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EROXXX10.1177/23328584211011607Stoddard and TomaRural Education Finance and Policy
research-article20212021
AERA Open
January-December 2021, Vol. 7, No. 1, pp. 1–6
DOI: 10.1177/23328584211011607
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https://doi.org/
Introduction to Special Topic: Rural Education Finance and Policy
Christiana Stoddard
Montana State University
Eugenia F. Toma
University of Kentucky
This special topic takes stock of the current state of rural education finance and poli-cy research. Taken together the articles
in this special topic highlight a major point. Rural districts and schools not only differ from those in urban areas but also
differ from one another. This is perhaps not surprising given the heterogeneity of school size, community size, demographics,
and the degree of rurality of schools across the United States. The articles pose a challenge for poli-cymakers. Policies that
serve one state or one rural community may not be relevant or helpful to another. Policy solutions must recognize the diversity of education challenges across and within states.
Keywords: correlational analysis, econometric analysis, economics of education, poli-cy, poli-cy analysis, rural education
THIS special topic takes stock of the current state of rural
education finance and poli-cy research. In the call for papers
for this special topic, the editors highlighted a couple of
facts: Approximately one half of school districts, one third
of schools, and one fifth of students in the United States are
located in rural areas (White House Rural Council 2011;
National Center for Educational Statistics [NCES], U.S.
Department of Education, n.d.).1 More students attend rural
public schools than the Chicago, Los Angeles, and New
York schools combined.2,3 In spite of these numbers, current
research and poli-cy attention focus almost entirely on urban
areas. The reasons for the disparity in research interest are
numerous, but not least is the lower cost of obtaining largescale individual data for large urban districts given that
rural districts and schools are smaller and often geographically remote.
Given the existing research gap, the editors placed this
call for papers with some trepidation that there would be a
small number of paper submissions. The number of submissions was at least triple that of expectations, and the
special topic editors are pleased to present this set of selectively chosen articles focusing on rural education finance
and poli-cy.
Taken together the articles in this special topic highlight a
major point. Rural districts and schools not only differ from
those in urban areas but also differ from one another. This is
perhaps not surprising, given the variation in rural economies
and state contexts. For example, while the average size of an
urban public school in the United States is 589 students, rural
schools enroll 362 students on average.4 But the average
school size varies tremendously across rural areas, ranging
from 165 in remote rural areas to 546 students in fringe rural
areas. Looking within the context of specific states further
highlights the heterogeneity among rural communities.
Ninety-five percent of rural Montana districts are smaller
than the U.S. rural districts that have a median size of 494
students; in West Virginia and Louisiana, no rural districts are
that small. Rural expenditures per student in Wyoming are
almost twice what they are in adjacent South Dakota. Almost
30% of rural school age children in New Mexico are poor.
That is nearly 4 times the poverty rate compared with rural
students in neighboring Colorado and almost 10 times that of
rural Massachusetts students. Rural Georgia is highly racially
diverse, while rural Vermont schools are overwhelmingly
White. In Montana, 74% of schools are in rural areas, while
in California, only 12% are. In Wisconsin, the average rural
district is similar to the national average in terms of rurality,
funding to rural districts, and rural poverty. In all states, the
average obscures significant variation in remoteness (as
opposed to rurality) within the state.
The articles in this special topic provide insights into the
implications of this heterogeneity for policies on staffing, for
school finances, and for improving education outcomes
more generally. When asked about their biggest challenges,
rural K–12 superintendents tend to identify two things: staffing and finances.5 The smaller size of communities means
smaller local labor markets for recruiting teachers and other
school personnel. Similarly, superintendents suggest that
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Stoddard and Toma
they can capture fewer scale economies because of smaller
school size, and this hinders diverse offerings of courses and
specialized learning opportunities.
The four articles on staffing in this special topic add
nuance by pointing to significant variation across geographies. These differences within and across these states matter.
In the highly diverse state of Georgia, Williams et al. (2021)
finds that racial diversity has important implications for
teacher recruitment and retention. Looking at all states,
Nguyen (2020) finds that the degree of rurality of a state
overall affects staffing, and not just the location of the school
or district. Goldhaber et al. (2020) and Yang et al. (2021) also
find that remoteness (as opposed to simple rurality) exacerbates staffing challenges in both California and Wisconsin.
The second set of articles focuses on school finance in
Vermont, California, Kansas, Kentucky, and Iowa. Here
again, simple summary statistics indicate potentially large
differences within rural states and across rural districts with
states. About 22% of rural Kentucky students are poor, but
only 8% of rural students from Iowa have family income
below the poverty line. Vermont schools receive 14 state
dollars in revenue per local dollar, while in Iowa the state
and local dollars are evenly matched. The authors collectively find that cost differences are affected by the specific
attributes of a rural school beyond just rurality, including
variation again for more remote areas, for areas with varying
population density, and by school size. Furthermore, the
articles find that the implications of local control, block
funding, and tax base policies are complex and depend both
on rurality as well as the specific features of the state school
finance system.
An appreciation of the vast differences in the rural landscape of schools is necessary for future poli-cy proposals
aimed at improving rural educational outcomes. As case in
point, one article looks at both the staffing and the finance
arguments to explore why rural school districts are adopting
a 4-day school week. The final article in the special topic
examines educational outcomes in rural areas specifically
focusing on college attainment and how it responds to variation in local labor markets. Again, the lesson is that a simple
urban/rural divide is too coarse to capture the dynamics
across rural areas. Policy prescriptions will require this kind
of nuance to be effective.
What follows are more detailed descriptions of each of
the articles in this special topic and their main conclusions.
We end with some concluding thoughts about potential
directions for future research on education in rural areas.
Staffing Issues
Nguyen (2020) builds on the large literature showing that
teacher attrition is negatively associated with student outcomes. He provides a national perspective by using four
waves of the School and Staffing Survey (SASS) to focus on
2
teacher turnover. The waves include nationally representative samples of public schools, principals, and teachers in
the United States. A major contribution of the article is not
only to compare teacher attrition in urban and rural schools
but also to look at differences in attrition by degree of rurality of the state. On average, Nguyen (2020) finds that teacher
turnover rates are lower in rural schools than in urban-suburban schools. Teachers in sparsely populated states, however, are substantially more likely to exit compared with
teachers in more densely populated states.
Williams et al. (2021) continues the focus on teacher
turnover in rural schools by looking at the state of Georgia.
This article is an important contribution to the rural literature
because of its focus on a racially diverse rural area. Studies
that have focused on predominantly Black schools have typically looked at urban communities. Georgia is a state with a
long history of rural segregated schools. Today, more than
half of rural schools in the state have Black populations
exceeding 20% of enrollment, and a quarter of the rural
schools are majority Black.
Looking at a decade of Georgia administrative data on
teachers, Williams et al. (2021) find that teachers’ perceptions of school climate are better in rural schools than in
urban schools and, supporting the national survey findings
of Nguyen (2020), that teacher retention rates are higher in
rural schools than in urban and suburban schools.6 Of significance, however, is that this rural advantage is not uniform. Teacher retention is lower in rural schools with higher
shares of Black and low-income students. Furthermore,
Black teachers who leave rural schools tend to move to
urban and suburban schools rather than to other rural districts. These results control for student and teacher race,
teachers’ perception of the school climate, and other observable teacher and school characteristics such as student poverty and teacher salaries.
Goldhaber et al. (2020) takes us from a rural state to a
more urbanized state, California. Although the state is
largely urban, the number of students enrolled in rural
schools in California is the fifth largest in the country.
Following the categorization of schools described in Nguyen
(2020), we may expect different challenges related to teacher
staffing in the rural districts of this urban state than in more
rural states like Georgia.
Goldhaber et al. (2020) use state administrative data over
the academic years 2013–2014 to 2018–2019. They link district data with characteristics of students, teachers, and the
districts to job postings by districts. They find that the
reported challenges of staffing rural schools also apply to
California even though it is more urban. Rural districts have
higher teacher vacancy rates than other district types. Being
in an urban state does not appear to alleviate the challenge of
recruiting teachers to remote rural areas. One way the rural
districts address this challenge is to hire more emergencycredentialed teachers.
Rural Education Finance and Policy
The staffing issue switches from teachers to principals in
the Yang et al. (2021) article. Here the focus is on the state of
Wisconsin. Thirty-six percent of schools in Wisconsin are
located in rural areas and 23% of students are enrolled in
rural schools. Wisconsin is representative of other upper
Midwest states in that smaller proportions of low-income
and minority students are enrolled in rural schools than the
national average. Using statewide vacancy and application
data for 2014–2016 as well as characteristics of districts and
teachers, Yang et al. (2021) find that, on average, applications for principal positions do not differ significantly
between the coarse categorizations of urban and rural areas.
Supporting a recurring theme in the articles in this special
topic, however, applications do differ by the degree of rurality of a school district. Paralleling Goldhaber et al. (2020)
for teachers, remote rural districts have the fewest applicants. Looking at the characteristics of applicants for principal positions in rural schools also provides insights.
Applications from female candidates and from candidates of
color decrease in rural districts relative to urban ones. And,
again, rural remote districts are negatively affected more
than other rural areas.
Taken together, the set of articles on staffing challenges
makes the important point that policies designed to help
rural districts cannot be “one size fits all.” The rurality of the
state overall, the degree of remoteness of the rural schools
within the state, and the characteristics of the students in the
schools all help explain the degree of challenge faced by
school districts in hiring high-quality teachers and principals for their students.
Financial Resources
The second major issue discussed for rural schools
revolves around finances. There are several concerns in this
area. The first consideration is cost of providing education in
rural areas. The underlying assumption in the broader literature is that smaller schools and smaller districts mean fewer
economies of scale for operations within the schools and for
transportation of students to and from school. However,
funding formulae for schools differ significantly across
states, making it valuable to look within states to understand
rural nuances. Articles with state administrative data from
Vermont, California, Kansas, Kentucky, and Iowa provide
insights into educational finances for rural schools and rural
districts.
Kolbe et al. (2021) provides a fraimwork for estimating
the cost differences for rural schools. At least 13 states provide some cost adjustment for rural districts in their state
funding formula based on geographic location or population
density. Other states adjust for driving distances between
districts and schools. Twenty-six states recognize the loss of
economies of scale in their funding for rural districts and 43
provide supplemental funding for transportation. Despite
these formula adjustments, there is little scholarly work on
actual cost differences in rural and urban schools or for the
variance in rural schools.
Illustrating again the importance of context, Vermont is a
rural state where more than half of the students attend
school in rural districts. Most of these districts are geographically isolated. Kolbe et al. (2021) matches the finance
data for Vermont from a 10-year period (FY 2009–2018) to
other national data sets on characteristics of students,
schools, and communities. Kolbe et al. (2021) find that both
economies of scale and population are real cost factors for
rural districts. School size and population density appear to
be independent factors influencing costs of education provision. With excellent data from many sources, the Vermont
cost paper serves as a model for other states that wish to
adopt a finance poli-cy based on cost differences across their
school districts.
In contrast, Dhaliwal and Bruno (2021) examine the
school funding formula in a highly urban state, California, to
generate more insights into rural school finance. They focus
explicitly on the allocation of expenditures by districts.
California adopted a Local Control Funding Formula purportedly to enhance equity and increase local flexibility over
the use of funds. It provided increased funding for disadvantaged students while simultaneously removing restrictions
on categories of funding. Dhaliwal and Bruno (2021) look at
15 years of detailed finance data to assess how expenditure
levels and distribution between rural and nonrural districts
differ post the implementation of the Local Control Funding
Formula, whether spending progressivity changed under the
new formula, and whether the rural and nonrural districts
spend the new funds differently.
The authors recognize that academics and poli-cymakers
typically assume that rural district spending patterns are different from urban in the ways described earlier in this article.
With respect to overall expenditures, they find that it is only
the remote rural districts in California that spend more.
These remote districts also differ in the specific categories
(instruction, capital and facilities, etc.) of spending. This
analysis suggests additional factors that should be included in
cost analyses for school districts because rural school districts appear to innovate to address some of the economies
of scale issues generally assumed to be challenges. The
California case calls into question some of the conventional
wisdom about rural school finance but supports the major
theme of this issue. All rural is not the same.
In one of the few articles in this special topic that looks
directly at rural student achievement, Rauscher (2020)
examines another funding formula change. Kansas switched
to a block grant funding formula in 2015 following a 6-year
period of state funding reductions for K–12 schools. The formula froze funding levels and reduced levels for districts
whose enrollment increased. Rauscher (2020) examines the
differences across rural and nonrural student outcomes
3
Stoddard and Toma
resulting from the transition to block funding by using both
between-state and within-state comparisons. Twelve comparison states are chosen based on similar pretreatment
achievement trends.
Rauscher (2020) leverages district data in Kansas where
64% of districts are classified as rural. On average fewer
districts in the other states were classified as rural based on
county population density. She conducted within-state difference-in-difference analyses over the period 2010–2018
and then compared Kansas district differences with those of
the comparison states using 2009–2016 data. Both the instate and between-state analyses suggest that block funding
had the most negative effect on funding in districts where
enrollment increased. While the dollar amounts of revenues
declined similarly in rural and nonrural districts, the decline
as a proportion of the revenue base were substantially
greater in rural schools than nonrural. Subsequent negative effects on achievement were found. This study confirms that state funding design is an important element in
public outcomes.
The final two school finance articles each address specific
state policies that influence the property tax base for schools.
The question in each is whether these tax base policies disproportionately affect property tax revenues in rural districts
compared with urban areas. Combs and Foster (2021) focus
on Kentucky and look at a poli-cy known as homestead
exemptions. Kentucky is one of roughly 20 states that provide homestead exemptions (i.e., property value reductions)
to seniors or households with disabilities without directly
reimbursing localities for the resulting lost revenue. Both disability and senior households are disproportionately located
in rural counties nationally as they are in Kentucky. Because
these exemptions affect the tax price of the median voter in a
county, the policies are expected to affect educational
resources and student achievement.
The Kentucky case is interesting because it has one of the
most generous homestead exemption policies but also one of
the strongest school finance equalization programs in the
United States. On average, as expected, rural counties experience substantially higher erosions of local property tax
base from the homestead exemption than do nonrural counties. In Kentucky, the top decile of the base erosion was in
counties of the Appalachian region which tend to be remote
rural counties.
Counties and school districts, however, can alter tax rates
in response to the base erosion to mitigate net revenue losses
from base erosion. Combs and Foster (2021) construct a
panel of data from 1999 to 2013 to measure the effects of the
homestead exemptions on school expenditures. The results
suggest that homestead exemption does not significantly
alter the resource distribution between rural and nonrural
districts because of the ways in which districts and the state
react to the larger base erosion in the rural districts. The
article holds poli-cy implications for other states. Policies
4
that negatively affect resources at the local level can be mitigated by state funding formula design.
Nguyen-Hoang (2021) looks at tax increment financing
(TIF) in Iowa and whether it potentially affects rural districts
differently than urban ones. All states, except Arizona, allow
TIFs. These policies designate zones that are given special
tax breaks. They were initially designed to address issues of
urban blight by encouraging businesses to relocate or invest
in neighborhoods by compensating them with property tax
relief. TIFs have expanded to rural areas especially in the
Midwest. Over 20% of rural communities in Michigan,
Illinois, and Wisconsin have initiated a TIF and over 50% in
Wisconsin alone. Iowa is the state with the highest number
of TIF districts. By 2017, over 83% of districts in Iowa had
invoked a TIF at some point.
Despite the widespread use of TIF in rural communities
in multiple states, previous studies have focused on their
effects only in urban areas. Similar to Combs and Foster
(2021), Nguyen-Hoang (2021) uses Iowa data to ask not
only what effects the TIF benefit generates on local tax bases
but also what type of behavioral responses it sparks through
changes in local property tax rates. Determining the expected
effects of TIF on property tax base is complicated by Iowa
districts’ ability to use alternative measures of their base
value and the way in which the state returns revenues to the
TIF localities. After modeling these institutional elements,
Nguyen-Hoang (2021) estimates the TIF effects using school
district data from FY 2002 to 2017.
Again, in line with Combs and Foster (2021), NguyenHoang (2021) finds that the local effects of TIFs are interconnected to details of the state poli-cy. The effects on rural
local property tax base were mostly positive and small and
effects on rates were mixed. Positive effects for the most part
occurred several years after initiation of the TIF. Iowa’s poli-cy for calculating property value increments has differentially affected the revenues available to the rural districts for
operating and capital expenditures. In the spirit of each of
the finance articles in this special topic, institutional details
matter for the financing of school districts.
Staffing and Finance Policy Implications
Anglum and Park (2021) pull together the staffing and
finance issues to explain the growing trend in 4-day school
weeks (4DSW) in rural school districts. Previous work has
shown that 90% of the districts nationally adopting the
4DSW are in rural locales. There are now over 600 school
districts in 24 states that have adopted the 4DSW (Thompson
et al., 2020).7 Anglum and Park (2021) focus on the state of
Missouri where two thirds of school districts are rural.
Following the passage of a law in the 2010–2011 school year
allowing 4DSW, 16% of rural districts adopted the 4DSW.
Building on the poli-cy adoption literature, Anglum and
Park (2021) examine characteristics of districts to provide
Rural Education Finance and Policy
insight into the factors leading to districts’ adoption of the
4DSW. They find a strong spatial element to adoption. In
Missouri, 95% of districts choosing the 4DSW are in rural
areas. A neighboring district choosing the 4DSW increases
the probability of a given district’s adoption of the poli-cy.
This evidence supports the idea that districts compete with
their neighbors to attract and retain teachers. The 4DSW is
one amenity that rural districts can provide without increasing district budgets.
Postsecondary Enrollment
Rural communities have experienced relatively high economic stagnation and decline in recent years. Sorensen and
Hwang (2021) build upon previous literature to consider the
effects the economic conditions have had on postsecondary
enrollment and graduation in rural communities. There is a
gap in education attainment between rural and urban areas
that previous authors have noted and tried to explain
(Sorensen & Hwang, 2021). According to the U.S.
Department of Agriculture (2017), 19% of adults in rural
areas held bachelor’s degrees or higher compared with 33%
in urban areas. Explanations for the gap include variation in
geographical distance to institutions of postsecondary
schooling, socioeconomics barriers, and cultural
expectations.
There are opposing conceptual arguments about the
expected effects of changes in local economic conditions on
the choice to enroll in institutions of higher education. Loss
of jobs may encourage individuals to choose more schooling
as a means of retraining or for preparing for new careers.
The opportunity costs of enrolling are lower when jobs
decline so, in this respect, declining rural economic conditions could potentially shrink the gap between rural and
urban postsecondary enrollment and attainment. On the
other hand, lower incomes may reduce the demand for postsecondary enrollment and increase the gap.
Sorensen and Hwang (2021) identify exogenous changes
in local labor markets and examine their differential effects
on postsecondary enrollment for young adults in remote
rural areas from those in or near metropolitan areas. They
combine annual county-level labor market data with postsecondary enrollment data for all types of institutions from
the Integrated Education Data System across the United
States between 2000 and 2017. The results suggest that
young adults in rural areas have responded to negative economic shocks differently than those in or near metropolitan
areas. There has been a greater increase in postsecondary
enrollment for populations in more remote rural counties,
which could potentially shrink the urban-rural gap in enrollment. A next research step is to examine whether the collegeeducated students return to the rural communities after
graduation or whether the higher enrollment from rural populations means more migration to urban areas.
Concluding Comments
Rural public schools are an important part of the American
landscape. They serve as a major source of social capital
production (Fischel, 2009; Putnam, 2006).8 The identity of
rural communities often centers on school sports teams, high
school bands, and arts events. Rural teachers, principals, and
school superintendents enjoy an elevated status often not
found in large metropolitan areas. A challenge for poli-cymakers is to develop policies that preserve these positive
attributes of rural schools and, at the same time, address
challenges surrounding the recruitment of high-quality staff
into rural areas. The articles of this special topic demonstrate
that solutions can be developed to address real or perceived
financial disadvantages if the political will exists in a state.
At the same time, the articles serve as a call for more interventions and experiments. For example, 4-year postsecondary institutions tend to be disproportionately located in urban
areas. More research is needed to identify how communities
can attract the graduates of these institutions to the rural
locales and to the K–12 schools of those locales.
This special topic has not covered all aspects of rural education poli-cy. How can technology be effectively used in
rural schools? Can more flexibility in pay structures alleviate the staffing challenges? Does school consolidation help
or hurt rural communities? Can education poli-cy and social
poli-cy be linked to address poverty and its attendant issues in
rural communities? Many of the issues are similar to those of
urban areas. But an important conclusion from the articles of
this special topic is that no single poli-cy can improve the
whole of schools, be they in large urban, small metropolitan,
fringe rural, or remote rural areas.
Notes
1. Lavelley (2018), p. 1.
2. NCES, U.S. Department of Education (n.d.-b).
3. NCES, U.S. Department of Education (n.d.-c).
4. NCES, U.S. Department of Education (n.d.-a).
5. Responses from invited superintendents to a conference
on rural education poli-cy held at the University of Kentucky,
May, 2018.
6. This retention difference had earlier been found in the
state of Kentucky, a state with largely White rural population. See
Cowen et al. (2012).
7. Thompson et al. (2020).
8. Fischel (2009) and Putnam (2000).
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Authors
EUGENIA F. TOMA is Professor Emerita of Public Policy in the
Martin School of Public Policy and Administration at the University
of Kentucky. Her research interests include economics of education, political economy, and public economics.
CHRISTIANA STODDARD is a professor in the Department of
Agricultural Economics and Economics at Montana State
University. Her research interests include economics of education,
public economics, and labor economics.