Alaska's Public School Foundation Program, based on an instructional unit funding formula, enables the state to meet fiscal equalization criteria outlined in the federal PL 81-874 law (the disparity test). Alaska must meet the guidelines to utilize approximately $44 million in PL 81-874 funds within the state foundation plan as general revenues. Based on $61,000 per instructional unit, the disparity test takes into consideration designated state and local revenues; the range of revenues may not vary more than 25 percent between the school district raising the lowest amount of revenues and the school district raising the greatest amount. The foundation program makes provision for area cost differentials (geographical differences), declining enrollment, and monthly disbursements. The formula for calculating basic need is: basic need = (instructional units) x (area cost deferential) x ($61,000). The formula for calculating state foundation aid is: state foundation aid = (basic need) - (local tax effort) - (90 percent eligible PL 81-874). Following an explanation of terms, issues, and funding formulas, this report lists the foundation/PL 81-874 program entitlements for all Alaska school districts for fiscal year 1994, as well as projected increases. (MLH)