed, a dress code that did not deal with hair color or body piercing was adopted and an oft-vandalized wooden American Indian mascot was put in storage after some parents complained it was offensive.

Kneisler's explanations have done little to placate critics. He has asserted that students can legally form campus clubs. The dress code targets health and safety concerns such as shirts with drug, tobacco and alcohol messages, not style issues such as hair, he says.

Kneisler and the school board did accede to one demand: The warrior statue, a 6-foot caricature with an oversized head, was returned to the school lobby.

Kneisler was at the center, however, of two incidents that would become flash points.

In 1998, Kneisler asked the Lowthers whether they knew the land they had sold for an elementary school contained hazardous waste. Family members said they weren't aware of the contamination. Old-timers became enraged when the exchange was made public.

In April, Kneisler told sports boosters eager to build a new high school baseball stadium that federal law requires equal facilities for male and female athletes. Kneisler asked the baseball supporters to also upgrade the girls' softball field. The request offended the boosters, who withdrew their offer of a new stadium.

"They said it was politically correct to give boys and girls equal access," Kneisler says. "I say it's a legal obligation."

Steve Lowther later persuaded the foundation directors, made up of himself, his two brothers and four family friends, to end the scholarships, which totaled more than $15 million in the program's lifetime. About 500 students receiving the grants now won't be affected. Recipients could attend any college, but the scholarship amount matched tuition at Oregon State University, now about $4,000 a year.

Nearly two-thirds of the roughly 160 students who graduate from Philomath High each year attend college, up from next to none when the scholarships began.

A newspaper ad last month proclaimed the change, stating: The Clemens Foundation "stands firm in the belief that a quality basic education ought to precede funding for college." Lowther could not be reached for comment.

Without a Clemens scholarship, senior Brian Finley, 17, says he expects to go to community college and work full time to save money to transfer to a university.

Finley says it is the Lowthers and their backers, not students at the school, who are unruly and immature.

"They're like elementary school kids who take the ball away when the game's not being played their way," he said.

Peter Y. Hong is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.