This report profiles the condition of education in California's rural and small schools, placing public schooling and rurality into their social and economic contexts. The data focus on three issues: (1) the economic and social environments in which schools operate; (2) characteristics of rural schools, students, and teachers; and (3) school-improvement resources. California's counties are classified as rural, urban, mixed rural, or mixed urban. With more than 28 million people, California is the most populous state in the nation, with a broad ethnic mix. The state's population more than doubled between 1950 and 1980 and its economy is measurably strong. In 1988, the state's employment rate was 67%, slightly above the national average. In general, rural counties experience greater unemployment than urban counties. Rural schools made up 14.9% of the state's public schools, educating 8.5% of California's students in 1988. Rural schools are more homogenous than urban schools, but the rural student population is becoming more ethnically diverse. Because rural schools vary in size, economies of scale and allocating funds on a per-pupil basis work against rural schools for fixed operating costs. Attracting teachers to rural schools is difficult because of social isolation, lower salaries, limited mobility, and lack of personal privacy. California School Improvement Program (SIP) is a primary vehicle for rural school reform. SIP funds are used to improve curriculum, instruction, school climate, and school-community relations. The California School Leadership Academy offers a training program to address managerial, instructional, and curriculum leadership skills. (TES)