School systems have been forced to postpone purchases of new equipment and to defer repair and renovation projects. At present, 39 states provide support for local school district capital expenditures through five primary mechnanisms: full state assumption, state/local sharing, state flat grant, state equalizing grant, and state loans. In response to high and volatile interest rates, increased competition within the municipal bond market, and reduced investor demand for tax-exempt securities, state policymakers might consider new ways of structuring tax-exempt bond issues that have the advantages of lower interest costs to issuers and of a broader potential market. However, state policymakers should be aware of the pros and cons of various creative financing techniques before modifying existing legislation to permit their use. (MLF)