The five states of the Southwest--Arkansas, Louisiana, New Mexico, Oklahoma, and Texas--represent great diversity in economies, politics, educational settings, and resources. Despite this diversity, research indicates that rural small schools are concerned about the same issues as education as a whole. The purpose of this report is to present the common needs and conditions of rural education in the Southwest region, to describe the specific condition of each state's rural schools, economies, legislative mandates, demographics, educational indicators, and policies, and to serve as a catalyst for examining the challenges facing rural educators and the communities they serve. The report presents a comprehensive picture of the condition of rural schools in the region and of unique conditions of schools within each state. It contains three major sections: a regional overview, a description of Southwestern rural and small schools, and individual state profiles for the five states. The regional overview examines demographic and economic trends, legislative mandates, public education funding, rural education conditions and needs, and strategies for addressing regional needs, including economic development. The section on the description of rural small schools includes demographic information. Each state profile includes information on the economics affecting rural schools and discusses consolidation, the uses of technology, and education service centers. This document includes 87 references, 20 demographic tables, and 8 demographic maps. (TES)