Legislatures and courts have attempted to create equitable formulas for school finance. However, these formulas may have negative effects on educational opportunities for urban students. Comparisons of the per-pupil expenditures of large urban school districts, such as New York, with nearby suburban districts and state-wide averages disclose dramatic inequities. Urban school financing must contend with the following problems: (1) structural features in the State aid system that work against urban districts; (2) increased State control over local budgets; and (3) the decline in urban capacity for school support. Urban districts face higher costs than suburban districts in the following areas: (1) personnel; (2) facilities; and (3) special student needs. The relationship between school finance and student achievement has been difficult to establish because achievement has traditionally been measured in terms of basic skills and has not considered additional learning opportunities. Suggestions for improving educational equity in urban schools focus on the following areas: (1) increasing federal funding; (2) improving the methods of calculating urban students' needs; and (3) allowing greater local autonomy in determining standards and programs. A list of 18 references is appended. (FMW)