Order Code RS20375
Updated January 28, 2002
CRS Report for Congress
Received through the CRS Web
Rural Education: Legislative Initiatives
James B. Stedman and Richard N. Apling
Specialists in Social Legislation
Domestic Social Policy Division
The No Child Left Behind Act of 2001 (P.L. 107-110) authorizes the Rural
Education Achievement program, providing small, rural school districts with increased
flexibility in the use of funds under several federal education programs. This program
also authorizes funding for these districts and for another group of poor, rural school
districts. This new authority includes a revised version of the Rural Education
Achievement program enacted in the 106th Congress by the Consolidated Appropriations
Act for FY2001. The FY2002 appropriations legislation for the U.S. Department of
Education includes $162.5 million for rural education. This report describes the new
authority. It will be updated if major action occurs.
The No Child Left Behind Act of 2001 (H.R. 1) was signed into law on January 8,
2002 as P.L. 107-110. It includes provisions to increase federal assistance to rural local
educational agencies (LEAs).1 Advocates of such legislation contend that rural LEAs
receive too little from individual education formula grant programs for effective use, and
they are unable to secure federal competitive grants.
During the 106th Congress, the Consolidated Appropriations Act of FY2001 added
a Rural Education Achievement Program to the Elementary and Secondary Education Act
(ESEA). This program provided eligible LEAs (rural districts with small enrollment) with
flexibility in the use of funds they receive under specific ESEA authorities. The program
also included a 1-year authority for separate grants to these LEAs, an authority that was
In general under this legislation, a district’s rural location is determined by the “School Locale
Codes” for all of its schools. These codes are based on the Census Bureau’s classification of the
places. Currently, there are eight such codes. The definitions of a rural location in the legislation
use different combinations of Locale Codes 6, 7, or 8. Locale Code 6 is applied to a school in a
place with a population of less than 25,000 and more than 2,500, located outside a metropolitan
statistical area. Locale code 7 is applied to a school in a place identified as rural and outside a
metropolitan statistical area. Locale code 8 is applied to a school in a place identified as rural and
inside a metropolitan statistical area.
Congressional Research Service ˜ The Library of Congress
not funded. Despite the absence of an FY2001 appropriation for grants, eligible districts
could exercise the flexibility authority in the legislation.
P.L. 107-110 adds a new Rural Education Achievement program (ESEA Title VI,
Part B) that encompasses two separate programs — the Small, Rural School Achievement
program, and the Rural and Low-Income School program.2 The first program is a revised
version of the program authorized under prior law. The second program, which is new,
identifies another set of districts (defined by low-income student population and rural
location) and authorizes the allocation of funds to states based on the enrollment in those
districts. The provisions of the new authority (both programs) are described in detail in
Table 1, below. The FY2002 appropriations legislation for the U.S. Department of
Education (ED) includes $162.5 million for rural education.
Table 1. Provisions of the Rural Education Achievement Program
Under the Reauthorized ESEA
Rural Education Achievement Program
Location in amended ESEA
Title VI, Part B
Authorization of appropriations
$300 million for FY2002 and such sums as may be
necessary for each of the 5 following fiscal years, divided
equally between Subpart 1 (Small, Rural School
Achievement Program — see description below) and
Subpart 2 (Rural and Low-Income School Program — see
Limitation on participation in both
Districts eligible to receive funding under Subpart 1 are
ineligible for funding under Subpart 2.
Census to determine average daily
Any local school district participating under these program
must, not later than December 1 of each year, undertake a
census of students to determine the number in average
daily attendance in grades K-12 and submit the results to
the Secretary (Subpart 1) or its state educational agency
The House- and Senate-passed versions of H.R. 1 would have authorized two rural education
programs. The primary differences between the House and Senate versions were the following:
only the Senate included a population density factor in determining eligibility under the first
program; the House version made any district eligible for the first program, ineligible for the
second, while the Senate version prohibited concurrent participation; the array of programs to
which the flexibility authority extended varied under the two versions, as did the uses to which
funds could be put; the accountability provisions under both programs differed between the House
and Senate versions; and the House version authorized a single appropriation divided equally
between the two programs while the Senate version had two separate appropriation authorizations.
Supplement, not supplant
Funds awarded under either program must be used to
supplement, and not supplant, any other federal, state, or
local education funds.
Subpart 1 — Small, Rural School Achievement Program
This program provides eligible districts with increased
flexibility in the uses of “applicable funding”; it also
authorizes a formula grant to those districts.
To be eligible, districts must meet the following criteria:
(1) fewer than 600 students in average daily attendance or
all schools in the district are located in counties with a
population density of fewer than 10 persons per square
mile, and (2) all schools in the districts have a Locale Code
of 7 or 8. The Locale Code requirement can be waived by
the Secretary for a district if it is in an area defined as rural
by a state governmental agency.
Applicable funding includes formula subgrants to local
school districts under the following: Title II Subpart 2
(teacher quality), Title II Section 2412(a)(2)(A)
(technology), Title IV Section 4114 (safe and drug-free
schools), and Title V Part A (innovative programs).
Flexible uses of applicable funding
Districts may use applicable funding (defined above) for
the local activities authorized in: Title I Part A
(compensatory education for disadvantaged students), Title
II Part A (teacher quality), Title II Part D (technology),
Title III (education of limited English proficient and
immigrant children), Title IV Part A (safe and drug-free
schools), Title IV Part B (21st century schools), and Title V
Part A (innovative programs).
Grants to districts eligible for
Grants are authorized for eligible districts for the same
activities for which applicable funding can be used (see
“Flexible uses of applicable funding,” above). The size of
the grant to an individual district is equal to (1) $20,000
plus $100 times the number of students in average daily
attendance in excess of 50 students, up to a total of
$60,000, minus (2) the applicable funding the district
received for the preceding fiscal year.
Each district participating in this program must assess its
student achievement using an assessment consistent with
the assessment under ESEA Title I, Section 1111(b)(3).
After the third year of funding, the state educational agency
must determine whether a district can continue to
participate based on whether the district made “adequate
yearly progress” under the terms of Section 1111(b)(2).
Districts meeting the adequate yearly progress requirement
can continue to participate; those failing to make adequate
yearly progress can continue to participate only if their
applicable funding is used to carry out the requirements of
Section 1116 concerning school improvement.
Subpart 2 — Rural and Low-Income School Program
This program authorizes a state formula grant program
based on enrollment in eligible poor rural school districts.
To be eligible, districts must meet the following criteria:
20% or more of school-aged (5-17) population must be in
poverty and all schools must have Locale Codes of 6, 7, or
8. “Specially qualified” agencies are eligible districts that
apply directly to the Secretary because they are in nonparticipating states.
From the portion of the annual appropriation for this
program, 0.5% is reserved for Bureau of Indian Affairs
schools and 0.5% is reserved for the outlying areas. The
remainder is allocated among state educational agencies
based on each state’s share of the total number of students
in average daily attendance in eligible school districts
nationwide. Specially qualified agencies in a nonparticipating state receive funding directly from the
Secretary either competitively or by formula.
Allocation to LEAs
State educational agencies are to award grants to eligible
districts through competition, by formula based on average
daily attendance in eligible districts, or by an alternative
formula that directs funds to concentrations of poor
children to the same or greater extent as a formula based
on average daily attendance. State educational agencies
may reserve up to 5% of the grant for the costs of
administration and technical assistance.
Uses of funds
Funded districts are to use their grants for teacher
recruitment and retention (including use of signing bonuses
or other financial incentives); professional development
(including training for teachers to use technology and for
special needs teachers); educational technology (including
hardware and software); parental involvement activities;
activities authorized by Title IV Part A (Safe and DrugFree Schools program); activities authorized by Title I Part
A (compensatory education for disadvantaged students);
and activities authorized by Title III (education of limited
English proficient and immigrant children).
State educational agencies or specially qualified agencies
seeking funding must submit applications to the Secretary
that, at a minimum, identify specific measurable goals and
objectives to be achieved with this funding. These may
include goals and objectives related to increased student
achievement, decreased dropout rates, or such other factors
as the agencies choose to measure. Funded state agencies
must report annually to the Secretary concerning how
funds were awarded to local agencies, how they used the
funds, and the progress made toward the goals and
objectives. A similar report is required from specially
qualified agencies. The Secretary is to submit a biennial
report to the education committees of Congress including
the information provided by the states and specially
Further, all participating local educational agencies and
specially qualified agencies must administer assessments
consistent with Title I Section 1111(b)(3). Participating
state educational agencies are to determine, after the third
year of funding, whether local districts made adequate
yearly progress. Those agencies making adequate yearly
progress can continue to participate; those agencies failing
to make adequate yearly progress can continue to
participate only if they use their grant funding to carry out
the requirements of Title I Section 1116. After the third
year of participation, specially qualified agencies are to
provide the Secretary with data to determine whether they
made adequate yearly progress. Those making such
progress can continue to participate; those failing to make
such progress can continue only if they use their grant
funding for Title I Section 1116.
The process for determining which districts are actually eligible for these programs
and the amount of funding they will receive has begun. During the week of January 14,
2002, the Assistant Secretary of ED’s Office of Elementary and Secondary Education sent
to each chief state school officer a summary of the major flexibility provisions in the
reauthorized ESEA.3 Among the provisions covered and for which some summary
“guidance” is provided are the programs under the Rural Education Achievement program.
This summary and the letter accompanying it inform each chief state school officer that,
in order for ED to make grants to states on a timely basis, there is a March 1, 2002
deadline for submission to ED of average daily attendance for the state’s eligible districts.
The summary also indicates that, for determining eligibility, school locale codes are
available on the National Center for Education Statistics website.4
The summary and accompanying letter are provided on the U.S. Department of Education’s
website at: [http://www.ed.gov/offices/OESE/esea/index.html].
The summary gives the address as: [http://www.nces.ed.gov]. The page on the NCES website
that appears to provide locale code data that can be used in determining eligibility is: