1974 is a watershed for New Jersey public schools, a time when the State is under court order to reform its discriminatory and ineffective method of raising and distributing educational revenues. The existing approach to financing education in the state of New Jersey assigns higher educational resources to pupils in richer school districts, yet taxes the poorer districts at higher rates. Its basic flaw is the low proportion of equalizing state funds relative to the proportion of local revenues. Thus the state fails to overcome the disparities in local ability to support schools. Two alternative directions for reform seem to emerge. The first assumes that the Court opinion was essentially directed at requiring the state to meet the educational needs of its pupils. This view implies that policy-makers should concentrate their efforts on establishing the costs of a "thorough and efficient" education. The second direction is grounded in an attempt to reform the existing state aid structure to meet the Court's objections. By markedly increasing the proportion of state equalizing aid, the plan is intended to eliminate discrimination against low wealth school districts and thus guarantee the ability of all districts in the state to provide an adequate educational program. (Author/JM)