Since the founding of the People’s Republic of China, the elimination of illiteracy and the universalization of basic education has been a long-standing goal of the Chinese government’s educational policy. Rural education played a critical role in achieving these goals as the Chinese rural population has historically been disadvantaged in educational attainment. To accomplish the goal of universalizing basic education, prior to the 1990s, the Chinese government maintains large numbers of rural schools dispersed geographically in villages. Under this system, rural students are able to attend schools within or close to their home villages, which ensures students’ easy access to educational resources and thus the steady increase in rural students’ school enrollment. Students enroll in either “teaching posts” with less than six grades or “comprehensive schools” with six grades. In line with this condition of school location, educational policies encouraged local schools and educational administrators to raise material, funding and human resources from hosting villages. With limited governmental finance support, this system mobilized local resources and fostered productive relationships between schools and communities in China’s vast rural areas. In the meantime, maintaining large numbers of schools and teachers placed tremendous financial burdens on township-level governments and local villagers, jeopardizing the long-term stability of educational finance.