This study examines the relationship between school district expenditures and district characteristics, including regional features (enrollment size, student population density, labor costs, and geographic remoteness) and level of student need (percentages of students eligible for free or reduced-price lunch, of special education students, and of English language learner students). Prior research has found that each of these factors has been associated with differences in expenditures across districts. This study examines five types of district spending per student for prekindergarten-grade 12: general fund expenditures, instruction and instruction-related expenditures, administration expenditures, student support expenditures, and transportation expenditures. The analysis finds that during the 2008/09 school year, rural districts accounted for 65 percent of Minnesota school districts and 25 percent of students. Further, district expenditures, regional characteristics, and level of student need varied across locale types. Expenditure patterns across locales differed with the type of expenditure. Total general fund expenditures per student and instruction and instruction-related expenditures per student were highest in city districts and above the state average in suburban, rural-remote, and town-remote districts. Student support expenditure per student was highest in city districts and lowest in town-remote and town-distant districts. Administration and transportation expenditures per student were above average in rural-remote and city districts and below average in the remaining locales. Regional characteristics and level of student need also varied across locale types. Compared with other locales, rural-remote districts had lower enrollment, lower student population density, longer drive time to the center of the nearest urban area, and higher percentages of special education students and students eligible or reduced-price lunch (a measure of economic disadvantage). Within rural and town districts, the percentage of special education students and economically disadvantaged students increased with remoteness. The percentage of English language learner students was highest in city and suburban districts. Regression analysis indicated that once regional characteristics and levels of student need were taken into account, district locale was not a statistically significant predictor of expenditures per student on administration, student support services, and transportation. Differences across locales in total general fund expenditures per student and instruction and instruction-related expenditures per student remained statistically significant predictors, but their shares in the overall variation in these expenditures fell considerably (from 16 percent to 3 percent for total general fund expenditures and from 19 percent to 6 percent for instruction expenditures). For these two expenditure types, only differences between town-remote districts and rural-remote and rural-distant districts were statistically significant. On the whole, regional characteristics and level of student need accounted for much of the variation in expenditures per student between districts in different geographic locales, but unexplained differences remained for Minnesota's most remote town and most remote rural districts. Appended are: (1) The literature on financing rural education; (2) Data and data sources; (3) Sample statistics and methodology; (4) Regression model results; and (5) Outliers dropped from the regression analysis. (Contains 3 boxes, 21 figures, 13 tables and 28 notes.) [For "Differences in Spending in School Districts across Geographic Locales in Minnesota. Summary. Issues & Answers. REL 2012-No. 124," see ED532662.]

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