The Chilean Ministry of Education oversees preschool, primary, and secondary education in both urban and rural areas. Many parts of Chile are sparsely populated and there are currently over 4,000 rural schools (almost 38% of all schools in Chile) educating 9.5% of the students in the country. Many of the rural schools are small with only one teacher responsible for instruction of all local students (multigrade schools). The geographical distribution of the rural schools has not been coordinated and this has resulted in unequal utilization of existing schools and some unreasonably long travel distances by students. Good management of the rural schools is fundamental to meeting Chile's goal of providing quality education to its citizens. Seeking to improve the situation, the Ministry of Education ordered a study of the optimal location and size of rural schools with the general goals of reducing the number of lesser quality multigrade schools and reducing student travel distances while maintaining reasonable costs. This paper presents results of this study obtained using an integer linear program that has been embedded in a geographical information system. We present computational results for the entire country. Recommendations include where to open new rural schools as well as where to expand, reduce, close, or leave unchanged existing schools. We show how recommendations are sensitive to key parameters such as the cost of transportation.