This document begins with a section that discusses the demand for education and the identification of the broad characteristics of an educational system that would fulfill the needs and aspirations of the individual and satisfy the requirements of society. It outlines the history of the crisis in educational finance, discusses the problem of determining the needs of the individual and society, and considers the new values in society. Individual section chapters consider the determination of performance goals, the synthesis of social and individual goals, structural or systems goals, and operational goals. The first section concludes with an examination of the attitudes toward various structures for education and the decisionmaking process in education. The second section of the document identifies and examines the principles underlying the procedures and mechanisms for satisfying the educational demand in general, and the means of exploring alternative ways of restructuring educational finance to better achieve the ideals previously identified. The conflict between decentralization and centralization in the financing of education is discussed, and the case for public support of education is considered. The authors examine the equity and efficiency principles of taxation, tax coordination, and redistribution; and the document concludes by examining trends and future directions of school spending, revenue sources, and change strategies. (Author/DN)