This third edition of this book explores traditional economic and political models and contemporary issues that affect the social, political, and economic state of schools. Like the previous two editions, this edition takes a balanced approach to understanding school finance issues by using paradigms of both the economist and the political scientist. Part I begins with a discussion of the educational decision-making process in a political-economic system divided between public and private sectors. Part II examines the sources of money that society devotes to support public education. Part III focuses on the merits and structures of general and categorical aid programs at state and federal levels in the United States. Part IV examines the potential of school finance policies to achieve high standards. Part V examines how changing the incentives provided by financial rewards in state policies and by teacher compensation within districts might improve school and student performance. Part VI concludes with a discussion of some implications of the systemic-reform movement on the changing policy context. (Contains a name index and a subject index.) (WFA)