Issues in school funding inequities are discussed in this Digest, which points out that funding inequity exists among inner-city, rural, and urban schools. The extent of the disparities that exist in per-pupil spending between wealthy and poor school districts within states is described. Reasons for funding inequities include the built-in inequity of school district financing and the inefficiency of the state equalizing formulas. A review of recent court rulings between 1968 and 1990 reveals that although the courts overturned many financing plans, clear guidelines for remedying the fiscal inequity have not been provided. A review of literature indicates that school expenditures per se are not generally related to improved student academic performance. However, the way in which educational funding is used affects student achievement. Future issues to be addressed are financial equity across states and among schools at the state level. (Contains 11 references.) (LMI)