Innovation Amid Financial Scarcity: The Opportunity in Rural Schools

Marguerite Roza – February 2015

Marguerite Roza of the Center for Reinventing Public Education and the Edunomics Lab challenges long-held assumptions about the cost of rural education. Most states have approached funding for rural districts in terms of problems of scale and deficit thinking; these districts won’t have the economies of scale to support programs or staffing, the thinking goes. In order to address these perceived shortfalls, many states have layered on additional funding for small and rural districts—a practice Roza believes is unnecessary.

She challenges these beliefs by examining the relationship between spending and student outcomes across rural districts. First, she looks at cost trends for rural districts compared to their peers in each of the 50 states to understand how funding for rural districts varies across the country. Next, she uses a dataset developed by the Center for American Progress to look at the return on investment (ROI) for rural education in 46 states and across remote rural areas—those furthest from urban centers. She concludes the paper with several recommendations for fostering high-ROI rural districts.

Most states spend more on rural education

Roza found that 12 states allocated a subsidy of 5 percent or more of their average per-pupil funding to small districts. Only three states provided an amount less than the average per-pupil funding to their remote-rural districts.

Return on investment in remote rural districts

Roza found that additional funding for rural districts did not appear to have a clear payoff. Further, remote rural districts had a low return on investment. However, districts with a super-high ROI—the highest outcomes relative to predicted outcomes based on spending—were most likely to be found in remote rural areas. In fact, one in five remote rural districts is a super-high-ROI outlier. This finding is in direct contrast to the commonly held belief that rural districts must receive additional support to be successful.

The opportunity for states

These findings alone do not show us how these districts came to be super-high-ROI outliers. However, states can create policies that make it possible to embrace the advantages present in isolated rural areas. Roza offers several recommendations that would allow states to foster innovation in pursuit of improved rural ROI:

  • Develop information systems
  • Document and disseminate practices from super-high-ROI districts
  • Allocate funding based on student characteristics
  • Eliminate specifications around service delivery
  • Provide innovation grants that promote redesigned delivery models to enhance ROI

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Blog Post by Andy Smarick