In Kentucky, 105 of 178 school districts, or 59%, are classified as rural. State law and administrative regulations presume that most school districts are both rural and isolated. The environment for rural schools in the state is heavily influenced by the fact that the majority of school districts are rural. Each school district must have a written plan for a program of school and community relations and provide a specified amount of school time to be spent on basic skills. Typically, rural students begin the day with a fairly long bus ride, may have parents who are unemployed or underemployed, are more likely to need special education services and less likely to be classified as gifted than urban students, and are likely to have parents who did not graduate from high school or have only a high school education. The rural student is apt to do more poorly in school than urban students and value education less. Rural school districts in Kentucky differ from urban school districts not only in student achievement but also in the adequacy of their funding. When school districts are ranked by quartiles of student density, the lowest two quartiles (i.e., half the districts) are shown to have equally average personal income: approximately five-eighths of the average personal income of the most dense quartile of districts. The highly varying tax rates on properties and the unequal distribution of wealth provide very unequal funding for school districts. In 1989, the supreme court ruled that the entire system of precollegiate education was unconstitutional because of the unequal educational opportunity. There has been a great deal of school consolidation in Kentucky's rural school districts, with virtually all feasible school consolidation having taken place. This document contains statistical data and 14 references. (ALL)