Formula Grant Successful in Rural Schools, Flexibility Key

Last Updated: July 24, 2010

This article appeared in the July 2010 Rural Policy Matters.

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Amid the rising battle over the role of competition in federal grant-making, a new report has found that school districts participating in the federal Rural Low-Income Schools (RLIS) program used their funding well and for activities directly related to improving student achievement. The findings are important because funding to eligible districts was awarded on a formula rather than a competitive basis. Districts credited the program’s flexibility, allowing them to use funds for specific local needs, as key to its success.

In recent months, an increased emphasis on competitive grants in the U.S. Department of Education has raised serious concern among advocates for rural and high poverty areas. Competitive grants are awarded to agencies submitting grant applications that evaluators view as compelling or deserving. Formula grants, on the other hand, are awarded on the basis of eligibility along specified criteria. Formula grants are especially important for communities and agencies where funds and personnel for writing competitive grant applications are scarce.

The report, Evaluation of the Implementation of the Rural and Low-Income Schools (RLIS) Program: Final Report, found that RLIS schools used the funding for activities aimed at improving instructional quality and improving student achievement in particular subject areas.

Further, the report found that the rate of academic improvement in mathematics and reading for RLIS districts was significantly greater than for non-RLIS districts from the 2002­–03 school year to the 2007–08 school year, although the report did not examine causality and could not attribute these gains to RLIS funding.

What is RLIS?

RLIS is one of two federal programs collectively known as the Rural Education Achievement Program (REAP). The programs provide funding to rural districts to help them make Adequate Yearly Progress (AYP) as required by No Child Left Behind and to meet challenges associated with small size and population sparsity.

To be eligible for RLIS funding, the district must enroll more than 600 students; at least 20% of students must live in families with incomes below the federal poverty line; and all schools located in the district must have a National Center for Education Statistics (NCES) Locale Code of 6, 7, or 8, meaning all schools are in communities with fewer than 25,000 people and located outside of a metropolitan area or rural communities of fewer than 2,500 people located within a metropolitan area.

RLIS funding goes to states that then distribute it to eligible districts. States have the option of awarding funding on either a formula or competitive basis. All nine of the states studied in-depth in the report awarded funding on a formula, although districts were required to fill out applications and participate in a planning process for use of the funding.

The second REAP program is the Small, rural School Achievement program (SRSA), which provides funding on a formula basis directly to rural districts with fewer than 600 students enrolled or to districts located in very sparsely populated areas. SRSA was not covered in this report.

RLIS provided about $86 million to 41 states, which distributed it to 1,497 districts, in the 2009–10 school year. Districts received, on average, $57,000 or about $29 per student.

Characteristics of RSIS Districts and Uses of Funds

Districts used funds for activities authorized under Title I, Part A, primarily educational technology, professional development, teacher salaries, and instructional materials. The most common goals cited by districts for the use of RLIS funding were improving instructional quality and improving student achievement in particular subject areas.

Districts reported that the flexibility of RLIS program allowed them to use funds to meet needs specific to their districts.

The report notes that rural school districts with high rates of low-income students also tend to have a reduced property tax base, which is critical to local district funding. Districts receiving RLIS funding did have lower per pupil spending levels in 2006–07 than other districts. RLIS districts spent an average of $9,842 per pupil, compared to $11,777 for all districts nationally, and $11,965 for other rural districts.

RLIS districts had higher proportions of students eligible for free/reduced lunch and slightly higher proportions of students with Individualized Education Plans than other rural districts or all districts nationally.

Most RLIS districts are located in the South (69%), where large county-wide school districts predominate. RLIS districts were larger than non-RLIS rural districts, but smaller than other districts nationally.

Compared to other districts nationally, RLIS districts had higher percentages of African-American, American Indian/Native Alaskan, and White students and lower percentages of Hispanic and Asian/Pacific Islander students. Compared to other rural districts, RLIS districts had higher proportions of African American and Hispanic students.

The report notes, “As the RLIS is intended to help rural school districts that serve students form low-income families, the RLIS program is targeting districts as intended.”

U.S. Department of Education, Office of Planning, Evaluation and Policy Development, Policy and Program Studies Service, Evaluation of the Implementation of the Rural and Low-Income Schools (RLIS) Program: Final Report, Washington, D.C., 2010.

This report is also available on the Department’s Web site at

Read more from the July 2010 Rural Policy Matters.