Designed to serve as an introduction to research currently being conducted on behalf of the Task Force into implications for rural schools of the Levittown decision, the primary purpose of this report is to provide background information and to provoke discussion about fiscal problems in rural areas. Two sections provide historical as well as legal perspectives on the state's responsibility for delivering educational services in rural areas. Historical analysis gives an overview of how the state has responded in the past and provides insight into the current nature of the state's involvement. Section III draws heavily on the Levittown decision and shows that a concern for problems that exist perhaps uniquely in rural schools is entirely consistent with the holding of the court. Section IV addresses whether there are costs peculiar to operating schools in rural areas and presents results of early attempts to document existence of these costs. The report concludes with a discussion of policy implications. Definitions for rural schools are proposed as well as a series of policies which might be recommended by the Task Force as a means of more completely fulfilling the state's responsibility to students and taxpayers in rural areas of the state. (BRR)