This report reviews economic and social issues facing rural schools and communities in the 1990's, focusing on the mutual dependence and collaboration between communities and schools. Rural America, dependent on resource-based industries, has faced distressed economy and declining populations. With a historical overview of rural America under the influence of economic and social forces, this paper analyzes the current trends in which these forces have impacted rural communities and created high levels of social and economic stress. Community development, with the school as a key infrastructure, is crucial for adaption to the new socioeconomic structure. To strengthen the linkages between the school and community, three general approaches are in the areas of: the school as community center, the community as curriculum, and school-based economic development. The report describes specific programs that demonstrate the benefits gained when the school directly serves the needs of the community. It also describes a process for beginning a dialogue within the school regarding the school's role in community development, including activities, questions, and sample community-related curriculum projects. Appendices include: (1) a summary of research on community service education; (2) sample student learning activities; (3) sample activities for developing a school-community vision; (4) a community-school design conference agenda; (5) an example of a community and school simulation activity; and (6) a listing of agencies providing assistance to rural communities and schools. This report contains an extensive bibliography. (LP)