A synthesis of research findings addressing effects of population and economic changes on education supply and demand in rural communities also presents policy implications, to help with local decision making. Principal research findings listed include: lack of a statistical relationship between per pupil expenditures and achievement on standardized tests; teachers' salaries are determinants of school quality as measured by achievement tests; lack of evidence of economies of size for school districts, except small rural districts; and a consistent relationship exists among income, community wealth, school size and school expenditure levels. Principal implications for policy and future research are also stated: school decision makers must consider school system structure to determine the most effective means of meeting short- and long-run educational objectives when allocating funds, and research is needed to help school administrators minimize costs when faced with excess capacity and reduced enrollments. Also recommended are expenditure analysis to identify local factors that community leaders can modify to deliver education at least cost, research on relationships between local economic growth and local education, and consideration of local, private, social, and spillover benefits of education when determining total returns to education. An annotated bibliography describes 121 research reports published between 1960 and 1983. Research projects (25) of the Southern Rural Development Center are listed. (MH)