This ERIC digest examines the slowed pace of school district reorganization since 1970 and the expanded role of state education agencies (SEAs). It also reports trends that influence consideration of various reorganization forms and considers the framework in which future policy options may take shape. The decades from 1940 to 1970 show the largest declines in the number of U.S. school districts, largely attributable to the reorganization of small and rural districts. Still, in 1987-88, approximately 53% of all schools were located in nonmetropolitan areas. The slowed pace of school-district reorganization since 1970 seems not to be caused by any reduction in the power of the various SEAs. Several trends, in fact, suggest that the influence of SEAs may be increasing in rural areas. Other trends that influence school-district reorganization include: (1) litigation over fiscal equality; (2) problems in reaching consensus on what adequate support for education might be; and (3) research findings that indicate possible negative effects of large scale organizational units on learning, especially for at-risk students. Education reform in the 1980s has reflected a national, often urban-based consensus. Rural and small schools, especially in impoverished areas, are more likely to be judged "inefficient" than large urban ones. Research suggests, however, that what happens in the classroom is still the ultimate measure of the effectiveness of school-reform. Small-scale reorganization has shown potential for positive educational results. Policymakers continue to face the task of balancing small schools' higher costs with the advantages they offer, especially for at-risk students. (TES)