This report is one of a series on education finance undertaken to document existing disparities in expenditures for education, to analyze the sources of the disparities, and to describe and evaluate the gains and losses that would occur in differing types of school districts under alternative fiscal policies. This study shows that North Carolina's approach to financing education differs greatly from those of most other States. In North Carolina, the government provides nearly 80 percent of the total State-local education funds in the form of flat grants to districts, while local units make up the rest from property tax revenues. The booklet describes full and partial State funding alternatives and shows the impact of these various plans on different districts and segments of the population. The impact of a fully State funded alternative which distributes an equal number of dollars per pupil is compared with that of a weighted pupil formula and a personnel unit formula. Among partially State funded alternatives, State matching grants based on various measures of fiscal capacity and district "power equalization" are examined. Related documents are EA 004 896 and EA 005 087. (Author/JF)