This paper examines the impact of Illinois' present system of state aid to education in light of the rationale for its adoption, and argues that the stated purposes of the present system would be better realized through the adoption of a "two-tiered" finance system. The present Illinois system consists of the Strayer-Haig system of foundation grants and a "resource equalizer" system of aid to districts based on their local tax effort. The authors argue that much of the political support for this system was based on the desire for overall property tax relief, and not on the desire to reduce disparities in per-pupil expenditures between districts. Although Illinois' resource equalizer system did provide short-term tax relief during its phase-in period, they point out, its long-term effect is to reward increases in local tax rates. By adopting a "two-tiered" system, they suggest, it would be possible to provide more or less of this district power equalizing, simply by varying the relative size of the basic foundation grant (tier 1) and the "local initiative" or "tax incentive" grant (tier 2). (Author/JG)