Rural education trends and issues confronting state legislatures are examined in this handbook of narrative as well as statistical tables. Designed to provide state legislators with information they need to better understand rural implications of statewide education reforms, the handbook presents a range of legislative alternatives in key areas. Chapters embody five basic guidelines for rural school reform: respect for primacy of local circumstance; expansion and strengthening of bonds between school and community; more equitable balance between outside regulation and local control; treatment of structural and substantive reforms as separate and distinct issues; capitalizing on strengths of rural schools as well as correcting deficiences. This report to state legislators contains the following chapter focuses: (1) overview of rural America and its schools in terms of demographic, economic, and educational factors; (2) school/school district organization in sparsely populated areas, with emphasis on the consolidation movement; (3) school finance issues with special relevance for U.S. rural areas: (4) background information on personnel issues in rural education (teacher salaries, training programs); (5) delivery of educational services and development of educational programs appropriate for rural communities. Specific legislative alternatives are presented in chapters two to five. (RS)