Economy of scale in rural schools and districts is associated with higher per pupil costs for educational programs and services of a quality comparable to nonrural schools. In 1990, Florida was one of 29 states that recognized higher per pupil costs associated with student population sparsity by providing additional revenues through its funding formula. Out of 67 school districts in the state, 37 received additional revenues to offset such costs. To ensure equity, Florida's Education Finance Program (FEFP) bases financial support to public schools on the number of students participating in a specific educational program, rather than the number of teacher units or classroom units. This paper summarizes a study examining the effects of additional revenue for student population sparsity on the equity of FEFP. The study divided the FEFP into four revenue sources: foundation program, supplements, discretionary levy from the local property tax, and categorical and special allocations. Measures of equity were applied to each element under two conditions (inclusion or exclusion of additional equity revenues). Findings showed that the sparsity supplement enhanced vertical equity for sparsely populated school districts and yielded a substantial gain in the state school finance system's fiscal neutrality. (80 endnotes) (MLH)