RSFN Special Series:
Financing Rural Schools: Characteristics of Strong Rural School Finance Systems

Last Updated: August 26, 2010

This article appeared in the August 2010 Rural Policy Matters.

In this series, Rural School Funding News is reviewing general principles of school finance and sharing information about school funding systems that support rural schools and their unique characteristics and needs. While there are no easy answers to questions about how to fund schools, especially in this economic climate, we hope that these articles will provide you promising practices, ideas for advocacy, and guidelines that are easily transferable in your analysis and work on your own school finance systems.

If you are new to the series, you can review a brief introduction to the subject and discussion of Characteristic 1: A Strong Foundation Formula, here; Characteristic 2: Effective Use of the Judicial System, here; and Characteristic 3: Fair Accounting for Cost of Living and Geographic Differences, here.

Editor's note: Links are free and current at time of posting, but may require registration or expire over time.

Characteristic Four: Recognition of the Benefits of Small Schools

An important principle of rural school funding is that size matters. Schools should be small enough so that every child is known, and known well, by teachers, administrators, and other adults in the school. Small enough so that every child’s participation and contribution is needed and wanted. Small enough so that important decisions about the school and its policies can be discussed by faculty, community members, and parents and implemented by mutual consent.

Research confirms that small schools have higher graduation rates, higher rates of parental involvement, fewer disciplinary and safety problems, much higher levels of student participation, and better school climate. Smaller schools are also associated with significantly higher student achievement levels, especially for low-income students. And, research on school construction demonstrates that small schools cost no more to build, per student, than larger schools. (You can check out research references on school size in the Consolidation Fight-Back Toolkit on the Rural Trust website.)

School finance policy can either embrace or reject the value of small schools through specific provisions in the funding formulas.

Funding systems in about half of the states include size provisions that acknowledge the higher costs per pupil that often occur in small schools or small districts. These provisions may provide additional funding in the form of per-pupil weights, grants, protections for districts with declining enrollment, or other hold harmless measures. For example, Oregon and Vermont provide supplemental grants for rural districts. Texas and Kansas use fixed student weights (extra per pupil funding) for schools below a certain enrollment. And, Colorado has a variable cost factor that recognizes the different expenses of small schools.

Additional research is needed to determine the real effect of these funding mechanisms and whether they are a meaningful benefit for small and rural schools.

Often the legislative history of these factors reveals that they are merely political cover, creating the appearance of providing more support for rural schools than is needed or equitable. For example, in some states size factors in the funding formula are not rationally related to costs or to specific rural realities, like the need to raise teacher salaries to levels of urban and suburban teachers.

In some states the language used to describe small school factors carries negative connotations or the factors might apply only to certain schools. For example, you might hear the term “necessarily small” to describe schools in very sparsely populated areas, the implication being that small schools should only exist when distance requires it. You might also hear small school weights described as “subsidies,” suggesting that small schools are receiving unwarranted support, possibly at the expense of other schools.

Many states, including states with small school factors of various kinds, also promote school or district consolidation through their funding formulas. Many states offer financial incentives of various sorts for schools or districts that voluntarily consolidate. Some states cut portions of their funding for schools or districts below specific enrollment thresholds to make it difficult for small schools and districts to survive.

States that promote consolidation often use language like “economies of scale” or “optimal school size.” It is important for rural education advocates to understand that there is no optimal size for schools or districts. Optimal size depends on a variety of site-specific conditions. Good schools come in all sizes.

Likewise, economies of scale are often figments of idealized scenarios intended to promote consolidation, and usually they don’t account for diseconomies of scale or new expenses, like increased transportation costs and higher dropout rates, associated with actual rural consolidation. Research demonstrates that projected savings from rural consolidation rarely materialize. Further, while annual per pupil operating costs of larger schools may appear lower, a closer examination of all costs usually reveals a different picture. For example, analyzing costs per graduate typically reveals that small schools and districts are highly efficient and successful.

Importantly, some states now adjust costs for schools of all sizes, on the theory that costs change continuously across the entire spectrum of school size. Large schools have additional costs, too — costs related to effective communication, student behavior management, dropout prevention, and personnel management.

A close examination of language in your state’s school finance system can indicate the direction your state policy leans on the consolidation issue. Policy language may imply that small schools should be eliminated or tolerated only in certain circumstances. Or, language may communicate that small schools are important learning environments that the state needs in order for its educational system to thrive.

As in all successful advocacy campaigns, maintaining a clear message and managing the discussion is a major task when working to achieve size factors that adequately support rural schools. In school finance litigation, courts demand a rational basis for funding systems, so it is important to understand the issues affecting different kinds of rural schools in your state. The Rural Trust is also working to find clearly defensible standards for funding rural schools in the variety of circumstances in which they exist.

“Smallness” is an educational asset to schools — not an expensive luxury, not a necessary evil — but an essential part of a quality education system.

Read more from the August 2010 Rural Policy Matters.