Research
Listen to Tony Pipa explain the unique considerations in funding rural schools.
Learn how rural districts are defined, the challenges they face, and why educating students in rural communities often comes with higher costs.
Research Consensus
Research shows that investing in school buildings, facilities, and equipment—capital investments—improves student achievement, especially if it targets basic infrastructure and high-needs school districts.
Policy Notes
- About three fourths of facilities funding for schools comes from local funds, disadvantaging lower-wealth communities that have more difficulty raising taxes.
- Many states offer matching grants for local bonds. While these make it possible for some districts to finance larger projects, they tend to be more beneficial for higher-wealth districts that have the means to approve new taxes. Some states take special measures for low-income districts, which makes it easier for lower-wealth districts to access funding.
- Twenty-four states that offer a credit enhancement program to help school districts issue bonds. This allows low-income and low-wealth districts to qualify for a higher credit rating, increasing the amount of funding they can borrow at no cost to the state. For more information about these programs, see this summary of the effects of state credit enhancement programs.
- Eleven states require supermajority votes to pass school district bonds for facilities construction and repair. Lowering vote thresholds for these measures would make it easier for districts in these states to access resources.
Cost Factors and Sparsity are Important an Identifying Effective Funding Strategies
Main takeaway
Low enrollment and geographic sparsity significantly increase the per-pupil cost of providing education in rural districts.
Baker, B., & Duncombe, W. (2004). Balancing district needs and student needs: The role of economies of scale adjustments and pupil need weights in school finance formulas. Journal of Education Finance, 29(3): 195–221.
School Size and District Sparsity are Distinct Issues, With Separate Cost Drivers
Main takeaway
States should account separately for enrollment size and geographic isolation when designing funding adjustments for rural districts.
Baker, B., & Duncombe, W. (2004). Balancing district needs and student needs: The role of economies of scale adjustments and pupil need weights in school finance formulas. Journal of Education Finance, 29(3): 195–221.
Cost Drivers in Rural Districts are Difficult To Quantify and Often Require Disparate Approaches
Main takeaway
No single formula adjustment can fully capture the diverse cost pressures faced by rural districts, underscoring the need for flexible, state-specific funding strategies.
Baker, B., & Duncombe, W. (2004). Balancing district needs and student needs: The role of economies of scale adjustments and pupil need weights in school finance formulas. Journal of Education Finance, 29(3): 195–221.
Learn more with audio snippets
Listen to Tony Pipa explain the unique considerations in funding rural schools.
Learn how rural districts are defined, the challenges they face, and why educating students in rural communities often comes with higher costs.
