The inadequate financing of public school facilities under the maximum class size requirements in Texas public education raises issues of quality and equity. In six chapters, this thesis attempts to examine the costs of facilities needs and to evaluate the options available to state and to local school districts. Chapter 1 states the problem and the background of the problem, which includes but is not limited to teacher shortages, inadequate facilities, and insufficient funding to exact compliance with Texas' legislative requirements. Chapter 2 provides a recent history of school financing in Texas. It outlines the major changes that have occurred since the Gilmer-Aiken bills of the late 1940s through the reforms of House Bill 72 in 1984. Chapter 3 looks more closely at the effects of the provisions of the bill dealing with maximum class size. This chapter also examines some of the arguments advanced in the literature concerning the effects of reduced class size on student achievement. Chapter 4 examines current methods of financing school facilities in Texas and discusses the financial effects of reductions in class size for local school districts. Chapters 5 and 6 outline school facilities financing in other states and present options for Texas in dealing with the school facilities problems precipitated by the maximum class size requirement of House Bill 72. The conclusion is that the current law provides no flexibility for districts to design educationally sound options other than furnishing additional classrooms or to meet the requirement of lower pupil-teacher ratios in the early grades by means other than providing for additional classrooms. This conclusion raises serious questions about the law's effect on improving equity in educational opportunity and outcomes. (JAM)