The Oregon educational system confronts a set of legislative challenges similar to, yet different from, the rest of the nation. Like the rest of the nation, distrust of government runs high, politicians are wary of raising or restructuring taxes, the economy is expanding, and the November 1994 state election shook up the political leadership of the State. Unlike most other states, Oregon is implementing a property-tax limitation and continues to struggle with the problem of how to fund public education. This document presents an update of school-finance issues confronting the 1995-97 State Legislature, which include: (1) the impact of a statewide property-tax limitation on the state budget; (2) the move to a state-funded K-12 education system; (3) a new view of the state budget; (4) K-12 education's share of the budget; (5) state tax reduction; (6) equalization issues in the state school fund; (7) lottery funding; and (8) limits on assessed valuation growth. Three tables and a copy of the 1995-97 Governor's budget are included. (LMI)