Valuable, Flexible, and Cost-Effective: Making the Most of Small Scale

Last Updated: February 26, 2014

This article appeared in the February 2014 Rural Policy Matters.

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Don’t miss “It’s Complicated… Why What’s Rural Matters,” and “Going Two Ways at Once: Distance as a Defining Rural Characteristic,” installments 1 and 2 in this series.

It seems obvious that the characteristic most defining of rural is low population density. After all, rural places, unlike urban places, just don’t have a lot of people. But, it is this very characteristic that is often the most confounding to policymakers.

The issue is that low population density translates into smallness: institutions and organizations in rural places are, of necessity, smaller than their counterparts in more densely populated places. Policy made in a one-size-fits-all fashion — which is most policy — is typically intended for a large, metropolitan areas and doesn’t fit well anywhere else, in part because it generally assumes a scale and reach only appropriate in densely populated places.

As a result, policy created for large places can create a lot of bloat and unnecessary superstructure (translate that as expense) in small places. Or, conversely--and more frequently, it fails to adjust for the different circumstances of small places and constricts opportunity be providing too little support. Just as importantly, policy created for densely populated areas cannot respond to and develop well the resources and opportunities that exist in less populated places. Rather than recognizing the policy as flawed, policymakers often view small places and their institutions as the problem. (We’ll let our readers draw out the fashion analogy here.)

Throw in doses of American bigger-is-better dogma and urban-is-superior cultural bias and you get some predictable outcomes. The first is that small organizations and service provision in rural places are considered “too expensive,” so funding is reduced or eliminated. Then, as underfunded rural organizations struggle, the policy response is usually to let the organizations die or to trigger their closure with some kind of policy mechanism.

This basic trajectory — present in both public and private policy — is a primary reason that the number of schools, post offices, mainline churches, clinics and hospitals, libraries, emergency assistance providers, and other organizations has dwindled in rural places. As a result, many rural communities have been gutted of infrastructure and opportunity, accelerating population loss and depriving the nation of an important source of its economic, cultural, and innovation wherewithall.

So what should policymakers know about smallness and how should the realities of smallness be met in policy? The answers lie first in realistic assessments of the opportunities presented by small scale and the costs that small scale entails.

Smallness: costs, benefits, and opportunities

Rural places and institutions face two significant issues when it comes to figuring costs. One is per unit cost. At its simplest this means that per unit costs — measure units as production, operation, delivery — are usually higher at smaller scale. A one-off designer dress shirt costs a lot more to produce than the same shirt replicated a thousand times. Deliver the thousand shirts to five-hundred locations and the delivery costs are much higher than delivering all the shirts to one place.

There is no question that low population density incurs some costs associated with small scale. As illustration, a pre-school home visitation nurse in a rural county may see three families in a day, while her urban counterpart might see seven. The rural nurse has a higher per-family cost. The rural nurse will also have higher travel costs. (See “Going Two Ways at Once” for more exploration of the costs of distance in rural setings.) The nurse's valuable services, proven as good investments for the future, will simply cost more in a rural setting.

Policymakers have dealt with these rural and small-scale costs in different ways. Historically, lawmakers designated some functions of government and some private services as so essential that making them available throughout the entire country has been prioritized, not so much as a matter of fairness, but as a matter of national interest. It cost more to bring electricity, telephone access, and postal services to rural areas, and investments to make these essential services available in rural places have paid off with big national gains in innovation, productivity, opportunity, and economic development.

Often, however, policymakers have taken a different tack, requiring rural places to operate as if they were urban places, with similar per unit budgets and the same standards of delivery. The problems with this approach for rural places are twofold. First, as we have seen, some things simply cost more in rural places. As a result, rural organizations often cannot do all that is expected or they must shift funding from other budgets, creating problems elsewhere. Secondly, requiring small rural organizations to use urban standards of delivery can create serious inefficiencies, compromise rural assets, and miss rural opportunities.

The treat-rural-as-minature-urban approach to small communities and their small organizations threatens many of America's greatest economic, physical, environmental, and cultural resources. And, it threatens the sources of innovation and development that are rooted in those rural resources and the relationships rural people have with each other and with their places.

Rural considerations in policymaking

Policy that is sound for rural small places will provide basic operating equity, open opportunity for communities and their residents, and develop and use the assets of small size and rural location. By focusing on place and on strengthening community, policy can expand the contributions and achievements of rural places in ways that translate within and beyond those rural places. We explore some concepts for thinking about small size in policy. 

Economies and diseconomies of scale The theory of economies of scale asserts that savings occur in larger operations. It explains why producing a thousand shirts is less expensive per unit that producing one shirt. But simplistic approaches to economies of scale make sense for some kinds of production and not for others. For example, an Intensive Care Unit needs more staff per patient than an outpatient unit.

The notion of economies-of-scale is powerful in the American mindset. It is the argument that has most driven the consolidation of schools and school districts, even though research has consistently demonstrated that promised savings almost never materialize.

One reason savings don't always happen with increased scale is that larger size can also incur diseconomies of scale. These diseconomies often come about in the forms of increased need for management and administration, higher transportation costs, and loss of productivity.

We can see the economies-diseconomies of scale continuum in rural education. Smaller schools often have higher per-pupil instructional costs than larger schools. But closing the small school and sending the rural kids to town won't likely save money. Instead it will shift funding from instruction to transportation. In other words, it turns an investment in something productive (instruction) into a cost for something non-productive (longer bus rides). Likewise, smaller rural schools may have higher per-pupil costs, but research has demonstrated they also have lower per-graduate costs. In these cases, economies favor smaller scale.

Policymakers must examine economy-of-scale arguments in rural settings in light of diseconomies of scale that will occur in that setting by answering questions like: how will this policy shift funding from one area to another; and will this policy turn a productive investment into a non-productive cost?

Specialists and Generalists Smaller settings mean fewer people, which, in turn, means that many individuals will be called upon to perform a variety of functions. For example, medical, education, and legal professionals in rural and small town settings must usually be competent on multiple fronts. Working in a more generalist way requires a mindset that can make it easier to see connections between things that might not be obvious. A group of teachers with broad subject concentrations might find it easier to integrate content across the curriculum, and a physician might be more likely to catch a connection between one symptom and another illness.

However, there are limits to how much skill and information a small group of people can master, so specialists are sometimes needed. Small communities, especially those that are also ddistant, need mechanisms that provide access to specialists on as-needed bases.

Policymakers must recognize the reality that smaller places will rely more heavily on generalists than urban areas will by providing training and support for generalist practitioners and by providing mechanisms for extending specialist knowledge and skill to rural places when it is needed.

Depth and Breadth; it's personal Depth and breadth of opportunity and relationship often look very different in small rural and large matropolitan settings. Here again we can illustrate the issues in school settings.

One argument for larger schools (once the economy-of-scale lead has been debunked, at least when it comes to rural consolidation) is that they can provide a broader range of curricular and co-curricular opportunities. Further, it is argued that students can get deeper exposure in subjects that interest them. In other words, students can take marine biology and astronomy and physics II. In an apples-to-oranges comparison, these arguments are often true.

Small schools offer a different kind of breadth. Their students are more likely to participate in a greater variety of activities and curriculum. Sports and arts, vocational and college prep classes. Moreover, a broader range of students take part in activities. Instead of 20% of students who are natural athletes playing sports, a small school might need 80% of its students to fill their teams. Small size creates opportunities for students who would not have it in a larger setting.

Small schools also provide a different kind of depth. They may lack the staffing to offer Physics II, but their smaller size makes it possible to personalize student opportunity and learning in ways difficult to achieve in large schools. It's apples to oranges.

Comparing what's available within the walls of a small school in a rural community and a large school in a asuburb is also apples and oranges. It is more appropriate to compare what is available in small and consolidated rural schools. And, here the differences are not so wide in terms of offerings. Consolidated rural schools rarely offer significantly more than was available in the small schools that were closed. Further, those former small school students may find their opportunities limited by longer bus rides and more competition for available slots. (“Going Two Ways at Once” addresses these considerations.)

Further, the days of comparing schools on the basis of what is available within their walls are waning. The advantage may go to smaller, more personal schools. That's because technology offers means to bring breadth of curriculum while preserving the personal advantages of small settings.

Smaller schools and communities also offer a different kind of breadth and depth in relationship. One recent rural school graduate who is now a student at a Division I university in an urban state put it this way: "The kids from [the state's largest metropolitan region] did go to high school with kids from more ethnic backgrounds than I did, and the other parents practiced a wider variety of professions. But everyone they know is upper middle class and pretty much like them. They've never spent the night in a friend's mobile home or given their lunch to someone whose mom was just arrested. They don't know anyone who died becuase the family didn't have health insurance. I think when it comes down to it I know and appreciate more kinds of people because my school coudn't separate us. Everybody mattered. And we got to know each other as friends, not as types."

It is this personal nature of smaller settings that is their biggest advantage. People are known, individuals matter, everyone is needed, opportunities are spread around. These experiences are protective for young people, part of why small schools graduate larger proportions of their students, and one reason rural communities usually fight hard to keep schools in place.

Policymakers must recognize that small and large, rural and metropolitan are different, neither better nor worse than each other. Policies should enable institutions in all settings to make best use of their inherent strengths. 

Policy solutions and alternatives

Rural communities are located at a distance from large population centers and are by definition small. Smallness has benefits and costs, both of which vary greatly by context. Public policy can capitalize on rural resources and opportunities afforded by small size if it recognizes and accommodates difference.

Flexibility Public infrastructure and core services should be funded in rural areas in ways that cover true costs and provide equitable access. Funding mechanisms should accommodate the reality that rural places have fewer means through which to generate revenue and that yields are lower. Some of these restrictions are a matter of public policy that local communities cannot address.

Policy should also recognize that small organizations in rural places generally lack the capacity to compete for public and private grants and that competitive grants advantage places with the most resources and opportunities. Alternative ways of seeding innovation and meeting basic needs must be developed for rural communities, especially those that have high levels of poverty or are in isolated locations.

Flexibility Small and rural organizations need flexibility in use of operating funds, staffing, allocation and development of resources, and opportunities to collaborate and share services between organizations with different missions. Smaller organizations are generally lean and can operate nimbly if given flexibility to do so.

Technology investment and broadband access Rural schools and communities have been innovators in technology, especially when it comes to expanding curriculum and sharing staff between schools and districts. Opportunities to continue to innovate, however, will need new streams of support and access, starting with reliable high speed internet for rural schools and communities. High quality technological infrastructure can provide rural and small places with access to speciaists and specialized content in a variety of fields in a cost-effective manner.

Shared services Ensuring cost-effective and productive programs — of all kinds — in rural areas can often best be achieved through collaboration. This means breaking down institutional barriers, enabling flexibility among budgets, and developing appropriate accounting and personnel management policies that enable a variety of institutions and organizations to join forces to make rural communities and their institutions strong, healthy, and unique to their own place. New investments in facilities, infrastructure, training, and staff should explore ways to maximize benefits across the community.

Tap the potential of rural schools The potential of rural schools has been severely compromised by public policies that have forced them to operate like big suburban schools. This includes things like unnecessarily specialized teaching certificates, minimum enrollment requirements, facility restrictions, discrete and rigid curriculum requirements, forced consolidations that achieve few if any equity outcomes, and inadequate funding. In most states rural schools receive less funding for operations and facilities than schools in suburuban and urban areas; nationally, rural teachers and administrators early significantly less than their counterparts elsewhere. Policymakers can mitigate these historical problems with thoughtful policy that addresses the following:

  • Funding sufficient to need, including funding for salaries, facilities, and technology;
  • Pre-service and in-service teacher education and supports geared to the realities of small rural schools, including multiple or generalist certifications, place-based teaching/learning, opportuities to network with other rural teachrs, and grow-your-own teacher training models;
  • Technology and technology training;
  • Flexibility in meeting curriculum requirements, including multi-disciplinary courses, multi-age classrooms, shared services/teachers, and support for technology;
  • Flexibility in use of facilities, including buses, cafeterias, and school grounds to enable greater collaboration across agencies and organizations and to strengthen community economic and social infrastructure and opportunity;
  • An end to forced consolidation of schools and districts except where consolidation can be proven to achieve an equity outcome for students and communities that cannot be met otherwise.


Read more from the February 2014 Rural Policy Matters.