This report summarizes a study examining the current conditions and unique nature of rural schools in Kansas. The purpose of the study was to identify problems that could be addressed through educational policy and state legislation. A literature review reports on the distinctive nature of rural life, factors leading up to school consolidation, the effectiveness of small schools, the strong relationship between rural economic development and school success, the problems associated with recruiting and retaining rural teachers, and the best teaching methods and latest technology for delivering quality instruction. The study also compared the populations of small towns in Kansas that retained or closed their high schools during district consolidations of the 1960s; reviewed demographic studies projecting the number of students living in rural Kansas in the 21st century; and interviewed 21 key educators, policymakers, and rural education and development specialists. Recommended policies include: (1) creating a statewide technology plan that provides designs, advice, and loans or grants for districts to purchase and maintain interactive television transmissions and computer networks; (2) equalizing capital outlay purchases based on a district's ability to pay; (3) creating a Kansas Office of Rural Education to assist rural districts in promoting the heritage, culture, and distinctiveness of rural life; and (4) increasing school participation in rural development initiatives. Contains 30 references. (LP)