Twenty percent of the children enrolled in rural and small-town schools are non-Caucasian, children of color. As in nonrural schools, rural schools have yet to close the achievement gap across various racial and economic subgroups of this diverse population. Overall, rural students perform as well as or better than their nonrural peers on standardized achievement tests. However, the gap between White and non-White student performance levels is persistent, widening in the 1990s. Socioeconomic status is the strongest correlate of standardized test scores, and rural poverty rates are highest in areas with large concentrations of people of color--the deep South, Southwest, and American Indian reservations. Examples demonstrate correlations between academic performance and both parental educational attainment and student eligibility for free and reduced-priced lunch. Small schools have been shown to mitigate the influence of poverty on academic achievement, but in many places, small community schools also may be linked to school segregation. Equity issues affecting the achievement gap include overrepresentation of minority-group students in school suspensions and expulsions, nonacademic "tracks," and special education; their underrepresentation in gifted programs and advanced courses; inequitable funding of poor rural schools serving children of color; and the poorer teacher quality in such schools. Three examples depict rural districts where place-based, culturally relevant curricula have raised academic achievement by connecting schools to their Latino, Native, or African American communities. (Contains 20 references) (SV)