Many students throughout the U.S. attend school in a rural setting. An Urban Institute report identifies that 42% of the country’s school districts are located in a rural area, and they serve 7.7 million students, based on NCES definitions. Rural districts are located in every U.S. state, and they serve a diverse student population. 

Yet, rural districts also face many unique challenges and barriers. Smaller districts have lower economies of scale resulting in higher administrative costs per student, particularly for districts with fewer than 3,000 students. In addition, districts in areas of low population density face higher transportation costs that can be 2.5 times the cost per student of an urban district. Rural schools can also have difficulty recruiting and retaining educators, particularly in areas with higher poverty rates.

States can play an important role in supporting rural districts and helping them overcome these challenges. Thirty-six states provide eligible districts with a small size or rural funding adjustment. These dollars are often allocated on a weighted basis with eligible districts receiving a larger per pupil amount based on the small size of the district or how remote or rural the district is based on the state’s definition. 

States do not share a universal definition for rural schools in their state funding systems, and as a result, schools are eligible for these dollars for a variety of criteria. The three most common criteria that’s state use are size, sparsity, and the presence of geographic barriers.

• School size (29 states): A district or school is eligible based on the number of enrolled students. States allocate additional funds to districts or schools below a specified enrollment threshold.. Among states with this definition, the median eligibility threshold at the district level is 1,000 students and at the school level is 300 students. Districts or schools with enrollment below this threshold are eligibility for state funds.

• Sparsity (25 states): A district is eligible based on the population density or distance between school buildings. Among states with this definition, the median density threshold is10 students per square mile, and median distance between school buildings is 30 miles. 

• Geographic barriers (5 states): A district is eligible based on the presence of geographic barriers, such as a mountain range, body of water, or if the district is located on an island. States may also factor in the percentage of roads that are paved. Districts have to apply to receive state approval.

States can take inclusive definitions for rural and sparse districts that account for both the size and population density of the district to account for the unique challenges that they face. In Tennessee, the state’s funding formula called the Tennessee Investment in Student Achievement Act, has a weighted funding factor based on school district size (for districts with 1,000 or fewer students) and a separate weighting factor for sparsity (for districts with fewer than 25 students per square mile). This can help districts account for higher costs from both higher administrative and transportation costs per student.

Going forward, projected enrollment declines in many states could compound many of these challenges, with school districts in remote and distant areas projected to have some of the largest declines. How states identify and direct aid to support schools in rural communities will be important to help districts navigate these declines. States can take the lead in supporting rural districts by directing resources to small and rural schools and by taking inclusive definitions that account for the many factors that impact school district budgets.

The voices of rural school leaders are equally as important in guiding state decision makers. Rural district leaders can advocate for state financial assistance to address the small size and sparsity challenges that they face, as well as managing enrollment declines in ways that minimize staffing and service disruptions. While the fiscal outlook appears challenging in many rural schools, partnership with the state and regional bodies can help districts navigate these challenges.