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This Digest reviews contemporary research on resource allocation issues in rural and
small schools, paying particular attention to (1) factors affecting resource allocation
decisions; (2) making cost-effective resource allocation decisions; (3) whole-school
reform as a potential guide for resource allocation; and (4) resource strategies for rural schools that are both small and poor.

Rural districts across the country have invested heavily to meet higher achievement
standards set by states and goals established by the "No Child Left Behind Act" (NCLB) (American Association of School Administrators [AASA] and the National Association of State Boards of Education [NASBE], 2003). The testing, accountability, and teacher quality provisions of the legislation are particularly challenging for rural school systems, which tend to be smaller, geographically isolated, and alternatively staffed (Reeves, 2003). These same districts now face the challenge of meeting recent mandates with fewer resources. Small rural school systems seem particularly vulnerable to programmatic cuts as states and localities respond to an environment of reduced revenues and budget deficits.

FACTORS AFFECTING RESOURCE ALLOCATION DECISIONS IN RURAL AND SMALL SCHOOLS

Miles and Darling-Hammond (1998) identified structural constraints that can complicate the resource allocation process, including (1) fragmented school schedules, (2) inflexible job definitions for teachers, and (3) specialized programs that may be peripheral to the academic mission. Rural and small schools must be particularly attentive to these constraints as they often confront a series of resource allocation challenges not fully shared by their larger urban and suburban counterparts (Brent, Roellke, & Monk, 1997).

Local education agencies, for example, are required to follow federal and state
guidelines for curriculum offerings, graduation requirements, provision of special
education services, teacher certification, and so on. With restricted resource bases and limited numbers of staff members, meeting these guidelines can be difficult. Since teachers represent the single greatest fiscal investment made in education, staffing
considerations are among the most important resource allocation decisions for
educators. Rural and small schools, for example, may rely heavily on teachers who
possess multiple subject-area and grade-level certifications. Alternatively, these school systems may need to justify out-of-certification area assignments for selected staff members. Due to their comparatively small size, rural school systems may also operate an academic schedule with a number of singleton offerings or require the sharing of staff members across buildings.

It is important to consider this staffing complexity in light of the new teacher quality
provisions of NCLB. The legislation requires that all teachers in core academic subjects be "highly qualified" by the 2005-2006 school year. The teacher recruitment and retention difficulties in rural schools are well known and may be exacerbated by these new federal policies (Reeves, 2003). Low-income rural schools face the challenge of recruiting teachers to geographically isolated areas in a highly competitive labor market for educators, particularly in hard-to-staff subject areas such as mathematics, science, foreign language, and special education (Reeves, 2003).

Despite these resource constraints, many researchers point to the benefits of
small-scale schooling, including improved efficiency in service delivery, feasibility of
democratic practices, and collective accountability for student performance (Meier,
1995, Public Education Association, 1992). Researchers have also commended rural and small schools for their creative use of resources, such as providing longer and more varied blocks of instructional time and designing flexible teacher schedules and work definitions (Miles & Darling-Hammond, 1998). Others have demonstrated the potential cost-effectiveness of smaller schools in both rural and urban areas, including lower costs per graduate (Bingler et al., 2002; Stiefel, Iatarola, Fruchter, & Berne, 1998). Additional research is needed to better identify the economies and diseconomies associated with the size and scope of schooling operations.

MAKING COST-EFFECTIVE RESOURCE ALLOCATION DECISIONS

The educational policy terrain continues to be flooded with options like class size
reduction, alternative scheduling, summer enrichment, early intervention programs, and a wide array of whole-school reform models (Roellke & Rice, 2002). Successful implementation of these initiatives is highly dependent on a variety of contextual factors, including student demographics, fiscal capacity, school size, spending level, and district/school governance (Brent et al., 1997). This is certainly the case in all schools, but it is especially challenging for rural and small school educators, who often operate under considerable fiscal constraints (Reeves, 2003). Further, researchers offer little definitive evidence on the costs and benefits of alternative investment options, information that would be very helpful to local leaders facing a multitude of policy and program alternatives and a limited stock of resources.

A series of meta-analyses and literature reviews by Hanushek (1981, 1986, 1996,
1997), for example, have shown a high level of inconsistency and lack of significance in findings across studies that estimate the impact of various types of educational
investments, including class size reduction, teacher salaries, and special education. On the other hand, researchers who have reanalyzed Hanushek's data, challenging both his assumptions and his basic "vote counting" methodology, have reported more
positive and consistent interpretations of the same set of studies (Hedges, Laine, &
Greenwald, 1994; Krueger, 2002). In light of these research discrepancies and in the absence of definitive cost-effectiveness studies, rural educators may find valuable
resource allocation guidance in the form of whole-school reform models.

WHOLE-SCHOOL REFORM AS A POTENTIAL GUIDE FOR RESOURCE ALLOCATION

Comprehensive and whole-school reform models have received considerable attention in education reform circles as promising alternatives for improving student performance.

This approach to reform is attractive in that each model prescribes a configuration of
resources intended to have a positive effect on the entire educational experience of
students during their elementary and/or secondary school years (Rice, 2001). The
challenge for rural educators is to assess the resource intensity of competing models
and to determine the local capacity for adoption of such models.

Research that examines both the implementation process and achievement effects of
these comprehensive reform strategies also has yielded mixed results.(1) Methodological challenges, including contextual differences across model sites and the lack of randomized experiments, make it difficult to draw useful conclusions. It is clear, however, that successful adoption of whole-school reform for rural schools requires a careful, inclusive model selection process and ongoing support and guidance from model developers (Erlichson & Goertz, 2002; Hertling, 1999). In addition, comprehensive reforms need longitudinal study with a specific focus on
cost-effectiveness (Bifulco, 2002; Levin & McEwan, 2001).

RESOURCE STRATEGIES FOR SMALL, RURAL, LOW-INCOME SCHOOLS

In our current environment of fiscal austerity, it is quite possible that rural educators will need to rely more heavily on alternative revenue streams to support programmatic initiatives and other reform efforts. Although it is possible to increase operating funds through challenges to state funding formulas, this type of change is difficult to leverage, particularly in the short term (Roellke, Green, & Zielewski, in press). More immediate benefits can be achieved through reconfiguration of existing resources, a strategy employed by many of the whole-school reform models discussed above (Picus, 2000; Rice, 2001). Researchers have described strategies, for example, for shared use of facilities, partnering with other community agencies, and creative financing of capital
costs (Bingler et al., 2002).

School leaders and policymakers sometimes also take advantage of a broader resource base than traditional federal, state, and local tax revenue streams (Haas, 2000). Examples include fiscal and personnel support derived from nontraditional sources, including private foundations, volunteer networks, and other human service agencies.

The Rural Education Achievement Program (REAP) is a federal grant program
specifically targeted to assist rural and small schools in their efforts to meet
requirements of NCLB. It is also possible for small and low-income schools to
consolidate funds from a variety of federal programs, including Teacher Quality grants, Safe and Drug-Free Schools grants, and Local Technology grants (Reeves, 2003).

These and other nontraditional resources can provide for a variety of school services, including parental involvement activities, tutoring, vocational counseling, technological enhancements, literacy programs and teacher recruitment and professional
development (AASA & NASBE, 2003; Schwartz, Bel Hadj Amor, & Fruchter, 2002).

CONCLUSIONS

Educators are under increasing pressure from policymakers and the public to
demonstrate that educational resources are used in appropriate ways. This demand,
coupled with an environment of increased standards and shrinking budgets, is a major challenge for rural, small, and low-income schools. Policymakers and school leaders may find guidance and support for meeting this challenge through (1) creative
reallocation of existing resources; (2) consideration of successful whole-school reform models; and (3) non-traditional revenues and new funding streams that are targeted explicitly for rural, small, and low-income schools.

(1) For a review of the evidence of comprehensive school reform models on student
achievement, see American Institutes for Research (1999) and Borman, Hewes,
Overman, & Brown (2001).

REFERENCES

American Association of School Administrators (AASA) and the National Association of State Boards of Education (NASBE). (2003). No Child Left Behind: A guide for small and rural school districts. Arlington, VA: Author.

American Institutes for Research. (1999). An educator's guide to schoolwide reform. Arlington, VA: Education Research Service. (ERIC Document Reproduction Service No. ED 460 429)

Bifulco, R. (2002). Can whole-school reform improve the productivity of urban schools? The evidence on three models. In C. Roellke & J. K. Rice (Eds.), Fiscal policy in urban education: A volume in research in education fiscal policy and practice (pp. 11-35). Greenwich, CT: Information Age Publishing. (ERIC Document Reproduction Service No. ED 471 163)

Bingler, S., Diamond, B. M., Hill, B., Hoffman, J. L., Howley, C. B., Lawrence, B. K., et al. (2002). Dollars & sense: The cost effectiveness of small schools. Washington, DC: Rural School and Community Trust. (ERIC Document Reproduction Service No. ED 473 168)

Borman, G., Hewes, G., Overman, L., & Brown, S. (2001). Comprehensive school
reform and student achievement: A meta-analysis. Baltimore, MD: Center for Research on the Education of Students Placed at Risk.

Brent, B. O., Roellke, C. F., & Monk, D. H. (1997). Understanding teacher resource allocation in New York state secondary schools: A case study approach. Journal of Education Finance, 23(2), 207-233.

Erlichson, B. A., & Goertz, M. (2002). Whole-school reform and school-based budgeting in New Jersey: Three years of implementation. In C. Roellke & J. K. Rice (Eds.), Fiscal policy in urban education. A volume in research in education fiscal policy and practice (pp. 37-64). Greenwich, CT: Information Age Publishing. (ERIC Document Reproduction Service No. ED 471 163)

Haas, T. (2000). Balance due: Increasing financial resources for small rural schools.
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Hanushek, E. A. (1981). Throwing money at schools. Journal of Policy Analysis and Management, 1(1), 19-41.

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Hanushek, E. A. (1996). School resources and student performance. In G. Burtless
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Hanushek, E. A. (1997). Assessing the effects of school resources on student
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Hedges, L. V., Laine, R. D., & Greenwald, R. (1994). Does money matter? A
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Krueger, A. B. (2002). Understanding the magnitude and effect of class size on student achievement. In L. Mishel & R. Rothstein (Eds.), The Class Size Debate (pp. 7-36). Washington, DC: Economic Policy Institute.

Levin, H. M., & McEwan, P. J. (2001). Cost-effectiveness analysis (2nd ed.). Thousand Oaks, CA: Sage.

Meier, D. (1995). The power of their ideas: Lessons for America from a small school in Harlem. Boston, MA: Beacon.

Miles, K. H., & Darling-Hammond, L. (1998). Rethinking the allocation of teaching
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Picus, L. O. (2000). How schools allocate and use their resources. ERIC Digest.
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Reeves, C. (2003). Implementing the No Child Left Behind Act: Implications for rural schools and districts. Naperville, IL: North Central Regional Educational Laboratory. (ERIC Document Reproduction Service No. ED 475 037)

Rice, J. K. (2001). Illuminating the black box: The evolving role of education productivity research. In S. Chaikind & W. Fowler (Eds.), Education finance in the new millennium, 2001 yearbook of the American Education Finance Association (pp. 121-138). Larchmont, NY: Eye on Education.

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Roellke, C., & Rice, J. K. (2002). Fiscal policy in urban education. A volume in research in education fiscal policy and practice. Greenwich, CT: Information Age Publishing. (ERIC Document Reproduction Service No. ED 471 163)

Schwartz, A. E., Bel Hadj Amor, H., & Fruchter, N. (2002). Private money/public
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Stiefel, L., Iatarola, P., Fruchter, N., & Berne, R. (1998). The effects of size of student body on school costs and performance in New York City high schools. New York: New York University Institute for Education and Social Policy. (ERIC Document Reproduction Service No. ED 420 464)