Because Louisiana is facing financial difficulties, the impact of reductions in federal aid since 1980 has been severe. With a state economy dependent on gas, oil, and agriculture, Louisiana suffers when oil prices are low and farming costs are high. Reduced tax income for the state lowers state spending, forcing additional enterprises out of business. Louisiana is left with a shrinking tax base at a time when state and local support for education must be increased. The major source of income for local schools is the property tax. Homestead exemption regulations shift the burden of taxation onto businesses and commercial property. Shrinkage of the local tax base results in disproportionate school funding. Small financial disparities between districts can result in large educational disparities for students. Efforts at educational reform require additional money and can lead to further regressivity of the taxing system. Just as school financial situations are best understood in terms of the local context, proposals for alternative, equitable financing must be based on local variables. A table of revenue sources for selected Louisiana districts is provided and three pages of references are included. (PGD)