Over the course of the fifteen years since 1991, Latvia has been undergoing rapid political changes from a party controlled state to a market economy. These changes have affected the system of education. The issue of quality and equity of educational outcomes is gaining increasing importance as schools are expected to adjust to the new economic situation and to the requirements of a democratic society. In this study, the authors focus on systematically examining rural/urban disparities in students' learning outcomes in Latvia and explore the effects of a number of individual and school characteristics in contributing to such disparities. They concluded from their data analysis that while the socio-economic status (SES) of students' family background was an important factor in explaining the regional disparities, school resources and school processes also played a role in explaining the differences between schools. They learned that the school process variables explained as much between-school variation in test scores as school SES and resource variables combined. Considering that improving school processes can be less resource-intensive than upgrading both physical and human resources, this finding highlights the existence of relatively less expensive alternatives to improve student learning. (Contains 2 tables, 2 figures and 2 notes.)