Part of a series on state educational finances, this manual aims to help Texas educators, legislators, and citizens understand school finance reforms by providing them with an overview of their state's public elementary and secondary education financing plan and by exploring selected issues in school finance. An introductory chapter traces the legal history of school finance reform in the 1970s, explaining the significance of Serrano v. Priest and other decisions. Chapter two reviews the Texas economy, the fiscal structure of its state and local governments, and the concept of fiscal effort. In chapter three the authors describe state aid to Texas schools and discuss the three programs Texas uses to equalize educational finance, including the Foundation School Program, the Available School Fund, and state equalization aid. Exercises help the reader learn to compute how much funding each program supplies to school districts. The final chapter analyzes statewide disparities in school districts' expenditures, wealth, and tax effort and compares district wealth with educational services. Appendices give additional information for computing state aid, list federal aid to Texas schools, and summarize recent legislative changes in the state aid plan. (Author/RW)